OVERVIEW

At close of trading on February 16^th CME corn was down 0.3 percent to 675 cents per bushel and soybeans were less than 0.1 percent in price to 1,526 cents per bushel for March delivery compared to the previous week. Corn price was influenced by higher ethanol production and export demand. Soybean meal was 1.2 percent higher to $492 per ton for March delivery. The market has now accepted projections of crop size and lower stocks as documented in the February 8^th WASDE #633. Commodity exports were not adversely influenced by a moderate rise in the Dollar Index to 104. Higher orders and shipments of corn to China and other importers were recorded by USDA-FAS over the past three weeks following their national holiday period.

Factors influencing commodity prices in either direction over the past four

 weeks included:-

• Fears of a U.S. recession in 2023 have moderated. The Federal Reserve increased the benchmark interest rate by 25 basis points on February 1^st but in the post-release commentary and subsequent presentations including the February 7^th, address when Federal Reserve Board Chairman, Jerome Powell suggested continued moderate increases for successive future rate settings by the FOMC to suppress inflation that he conceded was moderating. Equity markets have fluctuated during the past month with inter-day closing prices showing wide changes on sequential trading days this past week. The GDP for the fourth quarter of 2022 attained 2.9 percent. The January 2023 CPI and WPI that were higher than forecast suggest continued inflation. (Transitory downward pressure on markets)
• The commodities market took the release of the February 8^th WASDE in its stride with minimal response. The major changes comprised a 2.0 percent increase in ending stocks of corn to 1,267 million bushels and a 7.1 percent increase in soybeans to 225 million bushels. (Short-term downward pressure)
• It is evident that polarization in Congress will result in future conflict over funding SNAP, raising the debt ceiling and agricultural legislation including the 2023 Farm Bill. (Ultimately, downward pressure).

• Geopolitical tensions that impact wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Limited restoration of Black Sea shipping was accomplished following security guarantees by Ukraine to the Russian Federation but volume is deliberately restrained. Russia has inflicted extensive and deliberate damage on the agricultural and energy infrastructure of Ukraine including elevators and crushing plants. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)
• There is an expectation of high soybean and corn harvests from Brazil for the 2022-2023 season although recent dry weather may have reduced yields. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
• The Dollar Index (DXY) has ranged from 95 to 116 over 52 weeks but has recently shown less volatility. The DXY was at 101 on June 2^nd peaking at 116 in late October but declining to a range of 103 to 104 during February. The dollar index influences timing and volume of export orders. (Fluctuation in corn and soybean prices, high value depresses U.S. sales)

EXPORTS

The restored and functional ‘legacy’ FAS Export Report released on February 16^th for the week ending February 9^th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 14.14 million metric tons (556.6 million bushels) with 13.7 million metric tons (538.3 million bushels) actually shipped. Net orders for the past week covering the 2022-2023 market year attained 1.0 million metric tons (40.3 million bushels) with 0.67 million metric tons (26.4 million bushels) shipped over the past working week. For the current market year outstanding sales of corn to date are 38.8 percent lower than for the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 1.54 million metric tons (60.5 million bushels), with 0.1 million metric tons (3.9 million bushels) ordered for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

The FAS Export Report for the week ending February 9^th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 8.9 million metric tons (327.9 million bushels) with 39.2 million metric tons (1,349 million bushels) actually shipped. Net weekly soybean orders attained 0.51 million metric tons (18.8 million bushels) with 1.90 million metric tons (69.9 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are 1.0 percent higher than for the corresponding week a year ago. Sales recorded for market year 2023-2024 amounted to 1.2 million metric tons (42.7 million bushels) with sales of 0.26 million metric tons (9.5 million bushels) this past week. (Conversion 36.74 bushels per metric ton)

For the week ending February 9^th 2022 net orders of soybean meal and cake amounted to 270,900 metric tons for the market year 2022-2023. During the past week 204,800 metric tons of meal and cake combined was shipped, representing 4.7 percent of the total 4,402,900 metric tons shipped during the current marketing year. This quantity is 94.6 percent of the volume shipped through the corresponding weeks of the previous market year. For the next market year outstanding sales attained 78,400 million metric tons with 25,000 metric tons sold this past week.

Projected harvests and ending stocks were documented in the February 8^thWASDE #633, posted in this edition. Corn yield attained 173.3 bushels per acre with a crop of 13,730 million bushels. Soybean yield was 49.5 bushels per acre with a crop of 4,276 million bushels. This report was based on actual harvest data and incorporated amended domestic use and export categories. The WASDE presumably considered the predicted impact on world prices following disruption of the 2022 Ukraine crop by the invasion from the Russian Federation.

COMMODITY PRICES

The following quotations for the months of delivery as indicated were posted by the CME at close of trading on February 16^th 2023, compared with values at close of trading on February 9^th 2023 (in parentheses): -

Changes in the price of corn, soybeans and soybean meal over four trading days this past week were:-

Corn: March quotation down 2 cents per bushel. (+0.3 percent)

Soybeans: March quotation down 1 cent per bushel (<-0.1 percent)

Soybean Meal: March quotation up $6 per ton (+1.2 percent)

The NASDAQ spot prices for feedstuffs per short ton at close of trading on February 15^th 2023 with prices for the previous week were:-

• Corn (ZC): $241 ($243). 52-week range $177 to $292
• Soybean Meal (ZM): $474 was $482. 52-week range $311 to $488

Values for other common ingredients per short ton:-

• Meat and Bone Meal, (According to the USDA National AnimalBy-product Feedstuffs Report on February 10^th): $370 to $480; porcine (MN) $400 to $420 ruminant. Price varies according to plant and location
• DDGS, (IA. and other states according to the University of Missouri Extension Service By-Product Feed Price Listing) $280 to $310 per ton. Price varies according to plant and location and is expected to fluctuate with the price of corn
• Wheat Middlings: According to the USDA National Mill-Feeds andMiscellaneous Feedstuffs Report on February 10^th for MO. and other states: $200 to $260 per ton ($235 per ton in early June, with current price reflecting surge and subsequent fluctuation in wheat price following the invasion of Ukraine and from U.S. drought)
• Bakery Meal, (MO & TX): $225 to $240 per ton (unchanged)
• Rice Bran, (AR & TX): $185 to $260 per ton.

For each $1 per ton (2.8 cents/bushel) change in corn the cost of egg production would change by 0.11 cent per dozen

For each $10 per ton change in the price of soybean meal the cost of egg production would change by 0.35 cent per dozen

The respective changes in the spot prices of corn and soybean meal on February 15^th compared with February 8^th would have reduced nest-run production cost for eggs by 0.5 cents per dozen.

*(Rounded to 0.1cent)

COMMENTARY ON AVAILABILITY AND PRICES OF FEED COMMODITIES

The social restrictions imposed in the U.S. as a result of COVID-19, now being eased, were projected to reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2021-2022 requirement, accepting a nominal ten percent addition (E-10) to gasoline. This past week 89.3 percent (was 88.1 percent last week) of the U.S. ethanol fermentation volume was operational, based on the January 2022 U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on higher domestic demand in addition to increasing the quantity that is exported. During November 2022 ethanol exports attained 101 million gallons (1.95 million barrels), down 2.6 percent from October with 58 percent to Canada; European destinations, 11.3; South Korea, 9.5; South and Central America, 7.7; Mexico, 6.3 and the Caribbean, 5.4 percent. Neither Brazil nor China imported ethanol from the U.S in November. U.S. imports in 2021, all from Brazil attained 58 million gallons (1.1 million barrels).

According to the U.S. EIA, for the week ending February 10^th 2022 the industry produced on average 1,014,000 barrels of ethanol per day. This was up1.4 percent from the week ending February 2^nd 2023 and at or above the one million gallon per day benchmark for the fifth consecutive week after three weeks below this level. On February 10^th ethanol stock was up 4.0 percent from the previous week at 25.4 million barrels, representing an approximately 22-day reserve and confirming lower demand, given production level and lower stock. The U.S. Energy Information Administration forecast ethanol production at 970,000 barrels per day during the first quarter of 2023. The White House allowed all-year round 15 percent addition to gasoline resulting in an increase in the blend rate to 10.5 percent average during the past summer. The short-term prospects for increased domestic consumption are unfavorable. 

Many older vehicles cannot use higher than an E-10 blend and drivers are curtailing mileage due to high fuel costs. There are obvious restraints on fuel stations to store and dispense of high-ethanol blends,

Recent Energy Prices:-

• Ethanol quoted on the CBOT (EH) on February 16^th was priced at $2.16 per gallon unchanged over previous months due to lack of trading and compared to a 52-week range of $2.16 to $2.19 per gallon.
• On February 16^th RBOB gasoline traded on NASDAQ (RB) at $2.69 per gallon, up 23 cents (9.3 percent) from the previous week. The 52-week range for RBOB gasoline is $2.30 to $4.22.
• The CME WTI crude price of $78.89 per barrel on February 16^th was $0.48 per barrel (0.6 percent) higher than the previous week although with intra-week fluctuation reflecting the energy market. Hydrocarbon sources of energy are now contributing less to inflation.
• The AAA national average gasoline price declined progressively over successive weeks in late 2022 but recently has trended higher but on February 16^th was 3 cents (0.9 percent) lower than last week at $3.42 per gallon for unleaded regular grade. Gasoline is now $1.26 per gallon more expensive than ethanol but with a 63 percent higher BTU rating.
• The AAA national average diesel price was $4.53 per gallon on February 16^th seven cents (1.5 percent) lower from the previous week but with prospects of continuing rise in price due to a low National stock.
• CME Henry Hub natural gas was priced at $2.47 per MM BTU on February 16^th, up $0.12 (5.1 percent) from the previous week and down $3.16 per MM BTU over seven weeks due to warmer weather and transitory reduced exports..

With most plants among the 198 that were operational on January 1^st 2022 with a combined capacity of 1,134 million barrels per day functioning at 89.3 percent, DDGS is freely available. The University of Missouri Extension Service By-Product Feed Price Listing priced DDGS at $280 to $310 per ton on February 15^th, but will be priced higher reflecting the price of corn. Wide price variation exists depending on supplier, quantity and location. It is axiomatic that the cost of DDGS will reflect changes in the price of corn. Generally DDGS is currently incorporated at moderate inclusion levels in egg-production formulas based on price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS fluctuates in price

The CME soybean price for March 2023 delivery at close of trading on February 16^th was 1 cent per bushel lower to 1,526 cents per bushel compared to the previous week for March delivery. The current price of soybeans is a reflection of availability for domestic consumption and export orders. Soybean meal was up 1.2 percent to $492 per ton for March 2023 delivery. Prices are obviously influenced by projections of yield in the three major producing nations in South America. The downstream freight cost on barges from Midwest Mississippi loading elevators through to export terminals has declined as the rise in river level has allowed larger tows and quicker passage. This has made U.S. corn and soybeans more competitive compared to Brazil and Argentine.

According to a release on February 15^th by the National Oilseed Processors Association, whose members process 95 percent of the U.S. crop, 179.0 million bushels of soybeans were crushed in January 2023 lower than estimates averaging 181.7 million bushels. This value was up 0.9 percent from the previous month, December 2022, at 177.5 million bushels. The January 2023 crush was 1.8 percent lower than the January 2022 value of 182.3 million bushels.

On February 8^th the CME spot price for soybean oil was up 2.4 from the previous week at 62.15 cents per lb. Prices for vegetable oils have fluctuated over past weeks but with a growing market acceptance that total oilseed supply will eventually be limited by a sharply diminished supply of sunflower oil from Ukraine, the World’s largest exporter of this commodity. Ukraine is subject to restraints on cultivation and limits on crushing and exports due to hostilities following the invasion by Russia. Imposition of export restrictions on palm oil by Malaysia will impact prices. It is anticipated that 41 percent of U.S. soy oil was diverted from fuel to biodiesel during 2022.

On February 15^th, the soybean meal spot price quoted on NASDAQ was $474 per ton, $8 per ton lower than the spot price last week and compared to a 52-week range of $400 to $522 per ton.

On February 15^th Meat and Bone meal was priced over a range of $375 to $480 per ton according to the USDA National Animal By-product Feedstuffs Report, Prices quoted were for central U.S. plants but with a wide range based on composition, source and location. Price fluctuation reflects changes in soybean meal and other oilseed meals.

On February 16^th the conversion of the CNY to the BRL was BRL 0.76 up CNY 0.01 from last week. The conversion of the CNY to the US$ was CNY 6.86, up CNY 0.22 from the previous week.

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipated that soybean imports by China would attain 95.0 million metric tons during the 2020-2021 market year but in reality only 60.3 million tons was shipped through August 2021.

For the 2021-2022 market year net export sales of corn were down 0.13 million tons (5.1 million bushels) compared to the previous market year with cumulative exports of 59.764 million tons (2,352 million bushels) 

For the 2021-2022 market year net export sales of soybeans were down 0.11 million tons (4.2 million bushels) compared to the previous market year with cumulative exports of 57.118 million tons (2,099 million bushels) 

COMMENT

Subscribers are referred to the February 8^th 2022 WASDE # 633 in this edition and the USDA quarterly Grain Stocks Report posted under the STATISTICS Tab.

There is currently restricted operation of the free-passage agreement allowing Ukraine to ship commodities from Black Sea ports. Ukraine apparently exported the 2021 crop in storage to make room for the anticipated 2022 harvests of corn and other commodities in progress. Export of grain by Ukraine declined in December 2022 to 4 million tons from 7 million tons in October. The three major grains (corn, wheat and barley) harvested during the 2022/2023 season will amount to 49.0 million metric tons, 42 percent lower than for 2021/2022. Exports were projected to attain 38.1 million metric tons 26.5 percent lower than the previous market year.