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The U.S. Department of Agriculture on Thursday made its third consecutive announcement of old-crop U.S. corn sales to China, totaling 1.92 million tonnes over three days. Corn sales to China had not flashed on consecutive days since May 2021, and the last corn flash to China before this week was in August. China expects its 2022-23 imports at 18 million tonnes, down from nearly 22 million in the prior year. Brazil is done shipping corn to China for now, having exported 2.2 million tonnes of corn to China between November and February, including just one cargo in February. China is banking on a huge Brazilian safrinha crop, having bought at least 1.5 million tonnes for shipments starting in July.

Using the U.S. government’s latest estimates, Argentina’s corn and soy yields are set to fall 29% and 33%, respectively, from the long-term trends. Corn and soy yields fell 13% and 28% below trend in 2009, respectively, and they each fell 24% in 2018. Corn and soy yields: Argentina, Brazil, USAUSAComparable U.S. drought events include 1988 and 2012, where corn yields fell a respective 28% and 24% below trend. The only other year since where corn losses came anywhere close was 1993, when extreme flooding cut corn yield by 19%. Corn yields fell more than 40% below trend in Illinois and Indiana in 2012, and in Iowa and Minnesota in 1993.

LATEST DATAIn the week ended Feb. 21, money managers cut nearly 19,000 CBOT corn futures and options contracts off their net long, which fell to 215,928 contracts. They also increased their net long in CBOT soyoil by nearly 12,000 futures and options contracts, and the resulting net long was 34,301 contracts, a one-month high. When adding other reportable traders’ net long, the overall speculative soymeal net long is also a record at 173,690 contracts. and Minneapolis wheat futures and options contracts as of Feb. 21. Most-active CBOT futures hit some milestone lows on Friday.

Strong U.S. soy shipments to China continued in February, and exports to all destinations last month may have soared 30% above normal. Separately, corn was a 10-year low and soy exports were a five-year low. Corn to Colombia was down 89%, and those two countries normally combine for about a quarter of annual U.S. corn exports. Brazil’s January corn exports were 39% above the month’s prior high and more than double the volumes of the previous three Januarys. Thursday’s export sales report showed last week’s corn shipments were the highest of the marketing year so far.

The agency slashed Argentina’s 2022-23 soybean crop to 33 million tonnes from 41 million last month, well below the average trade guess of 36.65 million. USDA's Argentina soybean productionUSDA chopped Argentina’s corn harvest to 40 million tonnes from 47 million last month, below the trade guess of 43.4 million. As of now, USDA’s Argentina soy crop estimate is 35% below the agency’s original peg of 51 million tonnes. USDA’s Argentina corn number is down 27% from its initial forecast, compared with initial-final losses of 34% in 2009 and 20% in 2018. In the past five marketing years, global corn SU averaged 23.9% and soybean SU 19.9%.

LATEST DATAThe week ended Feb. 7, the last available week of CoT data, featured mild declines across most-active CBOT corn, wheat, soybean and soy product futures. In the four weeks ended March 7, most-active CBOT corn is down 6% and CBOT wheat has fallen 7%. Daily fund estimates collected by Reuters suggest that between Feb. 8 and March 7, commodity funds were net sellers of 42,500 CBOT corn futures and 38,000 CBOT wheat futures. Funds’ net long in soybean meal would be record-large per the trade estimates. CBOT corn and wheat have recently traded as if the Ukraine grain export deal will be extended before its March 18 expiration despite Russia’s resistance.

U.S. corn export sales for 2022-23, which ends on Aug. 31, totaled 29.2 million tonnes (1.15 billion bushels) through Feb. 23. Through Feb. 23, China had booked about six U.S. corn cargoes since late January for delivery in the current marketing year. Since July, Brazil has shipped over 45 million tonnes of corn, well above the prior record of 36.4 million set three years ago. Preliminarily, Brazil shipped 2.3 million tonnes of corn last month, down sharply from January’s 6.2 million and the lowest monthly volume since June. USDA’s latest predictions show Japan’s 2022-23 corn imports flat on the year around 15 million tonnes, which suggests Japanese buyers still have substantial corn needs to cover.

Although winter weather has been gentle to Ukraine’s crops, the ongoing conflict has reduced the country’s 2023 winter wheat plantings 22% below last year’s harvested area. CROP CONDITIONSRecent rains for parched winter wheat in the U.S. Plains have also added to wheat market pressure, though updated crop conditions released late on Monday suggest risks remain. Winter wheat in Texas and Oklahoma is not doing well, but it is better than a year ago. This week, Oklahoma is at 36% GE versus 17% a month ago, 31% in November and 11% a year ago. Kansas, Texas and Oklahoma planted half of this year’s U.S. winter wheat acres, and producers there are hoping yields will rebound from last year’s drought.

As of Jan. 31, money managers held a net long of 219,924 CBOT corn futures and options contracts, a net long of 175,504 contracts in CBOT soybeans, a net long of 140,943 contracts in CBOT soymeal, a net long of 31,224 contracts in CBOT soyoil, and a net short of 63,628 contracts in CBOT wheat. That included 18,127 contracts of corn, soybeans 29,242 contracts, soymeal 5,440 contracts and CBOT wheat 10,305 contracts. Funds’ Jan. 31 net long in corn was the highest since November, and their net short in CBOT wheat as of Jan. 24 had been the strongest since May 2019. Daily fund estimates collected by Reuters suggest that between Feb. 1 and Feb. 24, commodity funds were net sellers of 26,500 CBOT corn futures and 34,500 CBOT wheat futures. Money managers have not been net sellers of more than 25,000 CBOT wheat futures and options combined over a four-week span since late 2021.

Recent price trends imply better profitability for U.S. farmers to plant corn over soybeans this year, and both analysts and USDA agree corn acres will rise above the year-ago levels. USDA’s 91 million corn acres were nearly identical to the trade’s 90.9 million and above last year’s 88.6 million. I polled Twitter on Wednesday for the most likely surprise in this year’s intentions, offering choices of corn acres high or low or soybean acres high or low. Those long-term tables also had 2023 wheat plantings at 47.5 million acres, soybeans at 87 million and corn at 92 million. USDA’s trend corn yield is calculated with planting progress and summer weather assumptions.

Beijing last week approved planting of genetically modified (GM) corn for this year, though GM acres will likely account for less than 1% of the total corn area. CHINESE ACREAGE TRENDSChina harvests the second largest combined grain and oilseed area in the world after India, some 33% more than in No. On average, China’s area has remained steady over the last decade but is now about 11% higher versus 40 years ago. Additional price gains in the following years encouraged further corn area growth. Since 2007, China’s corn area has increased nearly 60% compared with 5% and 4% gains for rice and wheat, respectively.

Corn planting pace in ParanaParana’s 2021 safrinha crop was its latest planted since at least 2009, so it was especially subject to frost and freeze toward the end of the season. 2 producer of first crop corn, but it does not plant a second crop. Corn planting pace in Mato GrossoAlthough Mato Grosso’s planting pace is not necessarily alarming, it may reduce the corn’s resilience to any potentially tough weather conditions later, and last year provides a great example. May followed the exact same pattern, though Mato Grosso’s corn yields were very respectable last year. Mato Grosso’s biggest risk of late corn planting is the onset of dry season, as early as April.

As of late January, large speculators held moderate to large net long positions across CBOT corn, soybeans and soybean products, and those collectively outweighed their sizable net short in CBOT wheat. CBOT futures have mostly strengthened since then. Black Sea concerns and worsening crops in Argentina also helped CBOT corn drift 0.5% higher in the last 13 days, ending at $6.80-1/2 per bushel Friday. Corn has been the most mild-mannered of CBOT contracts since Jan. 25, trading up or down by less than 2% since then. ESTIMATESAs of Jan. 24, money managers’ net long position in CBOT corn futures and options hit an 11-week high of 201,797 contracts.

USDA’s views of Argentina’s corn and soybean crops landed below trade guesses by more than 1 million tonnes each. Applying those losses to 2023 would yield 34 million tonnes, still much below the current forecast. Rosario also reduced its corn crop outlook to 42.5 million tonnes from 45 million, and USDA made a 10% cut to 47 million from 52 million. Ukraine’s corn exports also increased 2 million tonnes to 22.5 million, well above the grim sub-10 million ideas from mid-last year. USDA took Argentina’s corn exports down with the smaller crop, but it does not ship corn to China.

Bulk exports including corn, soybeans, wheat, cotton and sorghum totaled 146 million tonnes, down 6% from 2021. The average exported cost of U.S. corn, soybeans and wheat all hit new records in 2022 as a result. CHINAU.S. agricultural and related exports to China in 2022 reached a record $40.85 billion, up 14% from the prior high set last year. U.S. corn exports to China last year were down 14% by volume from 2021’s high, and forward bookings are relatively very light. U.S. beef exports to China hit a record 244,000 tonnes in 2022, up 28% on the year and worth $2.16 billion, surpassing pork’s $1.36 billion.

Export inspections, a proxy for actual exports, totaled a preliminary 8.2 million tonnes in January 2023 compared with 6.5 million a year ago and 8.9 million in January 2021. January 2022 soy shipments totaled 6.4 million tonnes, a couple of cargoes above the five-year average. U.S. soy export sales were decent last month as Brazilian farmers have been stingy sellers of their huge impending harvest. Trade estimates ahead of the U.S. Department of Agriculture’s Wednesday supply and demand report suggest analysts are mostly content with the agency’s latest forecast for 2022-23 U.S. soybean exports of 1.99 billion bushels (54.2 million tonnes). Weekly U.S. soybean export inspectionsKaren Braun is a market analyst for Reuters.

Meanwhile, Russia may be emerging as the new leader in sunflower oil trade. Sunflower oil exports, Russia and UkraineGlobally, sunflower oil is the least prominent of the major four vegetable oils (palm, soybean and rapeseed are the others), but it has been a vital source of revenue for Ukraine’s economy. In calendar year 2021, sunflower oil was Ukraine’s highest grossing agricultural export, valued at $6.4 billion. Sunflower meal added another $1.2 billion, and agricultural product exports accounted for 41% of all Ukrainian exports. RUSSIAN RISEIn the 2022-23 marketing year, USDA projects Russia will eclipse Ukraine in sunflower oil exports, accounting for 35% of trade versus 34% for Ukraine.

Combined corn and soy acreage estimates are now closer to 178 million to 180 million rather than 183 million-plus two years ago, keeping primary crop acreage somewhat competitive. Fertilizer prices remain high but have eased since last fall, favorable for corn profitability prospects so long as corn prices do not significantly decline. Insurance price for spring wheat is also set during February, and half of the U.S. spring wheat crop is planted in North Dakota. The state’s spring wheat plantings ended higher than original intentions while corn and soy acres ended lower. Still, U.S. spring wheat acreage in 2022 was down from both intentions and the previous year.

All U.S. winter wheat area is estimated at an eight-year high. Wheat health is better in key soft red winter wheat states like Illinois and Missouri, where GE this week covers 69% and 68% of the crop, respectively. But only 5% of the country’s winter wheat has been sown in these states. Winter wheat at the U.S. level was 34% GE and 26% PVP in the last assessment at the end of November. Hard red spring wheat accounted for 28%, soft white winter 20%, soft red winter 9%, and durum and other wheat accounted for 5% of inspections.

New gross longs were the primary reason for the move, as has been the case in most recent weeks when funds were net corn buyers. CBOT corn ended at $6.83 per bushel Friday, up 5% from the month’s low and stronger than the year-ago $6.36. Most active CBOT wheat futures fell more than 2% in the week ended Jan. 24, including a 16-month low of $7.12-1/2 on Jan. 23. Most-active CBOT wheat had traded between $4.16 and $4.37 per bushel in April 2017. Their net long fell to 135,503 CBOT soymeal futures and options contracts from the all-time high of 150,939 a week earlier.

As of Jan. 19, U.S. soybean sales for 2022-23 totaled 46.5 million tonnes, up 5% from a year earlier. Robust sales are not necessarily needed from here as only 7.6 million tonnes stand between Jan. 19 sales and USDA’s full-year forecast. Net U.S. soybean sales to unknown destinations in 2022-23 are record-large for the date at 4.6 million tonnes. Sales to China of 28.2 million tonnes as of Jan. 19 are up 11% from last year. Some 129,000 tonnes had been sold to China in the week ended Jan. 19, revealed in Thursday’s weekly export sales.

That mildly increases the chance of a bountiful U.S. corn crop, but a disaster cannot be ruled out. La Nina and its warm-phase cousin El Nino usually peak in strength during the U.S. winter. La Nina is on its third consecutive season, but its departure could be near. Although it varied greatly by state, U.S. farmers on average did not produce a stellar corn crop in 2022 due to drought in the west. Recent years where an early-year La Nina gave way to El Nino by year’s end include 2018, 2009 and 2006.

Ongoing drought in Argentina also enticed fund buying last week in corn, soybeans and soybean meal, forcing another managed money record in the latter. Money managers' extension of net longs in CBOT corn, soybeans and meal in the week ended Jan. 17 was the result of new gross longs, which were especially numerous in corn and beans. Managed money net position in CBOT soybean futures and optionsOpen interest in CBOT corn futures and options is at 13-year lows for the time of year after hovering a bit below average during mid-to-late 2022. Through Jan. 17, money managers boosted their net long in CBOT corn futures and options to 192,137 contracts from 149,605 a week earlier. In the last three sessions, most-active CBOT soybean futures fell 2.2%, corn fell 1.3% and soymeal shed 3.6%.

Brazil’s corn exports should wind down in the coming months, inviting the possibility that China turns to the U.S. market. SHRINKING SHIPMENTSThe 2022 U.S. corn crop was smaller than expected and lighter than in the two prior years, curbing export potential. 2 shipper Brazil has the United States in serious jeopardy of losing its corn crown, something many believed could not happen this soon. For context, Brazil’s corn exports first topped 10 million tonnes in the 2010-11 trade year, and they broke 26 million tonnes two years later. Brazil’s 2022-23 corn crop is seen at a record 125 million tonnes, nearly a quarter larger than the recent average.

Most-active CBOT corn futures had declined more than 2% through Jan. 10, and CBOT soybeans fell fractionally. Corn and soybean futures both rose about 3% from Wednesday through Friday. However, strength in corn and soy, along with much lighter-than-predicted Dec. 1 U.S. wheat stocks, allowed CBOT wheat to rise 1.6% in the last three sessions. The managed money net short in Minneapolis wheat futures and options decreased slightly through Jan. 10 to 2,704 contracts. wheat futures and optionsKaren Braun is a market analyst for Reuters.

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