SAM Weather, More Acreage Estimates and Frigid Temps on the Way
Harvest delays in parts of Brazil and a dry Argentine forecast have bulls wondering if it may all lead to lower second-crop corn acres in SAM. Market bears caution that these factors have already been priced into the market even though the USDA is projecting the Argentine corn crop at 52 MMT vs the sub 50 MMT which the trade has already priced into the market. Any further adjustments to Argentine production in the coming months will likely not have the effect on prices that would otherwise be expected. Global headlines like the Russia/Ukraine war will continue to be the type that has the influence to move corn prices. And news this week of the U.S. sending high tech tanks and other equipment to Ukraine worries the market that this war is far from over.
The trade and analytic firms are releasing their acreage estimates for spring 2023 and so far, the numbers are coming in higher for corn and soybeans than those of 2022. S & P Global Commodity Insights, (formerly known as IHS Markit Agribusiness) released projections that U.S. farmers will plant 90.504 million corn acres in 2023 a increase of 2.2% from last year. Soybean acreage projections are more conservative at 88.0 million acres up 0.6% from 87.450 million a year ago. (Reuters)
Ukraine Black Sea exports were backed up for several days due to inspection delays but during the week of January 16th this improved when shipments of 893,874 MT were reported. Cargo size has increased to the highest level since the UN’s Black Sea safe passage was agreed to last summer and renewed for an additional 4 months in November. This extension will continue to allow grain and other food related items to ship out of the 3 main Ukrainian ports of Chornomorsk, Odessa and Yuzhny/Pivdennyi which are all located along the Black Sea. As of January 22, JCC data shows that since the safe passage deal was agreed to in July Ukraine has managed to export 18.33 MMT.
AgWeb spoke with Jerry Gulke president of the Gulke Group earlier this month regarding his outlook for grain prices as we begin 2023 and advises farmers to look at the big picture. Market volatility has had a lot to do with weather in SAM. “It better not rain more than we expect in Argentina, as it already has rained some. The concern of the market is not so much how bad it is in Argentina but how bad it is not. You get to a point where you stop deteriorating a crop.”
Gulke suggests that current issues like the of economy and threats of a recession, SAM weather, ethanol production levels, a reduction in the U.S. cattle herd, amongst other issues should be compared with what we know now vs what was known January 1st. “I can give you one good reason why soybeans should have gone higher after Jan. 1 and I can give you about 15 different reasons why I’m really concerned about agriculture going forward.” He gauges some of his concern on the fact that supplies of major agricultural equipment brands have been declining. “Somebody must not feel they want to be involved in agriculture in any way in what the market feels like the deflationary economy. We have a lot of things that have changed from last year to this year and it has me concerned.”
Snowfall has been plentiful in many parts of the U.S. since November 1st and this is helping to relieve drought conditions in those regions. (Areas with improvements are shown in green in the following map) Not everyone is as fortunate, notice the Southern Plains where drought conditions have worsened. (Shown in yellow on the map)
The outlook for this weekend does not look pleasant and winds have already ramped up today. Tomorrow (Saturday) a strong clipper system will move its way across areas to the north of Hwy 30. This evening clear skies will give way to clouds with snow expected to develop around daybreak. Accumulations of up to 7 inches are possible where the heavier snow bands set up.
The EURO model followed by the GFS weather model.
Arctic air will move into the Upper Midwest Sunday and is expected to remain throughout the week. Temps are predicted to fall off from normal levels and several nights of sub-zero temps are likely. Looking ahead to the first weekend in February, temps are expected to return to normal highs and lows. The deviation from seasonal temps is shown in the map below.