Weekly Commodity and Energy Report: April 27^th 2023.

OVERVIEW

At 14H00 on April 27^th CME corn was down 5.9 percent compared to the previous week to 626 cents per bushel despite high ethanol demand and continued export orders. Soybeans were down 4.8 percent from last week to 1,426 cents per bushel for May delivery. Soybean meal was 5.3 percent lower to $428 per ton for May delivery but price will fluctuate to reflect the price of soybeans and demand for oil. The market has now accepted projections of crop size and higher stocks as documented in the April 11^th WASDE Report but is anticipating more precise planting and emergence data. Commodity exports that rose this past week were unaffected by a fractional fall in the Dollar Index to 101.05.

WTI was 1.6 percent lower at $77.69 per barrela on April 26^th at close of trading despite a previous announcement of an intended production cut by OPEC.

Factors influencing commodity prices in either direction over the past four weeks included:-

• A mild U.S. recession in 2023 appears more likely following turbulence in the bank sector in both the U.S. and Europe. The Federal Reserve increased the benchmark interest rate by 25 basis points at the March 22^nd FOMC Meeting despite data indicating a gradual decline in inflation. This action was taken against evidence that progressively higher rates are stressing banks. Two failures occurred mid-March, albeit in mismanaged institutions. On March 30^th the Bureau of Economic Analysis issued a revised Real GDP of 2.6 percent for the fourth quarter of 2022. This value is based on increased consumer spending offset by lower investment in housing and a 0.6 percent increase in personal income. The March 2023 CPI (up 5.0 percent) and February WPI (up 3.9 percent) were lower than forecast. On April 27^th initial jobless claims were adjusted downward to 230,000 due to layoffs but offset by job creation amounting to 236,000 for the previous week as documented by the Bureau of Labor Statistics. The March Producer price Index was up 2.7 percent year-over-year and 0.5 percent down from February. These values were lower than expected confirming a cooling in the U.S. economy. This is confirmed by the anemic first quarter GNP increase of 1.1 percent, lower than the 2.0 percent expected and the 2.6 percent growth posted for the fourth quarter of 2022. (Transitory downward pressure on markets)

• It is evident that polarization in the closely divided chambers of Congress will result in conflict over raising the debt ceiling with the White House disinclined to negotiate over reductions in spending. Passage of agricultural legislation including the 2023 Farm Bill will be contentious as SNAP eligibility and other entitlements are a large proportion of the total. A 12^th-hour compromise is expected. (Ultimately, downward pressure).

• A cold snap with frost extending from the Northern Plains to the Texas Panhandle impacted recently planted soy and wheat but corn will be less affected. (Depending on severity will increase prices of affected commodities)
• High water levels along the Mississippi will result in closure of some locks impeding traffic and reducing exports if prolonged disruption occurs.(Temporary reduction in price)

• Geopolitical tensions that impact wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Extension of the Black Sea Grain Initiative for an additional 60 days was reluctantly accepted by the Russian Federation on March 18^th against undisclosed concessions on sanctions. Implementation is impeded by actions of the Russian Federation with threats of non-extension, roiling wheat markets. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)

• The April 11^th WASDE documented unchanged soybean and grain production compared to March with reduced exports from Argentine due to drought. The U.S. will export 12 percent of old crop corn resulting in stable ending stocks. Soybean exports will comprise 44 percent of the old crop with no change in ending stocks and a stable predicted price from March. (Lower domestic prices)

• There is an expectation that Brazil will attain a record soybean harvest of 153 million metric tons with export of 93 million metric tons. Corn harvests from Brazil for the 2022-2023 season will be higher than the previous season although recent dry weather will reduce yields. Corn exports will attain 50 million metric tons (Lower prices in the future subject to favorable reports on crop progress and actual harvests)

• The Dollar Index (DXY) has ranged from 99 to 116 over 52 weeks but has recently shown less volatility with a recent downward trend. The DXY was 101.5 on April 27^th. The dollar index influences timing and volume of export orders. (Fluctuation in corn and soybean prices, high value depresses U.S. sales)

EXPORTS

The FAS Export Report released on April 27^th for the week ending April 20^th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 14.8 million metric tons (581.8 million bushels) with 23.7 million metric tons (935.2 million bushels) actually shipped. Net orders for the past week covering the 2022-2023 market year attained 0.4 million metric tons (15.7 million bushels) with 1.1 million metric tons (42.4 million bushels) shipped over the past working week. For the current market year outstanding sales of corn to date are 37.9 percent lower than for the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 2.4 million metric tons (95.3 million bushels), with no orders this week for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

The FAS Export Report for the week ending April 20^th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 3.9 million metric tons (143.5 million bushels) with 46.7 million metric tons (1,717 million bushels) actually shipped. Net weekly soybean orders attained 0.3 million metric tons (11.4 million bushels) with 0.5 million metric tons (16.6 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are equivalent to the corresponding week a year ago. Sales recorded for market year 2023-2024 amounted to 1.8 million metric tons (65.0 million bushels) with no sales this past week. (Conversion 36.74 bushels per metric ton)

For the week ending April 20^th 2022 net orders of soybean meal and cake amounted to 153,400 metric tons for the market year 2022-2023. During the past week 453,700 metric tons of meal and cake combined was shipped, representing 6.5 percent of the total 7,013,100 metric tons exported during the current marketing year. This quantity is 0.4 percent higher than the volume for the corresponding weeks of the previous market year. For the next market year outstanding sales have attained 343,500 million metric tons with no orders this past week.

The annual 2023 USDA Prospective Plantings Report, released on March 31^st predicted:-

• Corn area planted for all purposes in 2023 will attain 92.0 million acres, up 4 percent or 3.42 million acres from last year. Compared with last year, planted acreage is expected to be up or unchanged in 40 of the 48 estimating States.
• Soybean area planted for 2023 is estimated at 87.5 million acres, up slightly from last year. Compared with last year, planted acreage is up or unchanged in 15 of the 29 estimating States.

The preference for corn is based on a favorable corn to soy benefit ratio.

The USDA Grains and Oilseeds Outlook released on February 23^rd documented initial 2023 planting intentions, ending stocks and prices for the major agricultural commodities. This data was updated in the Prospective Plantings Report above.

Crushers are expected to produce 54,475 million tons of soybean meal. Ending stocks will be up 35.0 percent to 450,000 tons depressing price from the previous season by 8.8 percent to $410 per ton.

Actual 2022 corn and soybean harvests and projected ending stocks were documented in the April 11^thWASDE #635, posted under the STATISTICS Tab. Corn yield attained 173.3 bushels per acre with a crop of 13,730 million bushels. Ending stock will attain 1,342 million bushels. Soybean yield was 49.5 bushels per acre with a crop of 4,276 million bushels. Ending stocks were projected to be 210 million bushels. The April WASDE report was based on actual harvest data and values incorporated amended domestic use and export categories. This WASDE report presumably considered the predicted impact on world prices following disruption of the 2022 Ukraine crop following the invasion of Ukraine by the Russian Federation. Values will be updated when WASDE #636 is released in mid-May incorporating planting intentions, harvests in South America and world trade.

COMMODITY PRICES

The following quotations for the months of delivery as indicated were posted by the CME at 14H00 EDT on April 27^th 2023, compared with values at 14H00 on April 20^th 2023 (in parentheses): -

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

Corn: May quotation down 39 cents per bushel. (-5.9 percent)

Soybeans: May quotation down 72 cents per bushel (-4.8 percent )

Soybean Meal: May quotation down $24 per ton (-5.3 percent)

The NASDAQ spot prices for feedstuffs per short ton at close of trading on April 26^th 2023 with prices for the previous week were:-

• Corn (ZC): $231 was $240 (down 3.9 percent from the previous week). 52-week range $198 to $289
• Soybean Meal (ZM): $435 was $452 (down 3.8 percent from the previous week). 52-week range $403 to $484

Values for other common ingredients per short ton:-

• Meat and Bone Meal, (According to the USDA National AnimalBy-product Feedstuffs Report on April 14^th): $450 to $525 for porcine (ex MN); $400 to $485 for ruminant (ex Central states). 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) $275 to $320 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 April 14^th for MO. and other states: $150 to $180 per ton (Current value reflects 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): $220 to $255 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 April 26^th compared with April 19^th would have decreased nest-run production cost for eggs by 1.6 cent per dozen.

*(Rounded to 0.1cent)

COMMENTARY ON AVAILABILITY AND PRICES OF FEED COMMODITIES

The latest U.S. Energy Information Administration (U.S. EIA) report estimated that fuel ethanol blending would average 990,000 barrels per day in 2023, up 1.2 percent from 2022. This past week 85.1 percent (84.4 percent last week) of the U.S. ethanol fermentation volume was operational, based on the January 2022 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 January 2023 (the last month for which data is available) ethanol exports attained 118 million gallons (2.81 million barrels), up 63.8 percent from December 2023 with 40.3 percent to Canada; 15.2 percent to the U.K.; South Korea, 12.2; India, 7.1; E.U. Nations, 6.4; Central and South America, 6.3; Mexico, 4.1; Caribbean, 0.5; China, 0.5 percent. Brazil has not imported ethanol from the U.S. since November 2022.

According to the U.S. EIA, for the week ending April 21^st 2023 the industry produced on average 967,000 barrels of ethanol per day. This was 5.6 percent down from the week ending April 14^th 2023 and reverting to below the one million gallon per day benchmark. On April 20^th ethanol stock was down 3.9 percent from the previous week at 24.3 million barrels, representing an approximately 20 day reserve and confirming higher demand, given relative changes in the weekly production level and stock. The U.S. Energy Information Administration forecast ethanol production at 970,000 barrels per day during the first quarter of 2023 although volume was exceeded. The short-term prospects for increased domestic consumption are unfavorable despite bipartisan bills in Congress to permit year-round E-15 blend. Many older vehicles cannot use higher than an E-10 blend and there are obvious restraints on fuel stations to store and dispense high-ethanol blends without extensive capital investment in tanks and multi-blend pumps,

Current Energy Prices:-

• Ethanol quoted on the CBOT (EH) on April 26^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 April 26^th RBOB gasoline traded on NASDAQ (RB) at $2.56 per gallon, down five cents (2.3 percent) from the previous week. The 52-week range for RBOB gasoline is $2.08 to $4.28.
• The CME WTI crude price is responding to increased concern over lower supply due to announced OPEC production cuts despite predictions for a World recession. Price was down $1.24 (1.6 percent) to $77.69 per barrel on April 26^th compared to the previous week. Hydrocarbon sources of energy are now contributing less to inflation than during the first quarter of 2023.
• The AAA national average gasoline price is trending higher and on April 26^th was three cents (0.8 percent) lower than last week at $3.65 per gallon for unleaded regular grade. Gasoline is now $1.49 per gallon more expensive than ethanol but with a 63 percent higher BTU rating.
• The AAA national average diesel price was $4.16 per gallon on April 26^th four cent per gallon lower than the previous week but with prospects of a future rise in price due to a low national stock, although following the WTI price.
• CME Henry Hub natural gas was priced at $2.31 per MM BTU on April 26^th up 12 cents (5.5 percent) from the previous week now above the 2023 market bottom.

INGREDIENTS

DDGS is freely available with most plants among the 198 operational on January 8^th 2022 (the last available estimate) with a combined capacity of 1,134 million barrels per day functioning at 85.1 percent. The University of Missouri Extension Service By-Product Feed Price Listing priced DDGS at $275 to $320 per ton on April 26^th. 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 with an appropriate lag period. 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 May 2023 delivery at 14H00 on April 27^th was down 4.8 percent to 1,426 cents per bushel compared to the previous week at 1,498 cents per bushel for May delivery. The current price of soybeans is a reflection of availability for domestic crushing, consumption and export orders. Soybean meal was down 5.3 percent to $428 per ton for May 2023 delivery. Prices are obviously influenced by projections of harvest in the three major producing nations in South America terminals.

According to a release on April 17^th by the National Oilseed Processors Association, whose members process 95 percent of the U.S. crop, 185.8 million bushels of soybeans were crushed in March 2023, the second highest March crush recorded and higher than estimates averaging 183.4 million bushels. Crush volume was up 12.1 percent from the previous month of February 2023, at 165.4 million bushels.

On April 26^th the CME spot price for soybean oil was down 0.7 cents per lb. (1.3 percent) from the previous week to 52.5 cents per lb. Prices for vegetable oils have fluctuated over past weeks but with supplies in excess of demand especially for Asian palm oil. Nevertheless there is 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. It is anticipated that 41 percent of U.S. soy oil was diverted from fuel to biodiesel during 2022.

On April 26^th, the soybean meal spot price quoted on NASDAQ was $435 per ton, $17 per ton lower than the spot price last week and compared to a 52-week range of $378 to $496 per ton.

On April 14^th Meat and Bone meal was priced over a range of $400 to $525 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 April 27^th the conversion of the CNY to the BRL was BRL 0.72 up CNY 0.01 from last week. The conversion of the CNY to the US$ was CNY 7.14, down CNY 0.15 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 March 11^th 2023 WASDE #635, the USDA quarterly Grain Stocks Report and the USDA Grains and Oilseeds Outlook posted under the STATISTICS Tab.

Currently there is restricted operation of the Black Sea Grain Initiative (BSGI) allowing Ukraine to ship commodities from functioning ports. 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. Since inception of the agreement 24 million tons of grains have been exported through the Black Sea Corridor. The BSGI has been extended beyond the March 18^th termination date but only for 60 days. It is unknown whether the United Nations negotiators relaxed sanctions on exports of Russian agricultural commodities including fertilizer to achieve a settlement. Extension of the BSGI is unlikely given the reluctance of the G7 and NATO nations to lift sanctions on the Russian Federation.