This Week in Commodities 03-17-2023

Chinese Buying Spree Turns US Corn Higher

  • May CBOT corn futures added 17 cents this week to close at 634-1/4
  • New crop December CBOT corn futures added 3-1/2 cents this week to close at 561-1/4
  • After being absent from buying US corn since August of 2022, China in four consecutive days bought about 83 million bushels of US old crop corn turning prices higher this week
  • US corn producing areas experiencing drought as of March 14th totaled 31%, this is down substantially from November 1st when 71% of corn producing areas were experiencing drought.
  • CFTC data released Thursday showed Managed Money funds held a 21,058 net-long position in the corn market as of 3-07-2023. This is down substantially from the 200,000+ long position the funds held in early February

Soybeans Pressured by Soybean Meal This Week

  • May CBOT soybean futures shed 30-1/2 cents this week to close at 1476-1/2
  • New crop November CBOT soybean futures shed 44 cents this week to close at 1313-1/2
  • NOPA crush totaled 165.4 million bushels of soybeans in February. This was slightly below expectations and down 7.6% from January but up 0.2% from February 2022
  • The Buenos Aires Grain Exchange slashed its Argentine soybean crop estimate another 4 million tons to 25 million tons. This crop estimate is now 50% lower than where the initial estimate for the crop size started
  • Soybean meal futures shed nearly $20 per ton this week to close at $466 per ton, this was the lowest close since late January for front month soybean meal


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Wheat Turns Higher After Tough Four-Week Stretch

  • May CBOT wheat futures added 31-1/4 cents this week to close at 710-1/2
  • May KCBOT wheat futures added 37-1/2 cents this week to close at 835-3/4
  • May MGEX spring wheat futures added 32 cents this week to close at 860-3/4
  • With spring wheat planting just around the corner, some have started to raise concerns about potential planting delays as many spring wheat producing areas are still under 20+ inches of snow pack
  • As of March 14, the USDA estimated that 53% of US winter wheat areas were covered in drought. 27% of this drought is considered extreme or exceptional
  • The grain markets held up well this week in the face of outside market macroeconomic concerns and weakness in the crude oil market which traded to its lowest levels since December of 2021

Class III Has Huge Week

The April Class III contract closed out Friday at $19.71, an impressive $1.47 jump since last week’s close. The rest of Q2 saw May garner $1.01, while June sprung 77 cents. The most tangible help came from a 20.3750 cent rally in spot cheese to push to $1.97875/lb, in which both blocks and barrels got in on the fun. For most of 2023, blocks had pushed to an uncomfortable premium over barrels, but that corrected in a massive reversal last week. This week, blocks jumped 21.75 cents with barrels rallying 19.00 cents, while the spread stayed at a healthy 3.75 cents. A bit more intangibly, due to a cybersecurity issue, has been the recently-delayed Commitment of Traders report, which are now up-to-date through March 7th. Managed Money traders are still flirting with more than a 4,000 contract net short position, second only to the peak position from 2019. Unfortunately, Class IV futures remained on the sidelines amidst the Class III rebound.


Keegan Madigan

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