This week’s action:
Corn March down 6 at $6.77
Beans March up 20 at $15.32
KC Wheat March up 3 at $8.72
Feeders March up 2.400 at $185.975
Fats Feb up 3.625 at $160.475
Hogs Feb down 1.125 at $75.025
Corn Dec23 up 9 at $5.96
Beans Nov23 up 17 at $13.69
KC Wheat July23 up 4 at $ 8.57
Fund buying continues to support grain prices with corn and beans holding in a narrow range again this week. Wheat saw a nice rally this week but remains near the bottom of its price range. Soymeal prices have rallied back to historic highs near $500/ton while soyoil is down testing support at 59 cents.
Export sales this week were better than expected on corn at 62.7 million and were the second highest for this marketing year. Soybean sales were at the low end of expectation at 27 million, down from 42 million last week. Wheat came in with a minimal 5 million sales this week and was down significantly from last week’s 18.4 million.
Brazil has ended the tax exemption for US ethanol imports effective immediately which raises the duty to 16% this year and 18% next year. This effectively ends exports to Brazil who has been the largest importer of US ethanol for years. This will add to already large domestic ethanol stocks and will weigh on prices and potentially corn demand for ethanol production.
Next Wednesday we will get the February USDA supply demand report. February is not a huge market mover historically but watch for potential reductions in US exports/ethanol usage as well as reductions to Argentina production. The next big report will be the March 31 stocks and prospective planting report.
If you’re out in the field today keep an eye on the sky as a Chinese surveillance balloon makes its way across the country (last seen over Montana). Tensions have escalated since the discovery of the balloon yesterday with Secretary of State Blinken cancelling his planned visit to China. This would have been the first high level meeting in Beijing in 5 years and increases tensions in an already strained relationship with China.
The recent rains in Argentina have been beneficial for crops with corn conditions improving 10% this week to 22% good/excellent. There is a week of dry weather forecast before rains return to Argentina and Brazil which will continue to help their second crop production.
As expected, the FED raised rates another 25 basis points this week, moving the base line rate to around 4.5%, the highest since October 2007. Secretary Powell indicated the Fed is not done with monthly rate increases. The Fed is also zeroing in on their bond holdings. They are currently planning to let $95 billion mature bonds roll off the books every month instead of reinvesting. Around $450 billion has been reduced since June.
It’s earnings week on Wall Street and the tech crowd is having a tough go. Amazon reported they lost $2.7 billion in 2022. This is Amazon’s largest ever negative year and first negative year since 2014. Alphabet (Google/YouTube) also reported difficult results as ad revenue is down dramatically as TikTok has become a new competitor in the space. Apple reported sales for Q4 2022 were about 5% less than the same quarter in 2021. Iphone revenue and other products (air pods/apple watch) revenues were both down over 8% year over year. Have we finally reached a price point people will not pay obscene money for the newest iphone?
Something that Probably Means Nothing:
Bed Bath & Beyond failed to make payments on more than $1 billion worth of bonds due Wednesday morning. The stock price has rallied almost 40% since.
Thanks and have a great weekend!