Grain Comments: 04-04-2023

Good morning:

Initial national winter wheat ratings disappointed yesterday afternoon, with no spring wheat planting seen yet either—that has KC and MN contracts continuing their rally. Corn and soybeans will have a tougher time sustaining recent runs given a much better Midwest forecast ahead.

February USDA total soybean crush came in at 176.9 million bushels yesterday , down from 191.1 mbu in Jan but above the 175.7 mbu trade estimate and 174.4 mbu last January. Corn used for ethanol of 400 mln bushels was down from 441 mln last month and 406 mln a year ago, while DDGs produced were 1.560 million short tons, down from 1.714 mln in Jan and 1.693 mln LY.

The initial U.S. Crop Progress Report for the spring showed winter wheat ratings falling from 34% to 28% good/excellent, down from 30% last year and the 43% five-year average; winter wheat heading came in at 6%, up from 4% LY and the 2% 5YA. Corn planting matched LY and the 5YA at 2% done.

Snow has fired up in the northwest this morning and coverage looks strong through tomorrow for all but the central and southern Plains, including snow, mixed precipitation, and strong storms center-east. Conditions generally look drier past that, with temps now much warmer up through the middle of April.

Demand for US corn has improved recently, especially in the export market. This is mainly from Chinese business with several daily sales announced in recent week. This buying has brought Chinese year to date purchases to roughly 8 million metric tons which is what trade has been predicting for Chinese demand for the marketing year. We will need to see China buy more than this volume to become more bullish for futures. Cumulative corn sales are still down from expectations though, which is also tempering trade reaction to the Chinese business. Building concerns over the quality of Ukraine corn and timely shipments out of the Black Sea may bring the US additional export business. This may be short-lived however as South American exports will soon be underway, and corn offers out of Brazil are already starting to soften. Domestic corn demand is starting to fall short of expectations, mainly ethanol, which appears to be overestimated by 50 million bu. There is also doubt over the USDA feed demand estimate for the year given falling cattle numbers. It is quite possible that even if US corn exports remain firm, they may simply offset any reduction to other uses.

Have a great day.