Tidbits, Soybean Meal, Export Sales, Markets & Rain Days Update 1/7/23
- Wright Team
- Jan 7, 2023
- 3 min read
Highlights
Big spec and index fund managers as of last Tuesday were net long 141,877 contracts of bean meal futures and options. That is the largest long position ever, up nearly 12,000 on the reporting week and funds' 6th consecutive week of buying. The prior open interest record was set May 1, 2018.
What does that mean? It means the next person to buy soybean meal futures very well may be the last person to buy bean meal at such a high price for a very long time. But there is a monkey wrench in the numbers.
Usually, all-time large net long position brings a new all-time high price for that commodity. Not this time; not even close. On Tuesday, when that open interest record was made (reported on Fridays by the CFTC), the highest price traded that day was $456.10. In September 2012, soybean meal futures traded to $554.40, $98.30 higher! Note the previous all-time high open interest was made in 2018, but the high price that leg up was just $404.90!
There are some rare opportunities with the current bean meal open interest and price run. We will outline most of them in the coming days.
Tidbits
Yesterday morning, the USDA reported the sales of:
132,000 mt of old crop soybeans to unknown
89,600 mt of old crop corn to Mexico
22,400 mt of new crop corn
The Buenos Aires Grain Exchange (BAGE) reduced their Argentine bean crop rating 2% to 8% good/excellent. They also dropped the corn rating 2% to 13% good/excellent. The next two weeks of weather is really going to be rough on the Argentine crops. Their bean crop planting is 82% complete, about 5.5% behind normal pace.
Biden will discuss the GMO corn dispute with Mexico's President Lopez Obrador next week.
Yesterday, China’s March corn futures settled higher for the 9th consecutive day and is around the equivalent of $10.66 per bushel. Their bean futures were down 19½ US cents, soymeal down US$5.50, and soy oil was down slightly.
China will auction off 140,000 mt of wheat (~5.1 million bushels) from state reserves next Wednesday. That is bullish because China only sells government stocks when domestic prices get uncomfortably high. China always replaces government stocks, which is about half of the world’s annual carryover for corn, wheat and beans.
With 80% of Australia’s wheat crop in the bin, yields continue to get even better than expected for the already record large wheat crop. The crop could reach 40.0+ million mt (USDA at a record large 36.6). Logistics and export capacity remain a barrier for wheat exports out of Australia.
Black Sea wheat guru Andrey Sizov: "The global wheat S&D is tense and it relies too much on the Black Sea with all its war risks threatening supplies. The Russian crop is enormous, but it's not easy to convert it into huge exports because of infrastructure bottlenecks that got worse thanks to the war."
Everybody is not respecting the damage this war is doing to wheat production. We say again, even if there was no war on the most productive wheat soils in the world, 2023 will be the fourth consecutive year the world will produce less wheat than it consumes.
The US unemployment rate was reported at 3.5% yesterday, a 53 year low. Show us those indicators that we are on the verge of a massive recession. The Dow was up 700 points yesterday.
Export Sales Tracker
Market Data
This morning:
Crude oil settled at $73.73, up $0.06
The dollar index settled at 103.91, down 1.13
July palm oil settled at 3,988 MYR, down 18. The contract high was made September, 1st at 4,365 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.
July cotton settled at $85.53, up $2.97 per cwt. The contract high was made September, 1st at $101.64 per cwt. Cotton competes with soybeans and corn for acres.
July natural gas settled at $3.653, down 0.032. The contract high was made September, 6th at $5.938. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD settled at $2.6910 per gallon, up 0.0011. The contract high was made November, 4th at $3.1450. ULSD stands for Ultra Low Sulfur Diesel.
March Dow Futures settled at 33,772, up 702. The lifetime high is 36,832 on January 5th, 2022.
Rain Days Update
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days
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