Commentary
Export sales for Corn came in last week as expected and that gave corn nothing to rally upon today. In fact, Corn dropped eight cents amid a commodity sell-off to begin 2023. The 780K tons sold last week was just over 50 percent of the volume done the same week ago. This brings commitments to 21.4 million metric tons vs 40.7 million a year ago. Of the 19.3 million metric ton lag that sits in the corn sales vs a year ago, China holds 8.6 million of the deficits. It’s interesting that Mexico is only 1.4 million metric tons behind last year and Japan is down 2.1 million metric tons. This is not just one importer but an across-the-board problem the USDA may address sooner than later. Corn commitments are even slower, on a percentage basis, than they were in 2019. In South America, Brazil’s crop is being maintained and helped by rains according to crop scouts. The first corn crop is 97% planted vs 93% last year. Brazil’s corn values continue to gain on US FOB values. Brazil’s discount to US is down to $3/mt today. Argentina’s crop thought is in decline in my opinion. Corn good to excellent ratings held steady at the year’s low (15%) vs 43% last year. The crop’s only saving grace is less of it is in the ground to experience the drought. The crop is 63% planted vs 76% last year. Surprisingly trend and index following funds are net long 167K contracts (as of 12/27) adding a whopping 45K contracts in the second half of December per CFTC data. Given the 30-cent sell-off in beans today, a sizable drop in energies, and a rally in the Dollar, it was no surprise to me that the market gave back some of its recent gains.
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