March corn was 14 1/4 cents lower today at $6.46 1/4, January soybeans were 8 3/4 cents higher at $14.38 1/2, and March wheat in Chicago was down 22 cents at $7.61.
Grains were under pressure to finish out the week while soybeans rallied. Soybeans corrected from yesterday’s sharp losses although soy oil continued to recede. Ongoing weather concerns in Argentina and what impact they are having on the country’s soybean crop was also supportive, as was a solid monthly crush figure for October. Grains suffered from thoughts a fading La Nina event will benefit global production, including the US. The outside markets were closely monitored today as the US jobs report indicated the economy remains strong with unemployment at just 3.7%. This is again raising thoughts that interest rates might increase more than thought in this month’s fed meeting. World food values decreased in November which was a positive indicator for inflation. This is the 8th consecutive month of lower food costs. Congress passed a measure to keep the rail lines open which was supportive for the markets. All eyes are on the weekend OPEC+ meeting for future crude oil production.
Corn futures were pressured today from the ongoing demand issues the US is having. While domestic usage is favorable, exports remain slow and with a large crop out of South America are unlikely to improve. Cumulative US corn sales are down 48% on the year. Brazilian exports remain strong with November sales at 6.1 million metric tons (mmt) compared to just 2.4 mmt a year ago. There are thoughts Brazil may exhaust their corn reserves ahead of the next harvest though which will be closely monitored. Weather is turning more favorable in Argentina as the second stage of planting gets underway. Even so, some analysts are lowering their world corn production forecasts, mainly from Ukraine uncertainty. March corn finished the week down 25 cents.
A recovery from yesterday’s losses supported soybean futures today. The United States is seeing less competition from Brazil in the global market although sales out of Argentina are building following their new incentive program. Brazil reported 2.64 mmt of sales in November compared to 2.59 mmt a year ago. Trade is more focused on the crop that is going to come out of Brazil this year as production estimates continue to rise. Some forecasters believe US soybean values could fall to $10.00 per bushel by next fall if Brazil’s crop is as large as thought and Chinese demand remains stagnant. January soybeans gained 2 ¼ cents on the week.
Wheat futures posted sizable losses today and made a new low for the move. A general lack of bullish news was the primary cause of this, along with rising global production numbers. Informa was out with a 4.5 mmt larger global crop estimate which is offsetting worries over losses in Argentina. US sales are slowing with cumulative bookings down 6% on the year. There are still concerns over future wheat production, especially in the Black Sea region. Another bumper crop out of Australia is also unlikely if the La Nina continues to fade. For the week March wheat in Chicago lost 36 cents.
The US ethanol industry consumed 449 million bu (mbu) of corn in October which was above trade estimates. This volume was an increase of 17% from September but was a 4% reduction on the year. This level is enough to keep us on track to reach our current USDA yearly manufacturing forecast. From this a reported 1.75 million tons of dried distiller grains were produced which was up 8% on the month. The DDG output was down 10% from October 2021.
The October fats and oils report indicated a large 197 mbu of soybeans were crushed in the month. This was an increase of 17% from September as more new crop soybeans became available. The total was a decline of 4% on the year. Crude soy oil production in October reached 2.34 billion pounds which was an increase of 17% from September but a drop of 1% from October 2021.
The US farm economy remains quite strong. Data indicates the US farm income for 2022 will total a record $160 billion, up 14% from 2021. Returns on grains and oilseeds were up 19% during the year while livestock revenue was up 31%. Farm expenses in 2022 were also up though, increasing 19% to come in at a projected $70 billion. There are concerns for 2023 farm income though with most economists expecting a set back in revenue.
Stats Canada released their updated production data today. Stats put the Canadian total wheat crop at 33.82 mmt which was at the low end of estimates and nearly 1 mmt under the group’s September estimate. The Stats canola crop estimate came in under trade expectations and down 1 mmt from September at 18.17 mmt. Corn production was also down 300,000 metric tons from September at 14.5 mmt. While down from their previous guesses, all crop sizes were well above last year as more favorable crop weather was experienced.
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