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Harvested corn acres were primarily lost in western states including Nebraska, Kansas and South Dakota, where drought hit hard this summer. Corn yield came in 0.8 bushel above the average trade guess, which is analysts’ worst performance in the 2022 season. The best analog for 2022 corn production may be 2002, which also featured a western drought. WHEAT AND SOY MISSESDec. 1 U.S. soybean and wheat stocks were both the most bullish versus market predictions since at least 2005. Wheat stocks came in 5% below trade guesses and soybean stocks were 3.6% below.

The ever-important U.S. corn crop may be most primed for a market miss due to an alarmingly low range of guesses. YIELDSAnalysts’ range on U.S. corn yield is a seven-year low and for soybeans it is at least a 13-year low. U.S. farmers did not have a banner corn crop primarily because of drought in western areas. The 2021 corn yield last January was unchanged from November, but otherwise the trade is looking for the smallest January move in corn yield in 14 years. Argentina’s corn crop is seen falling more than 5% to 52 million tonnes from 55 million in December.

The United States was gripped by a frigid Arctic blast in late December, affecting transportation and commerce. The U.S. Department of Agriculture already projects 2022-23 U.S. wheat exports at a 51-year low of 21.1 million tonnes (775 million bushels). That volume is 26% lower than in 2016-17, the last time the United States was the world’s leading wheat exporter. Through the first half of 2022-23, which began on June 1, U.S. wheat exports covered 54% of USDA’s December forecast. U.S. wheat supplies have contracted after two disappointing harvests, driven by both low area and yield.

CORN, SOY, WHEATCBOT corn, soybean and wheat futures declined notably on Jan. 3, the first trading day of 2023. Through Jan. 3, they cut about 3,500 contracts from their stance, resulting in a net short of 52,715 CBOT wheat futures and options contracts. Investors may have reduced CBOT corn length late last week with futures down 2.5% between Wednesday and Friday. Most-active CBOT soybean futures were unchanged over the last three sessions given the poor conditions in Argentina and possibly unfavorable weather in Brazil’s southernmost state offsetting U.S. demand concerns. They expect U.S. corn, soy and wheat ending stock estimates to rise along with Brazilian corn and soy crops, though a sizable decline is predicted for Argentina’s harvests.

Most-active corn futures’ worst recent January performance came in 2010 with a plunge of 14%, and most-active soybeans suffered the same fate that year, falling 13% during the month. That happened in January 2010, when decently bullish speculators heavily sold corn and soy futures in the weeks after the USDA report. Corn & soy futures in JanuaryUSDA INFLUENCEThe January trend in CBOT corn and soybean futures usually mimics price action on the month’s U.S. Department of Agriculture report day, so long as futures move by at least 1% on that day. But corn and soy futures have been uncharacteristically quiet on January report days in the last few years, making it harder to anticipate the trend going forward. January 2021 was the last time most-active corn futures spent more than one day below $5.

But Argentina is starting in a significant moisture hole given that La Nina, the cool phase of the equatorial Pacific Ocean, is hanging around for a third consecutive season. Monthly precipitation in ArgentinaDrought and heat cut Argentina's 2022 soy and corn yields to four-year lows, but the crops are in worse shape now. GOODBYE LA NINA? The calendar year of 2022 was the driest in Argentina’s grain belt since 2008, which started with a strong La Nina that had begun in mid-2007. Weather will matter for Argentina's soy and corn through at least March given the later development.

The managed money meal net long of 129,989 contracts, up about 8,700 on the week, rivals May 2018’s high of 133,549. That is supported by a heavier managed money net long: 128,616 futures and options contracts now versus about 98,000 a year ago. Most-active CBOT soybean futures on Friday settled at $15.24 per bushel, their highest since June. CBOT soybean oil futures expanded 13.3% in 2022 after increasing by a third in 2021, though they declined 3.5% in the latest three sessions. Open interest in CBOT wheat futures and options had ended 2021 at the lowest point for the date since 2008.

Historically, ratios below 2.3 are supportive of corn planting and soybeans dominate around 2.5 and above, but the middle can be gray. The U.S. Department of Agriculture recently slated 2023 corn acres at 92 million, up from 88.6 million this year. Soybean plantings were seen at 87 million acres in 2023 versus 87.5 million in 2022. Prices as of February should better dictate U.S. farmers’ 2023 planting intentions, but for now, corn’s supremacy has slipped. Unsurprisingly, bean acres were higher and corn acres lower than the earliest ideas that year.

CORN AND WHEATMoney managers’ net long in CBOT corn futures and options is now the smallest since the early days of the recent rally in September 2020. Managed money net position in CBOT corn futures and optionsThat was the largest weekly net reduction in corn since August 2019. Most-active CBOT wheat futures lost nearly 7% in the week ended Dec. 6, reaching their lowest level since October 2021. Money managers increased their net short by more than 9,000 to 63,382 futures and options contracts, the most bearish since May 2019. March Minneapolis wheat also notched four-month lows on Dec. 6, and money managers pushed their net short position past 3,000 futures and options contracts.

Nine vessels totaling 606,540 tonnes of Brazilian corn were set for sail to China this month, according to Tuesday’s shipping lineup from Williams Shipping Agency. Phytosanitary requirements prevented China from importing much corn from Brazil before last month, when Beijing approved several Brazilian corn traders for export. China’s remaining U.S. corn balance is thin, with unshipped 2022-23 sales at 1.8 million tonnes as of Nov. 24. Exporter association Anec on Wednesday pegged Brazil’s December soy exports at 1.7 million tonnes, below the five-year average of 2.5 million. China and unknown destinations, frequently assumed to be China, purchased 1.9 million tonnes of U.S. soy in the week ended Nov. 10.

Chicago wheat futures are still elevated versus most years, though they are slipping significantly versus prices elsewhere and against competing grains, even as supplies remain tight. Most-active CBOT wheat settled at $7.29 per bushel Tuesday after hitting a 14-month low. By the first week in March, most-active CBOT wheat had surged more than 50% within 10 sessions. Through Tuesday, CBOT wheat's 10-session decline totaled 11%, almost a record for the time of year. CBOT wheat usually sits at a premium to CBOT corn, but it has lost significant ground to its yellow grain competitor.

That resulted in a corn net long of 191,631 futures and options contracts, a three-week high. Managed money net position in CBOT corn futures and optionsFunds covered gross shorts in both corn and soybeans through Nov. 29, though the addition of new longs was the more prominent feature. Open interest in corn futures and options was down 14% on the year as of Nov. 29, and for soybeans it was down 9%. Corn futures lost 3.5% in the last three sessions, on Friday hitting the most-active contract’s lowest levels since August before settling at $6.46-1/4 per bushel. CBOT soy product futures were up in the week through Nov. 29, soyoil to a larger degree at 2%.

Forecasts suggest La Nina may fade into a neutral phase midway through Argentina’s growing season, but it is too early to say with certainty. Current trade wind and ocean temperatures, including those in the Indian Ocean, could support further strengthening of La Nina in the coming weeks. But that should not necessarily heighten concerns since crop impacts are not perfectly correlated with La Nina strength. Rain during the 2008-09 growing season was less than two-thirds of normal, resulting in terrible crop yields, particularly for soybeans. Growing season rains were a third heavier than usual, and soybean yields were very good, but corn was excellent.

Although most-active CBOT corn futures were unchanged in the week ended Nov. 15, the contract had traded down more than 2% by Nov. 15 before rallying back late in the session. Money managers axed more than 78,000 gross CBOT corn longs in the two weeks through Nov. 15, the most for any two-week stretch since July 2016. The U.S. Department of Agriculture released its monthly supply and demand and U.S. crop production reports during the week ended Nov. 15. Most-active CBOT wheat futures were also unchanged in the week ended Nov. 15 but had been down more than 3% at one point. Money managers were more active on the downswing, reducing their net long by about 11,000 to 92,965 CBOT soybean futures and options contracts.

China accounts for 60% of global soybean imports, and upon arrival, the beans are crushed into protein-rich hog feed to support the country’s strong appetite for pork. When soybean imports are strong, that often indicates healthy feed demand and a sufficiently large hog herd. China substantially upped pork imports in 2019 after disease spread through its hog herd starting in 2018, potentially killing up to 40% of the country’s pigs. China’s pork imports have risen a bit since the mid-year slump due to a notable increase in Brazilian shipments since the beginning of this year. Through October, China’s 2022 soybean imports of 73.2 million tonnes were down 7.5% on the year.

It showed 2022-23 Ukraine corn production at 25.8 million tonnes versus USDA’s official estimate of 31.5 million. However, official USDA estimates also use this general “policy in place” framework, so it is a decent bet that the approach was similar. That means its Ukraine estimates still include Crimea and all Russian-occupied areas, and no land area has been added to Russia. CHINA CORNThe market was tipped off in mid-2020 that something may be amiss with Chinese corn stocks as domestic prices began rallying well before U.S. ones. In other words, it appears USDA does not have hard, indisputable evidence of a strong decline in Chinese corn stocks.

That was funds’ fifth consecutive week selling CBOT wheat, meaning they sold even as Russia pulled out of the Ukraine export deal at the end of October. Wheat futures have shed more than 1% in the last four sessions, ending at $8.18-1/2 per bushel on Monday. Money managers’ gross CBOT wheat longs are the lightest for the date since 2008, and their shorts are largely average. Through Nov. 8, money managers cut their net long in CBOT corn futures and options to 237,662 contracts from 271,960 a week earlier. Managed money net position in Chicago wheat futures and optionsKaren Braun is a market analyst for Reuters.

Over the five reports from August to January, the trade’s January corn yield misses are typically second-largest after August. Corn yield in 2018 and 2020 were unexpectedly revised sharply lower in January, though the seasons were very different. There is a very slight tendency for higher corn and soy yields in November to result in higher yields again in January, and vice versa, but the bias is probably too weak for reliability without additional statistics. U.S. corn and soybean yields - November to JanuaryThe November-January decade trend for soybean yields is evenly split five apiece, and both great and unsuccessful growing seasons sit on either side. Chinese corn, soybean and wheat imports and consumption were also unchanged despite demand concerns driven by mixed messaging on Beijing’s post-pandemic strategy.

The preliminary targets for 2023 corn and soy plantings and yields resemble the year-ago estimates. A year ago, USDA’s 2022 corn and soy acreages started at 92 million and 87.5 million as corn prices were favorable versus soybeans, but high input costs perhaps prevented an aggressive corn estimate. CBOT November soybeans to December cornBut 2022 corn acres fell well short of expectations starting with March intentions, likely because the trade was overestimating the number of available row crop acres. 2023 YIELDSFocus will soon shift to 2023, and USDA’s corn trend yield of 181.5 bpa could already be labeled as controversial. But just for fun, the agency exactly 10 years ago slated 2022 corn yield at 181, the same number shown a year ago.

Crop Watch fields were harvested within the last week, all corn, and two of them fell short of expectations, consistent with this year’s trend. The North Dakota corn ended at 2.75, down a quarter-point from expectations but above last year’s 2. The 11-field average, unweighted 2022 Crop Watch corn yield ends at 3.57, down from 3.7 a week ago. Crop Watch yield scores 2022SIGHTS ON 2023More than half of the Crop Watch producers said they have already purchased seed for 2023 and an even larger share said they had priced next year’s inputs. Most of the Crop Watch producers are in rotation-heavy areas, but acres in North Dakota and Kansas can swing the pendulum.

China remains integral in the success or failure of U.S. corn, soy and other agricultural exports, and corn is currently carrying the biggest burden of proof. Although recent U.S. soy sales to China have weakened, the top buyer has been propping up the numbers by comparison. CORN AND OTHER GRAINAt just 14.1 million tonnes, U.S. corn sales as of Oct. 20 are dismal compared with recent years and expectations. Chinese purchases of 3.6 million tonnes are down from 11.9 million and 10.6 million tonnes by the same date in 2021 and 2020, respectively. Export sales as of Oct. 20 totaled 11.8 million tonnes, the lowest in more than 20 years.

Brazil’s potentially record-breaking soybean crop was 34% planted as of Monday, behind last year’s 38%, and progress slowed significantly in No. The southern state was 44% planted as of Monday, the date’s slowest pace in eight years and about 12 points below average. Soybean planting progress in Parana, BrazilBut Parana’s large second corn crop, planted right after soybean harvest, is certainly at risk if the soy season becomes delayed. The Center West state is among Brazil’s most stable soybean producers as it has not harvested a poor soy crop in seven seasons. A third straight season with La Nina, the cool phase of the equatorial Pacific Ocean, should keep analysts on guard as it tends to dry out Southern Brazil during its growing season.

Crop Watch corn fields were harvested last week: Nebraska and eastern Iowa. The eastern Iowa corn finished at 4.25, down a quarter-point from earlier predictions and a half-point below last year. The Nebraska corn is irrigated this year, but the producer would score his dryland corn yield around 1.5. That would be slightly above the 2020 result, which is consistent with the Crop Watch corn scores in 2022 versus 2020. REST OF HARVESTFour more Crop Watch corn fields remain.

Through Friday, CBOT soybean oil futures had risen 16% this month and Malaysian palm oil futures was up 20% as global vegetable oil supply concerns persist. Managed money net position in CBOT soybean oil futures and optionsBoth soyoil and soymeal futures notched 4% gains in the last three sessions, lifting soyoil above 70 cents per pound. Money managers in that period reduced their net long in CBOT corn futures and options by about 13,000 to 254,261 contracts. Funds’ net long in corn is larger than in the same weeks in 2021 and 2020, both of which were around 220,000 contracts. Money managers cut nearly 2,600 contracts from their CBOT wheat net short, which fell to 22,051 futures and options contracts.

Extreme fall dryness is more concerning for the U.S. winter wheat crop since there is less recovery time. However, the recent spread of dryness is alarming, as Midwest drought coverage was just 10% in mid-September versus 43% this week. Summer weather was largely supportive, and Nebraska’s 2021 corn yield was an all-time high. Fall of 2003 was one of the driest on record, and the 2004 corn yield was among the most impressive ever. And despite the terribly dry finish to 2012, the 2013 U.S. corn yield was respectable given the circumstances.

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