Market Analysis

The USDA will be updating its US/World Supply/Demand and S American crop estimates on February 8. After finalizing their US demand numbers last month, the Ag Department normally doesn't make many adjustments to their Feb balance sheets. In the past, the World Board has taken a wait & see approach to changes in their US & World reports. However, for the 2nd year in row, La Nina has impacted Argentina & Southern Brazil crop prospects. Argentina’s wheat crop was sliced by 45% to 12 mmt because heat & dryness during their spring. These harsh conditions continued for the past 6-8 weeks delaying the seeding and hurting the growth of Argentina’s & S Brazil’s (Rio Grande) corn & soybean crops after their wheat harvest. Argentina’s excessive La Nina’s heat & dryness during December prompted the USDA to drop their January bean crop outlook by 4 mmt to 45.5 mmt. With these excessive conditions continuing for another 2/3 of January, further reduced seedings & plant damage occurred before rains potentially stabilized the crop in the core producing area late month. This suggests another 4-5 mmt drop in Argentina’s crop. Interestingly, Brazil’s RGDS has experienced some dryness, but normal to above normal rainfall in northern area (Mato Grosso) has us expecting no change in Brazil’s 153 mmt crop. This suggests the USDA will up US bean exports by 20-25 million bu. This will dip US stocks to 190 million & the USDA’s World stocks by 2-3 mmt. La Nina’s heat & dryness has also hurt Argentina’s corn prospects. After a 3 mmt USDA drop last month, another 4 mmt decline to 48 mmt crop could occur this month because of 2023 ‘s poor weather conditions. Similar to beans, the USDA may leave Brazil’s corn crop unchanged at 125 mmt. Rio Grande dryness countering by N Brazil’s rainfall. Slow US exports & China’s indications of utilizing Brazilian corn imports suggests this demand could be sliced 50 million while US ethanal demand is left unchanged. Despite Black Sea shipping issues, no US S&D changes are likely until the US crop is better known in the spring.

What’s Ahead

With S America’s 1st crop corn & soybean harvest picking up steam, La Nina’s recent impact on Argentina’s 2023 outputs will be watched closely. However, Brazil’s safrina corn & Argentina’s post wheat seedings of corn & beans remain highly important to the world’s supplies. Hold 2022/23 corn & bean sales at 80%. Looking to market first 10% of new-crop corn & soybeans at $6.03-10 and $13.80-90

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