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Market Watch and Nov Soybean Tech Talk
By: Alan Brugler | May 17, 2022

While the CPI announced this week dropped a little bit from the previous month, we’re still looking at the most inflationary environment since the late 1970’s and early 1980’s. Those of us who were employed back then recall that prices went up, and wages went up, but you never seemed to have any more buying power. I went looking for quotes from the time, and found the Reagan item above, along with several about the Russians and the Cold War. We did see some bullish fundamental news from USDA on Thursday that boosted wheat prices, but it can be argued that limit up would not have been in the cards without an inflation booster. While cattle producers are fretting about the current discount of June futures to cash, I can also argue that ag and energy prices since January 1 have been quite buoyant. Just like a toy boat, they are going to bob a bit when they are hit by waves.

Corn futures slipped 3 ½ cents on the week in old crop July, but were up 28 cents for December. Corn planting progress through the 8th of May was a sluggish 22%. That should pick up with the drier weather this week, with exception to less than ideal in the Dakotas and Minnesota. Thursday’s WASDE report from USDA showed the initial 2022/23 balance sheet numbers, indicating yield at 177 bpa and projected production at 14.460 bbu. Carryout for new crop was pegged at 1.36 bbu. Old crop stocks were left unch at 1.44 bbu. Weekly export sales came in at a MY low 192,700 MT, with new crop bookings at 46,600 MT. New crop bookings were similar, at 46,600 MT. US old crop corn export commitments (shipped plus outstanding sales) are now at 58.491 MMT, 14% below last year at this time. That takes them to 92% of the full year WASDE forecast, slightly behind the average pace of 94%. Accumulated exports are 65% of the full year projection, matching normal pace. The Friday Commitment of Traders report showed specs in corn futures and options trimming back their net long position by 14,456 contracts. That took them to a net long 338,562 contracts as of Tuesday.

Wheat bulls had a really good week. Minneapolis spring wheat led the complex with gains of 9.62% on the week. KC was close behind, with a jump of 9.53% and CBT rallying 6.22%. Crop Progress data from Monday indicated 29% of the winter wheat crop in good/excellent status, up 2% from last week. The Brugler500 index (includes all 5 condition categories) was 272, up 7 points on the week but 61 points below the same week last year. Much of the spark in the market came from Thursday’s WASDE, as old crop stocks were down 23 mbu to 655 on a 20 mbu jump to exports. The new crop number came in well below expectations as production was pegged at 1.729 bbu. Stocks for 22/23 were seen at 619 mbu. Weekly Export Sales data showed a MY low 14,100 MT of old crop wheat sales, and only 124,300 MT for 2022/23 shipment. Old crop wheat export commitments are now 19.698 MMT. That is just 90% of USDA’s full year forecast of 805 mbu. They would normally be 102% by now. Shipments to date are still 23% smaller than a year ago, at 16.357 MMT. That is 81% of the USDA projection vs. the average of 91% by now. Census data (used in the official USDA balance sheet) shows shipments further along vs. Export Sales. CFTC showed managed money in Chicago wheat adding 4,641 contracts to their net long position as of 5/10 to 15,547 contracts. In KC wheat futures and options, their increased their bullish bet by 2,964 contracts during the reporting week to a net long 42,913 contracts.

Soybeans rallied 1.51% on the week for old crop July. New crop November was up 27 ½ cents. Meal was again a drag on the market, with July down 1.04%. Soy oil was back up 3.57% on the week. Thursday’s WASDE update showed a 25 mbu drop to old crop stocks at 235 mbu, with exports revised higher. The new crop balance sheet has ending stocks at 310 mbu. The weekly Export Sales report showed old crop bean bookings in the week that ended on May 5 at a MY low 143,700 MT, with new crop at 77,300 MT. US soybean exporters have either sold or shipped 58.455 MMT of the 21/22 crop, now just 5% smaller than last year’s record buying pace. Total export commitments are 100% of the USDA full year estimate, outpacing the 97% average for this date. Shipments are 82% of that projection, matching the average pace. Friday’s Commitment of Traders report indicated money managers in soybean futures and options trimming 22,592 contracts from their net long position to 130,661 contracts as of 5/10.



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