• HEADLINES: Soybeans extend losses in late week technical trade; Chicago corn extends correction on chart-based selling, weak export sales; Spot Chicago wheat falls to two-month low, reaches oversold territory in past two week.

• Soybean futures fell 5-15 cents to end the week with new crop November futures pacing the way lower. The inability of the market to rally on bullish Argentine crop news caused long time bulls to take profits. The Buenos Aries Grain Exchange knifed their Argentine soy crop estimate to 33.5 million mt, down 4.5 million. However, an overnight rally did not carry through. There have been several times that soybean futures dropped for 2 days, but the market has tended to rally on the third day. A lower close Monday will have traders discussing that a seasonal high was scored last Tuesday, the first trade following the weekend frost.

• The EIA’s Monthly Energy Review for November showed that US biodiesel production was down fractionally from October, but at 142 million gallons it was 101% of last year. Renewable diesel production jumped 18.5 million gallons (15%) from October and was 48 million gallons (51%) larger than last year. Other renewable production was 11.5 million gallons more than 2022, a record. The combined figures showed total US renewable production of 164 million gallons and total biofuel production of 306 million gallons. Renewable capacity utilisation was at a 10-month high of 77%. Chicago soyoil led soybeans lower on Friday, but it is soyoil that holds the most bullish fundamental outlook as US renewable fuel capacity doubles by yearend.

• We see soymeal as the overvalued product.

• Chicago corn futures fell another 9-10 cents on renewed fund liquidation amid falling Russian wheat price offers. May corn is below all key major moving averages following the release of the USDA’s Outlook Forum corn balance sheet with Russia’s wheat market dragging down global grain markets. Support at $6.65-6.70 March is now resistance. Global corn stocks will rise in 2023/24.

• However, the Brazil’s market did not follow Chicago lower this week. Spot corn in Brazil on Friday settled at a $0.65/bu premium to March Chicago. This is the largest premium since mid-January. Longer term chart support rests at $6.35-6.45 spot Chicago futures as importers contend with an absence of physical S American supplies until May. US corn export demand continues to struggle. This week’s US corn sales were only 32.4 million bu with the crop year sales pace to date down 745 million bu or 40%. With Argentina back offering fob corn below the US Gulf from mid-May onward, the window to expand US corn exports is closing. This will likely cause WASDE to lower their 2022/23 corn export estimate by 75-125 million bu in coming monthly reports. Corn lacks a demand driver with a drop to $6.35-6.45 March forecast for a bottom early in the delivery period.

• US wheat futures ended sharply lower with March testing the lows of mid-December. The market has tested both overbought and oversold levels since mid-February, and RSI index since summer has been the best indicator of future price moves.

• CFTC data won’t be fully available until mid-March, but we estimate managed funds’ short position in Chicago at a 5-year high 90,000 contracts.

• A Chicago recovery is probable, though such corrections are selling opportunities. A new supply threat is needed to sustain speculative buying and the US forecast is slowing trending wetter across the US Plains. Another round of soaking rain will impact North Africa in the next 7 days. The Russian Rouble scored a fresh 10-month low which keeps exporters there as aggressive sellers.

• Work maintains that fair value lies between $7.00-8.00 into mid/late 2022 unless Northern Hemisphere weather is perfect. Unlike corn, it is difficult to project larger exportable supplies in 2023/24 due to low carry-in stocks and this year’s contraction in Black Sea winter wheat planted area. Look for a trading low early next week as March Chicago tests $7.00 support.

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