Weather flip flop brings mixed results for grain market

With stocks tight, the U.S. markets likely will trade in their current trading ranges until traders are more comfortable with South American production estimates and the potential U.S. acreage mix.

A lack of corn exports is one hurdle the U.S. needs to overcome to give the market some direction.
File photo

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The grains closed mixed to end the last week of trading of January and the first few days for February. Wheat started the week with gains but lost ground toward the end of the week. Corn opened the week and closed the week with gains but posted losses in the middle of the week. Soybeans started the week on fire and posted solid gains toward the end of the week to lock in a solid weekly gain. But in the end, the grains continued to trade as they have since the start of the year, in a tight trading range.

The week started with soybeans posting sharp gains due to reports of hot dry conditions returning to Argentina. Weather forecasts were calling for a chance for rain, but the rain events continued to fizzle out and get pushed further down the road. In addition, rain continues to plague northern Brazil, slowing down harvest and the planting of the second corn crop. Corn was able to see gains from reports of two export sales of corn to Japan, one for 112,000 metric tons and the second for 111,800 metric tons. Mexico was also in and bought 200,000 metric tons of U.S. corn split equally between old and new crop.

Wheat struggled to start the week but did find strength Tuesday with most of the strength coming from USDA’s Monthly Crop Progress report. In the winter months, states report their Crop Progress reports on the monthly basis and the January report came out Monday, Jan. 30. The reports continued to show a wide variance in conditions.

The states that we monitor on a regular basis reported the following:


  • Colorado: 38% good/excellent, down 12% from December, 
  • Illinois: 69% good/excellent, up 1% from December, 
  • Kansas: 21% good/excellent, up 2% from December, 
  • Montana: 16% good/excellent, down 6% from December, 
  • Oklahoma: 17% good/excellent, down 21% from December,
  • Texas: 14% good/excellent, up 3% from December.

Dry conditions in the southern regions of Brazil are starting to get more attention as most areas have gone 20 plus days without rain. This has resulted in Safras lowering their corn production estimate for Brazil 1.3 million metric tons to 125.3 million metric tons versus USDA’s estimate of 125 million metric tons and versus 116 million metric tons last year.

Private analysts are starting to reduce the size of Brazil’s corn and soybean crops to the point that Brazil’s expected record crop may not be large enough to make up for the drought reduced production in Argentina. Maybe this is why corn and soybeans continue to trade in a trading range.

Light selling was due to month end position squaring, but for the most part, with stocks tight, the U.S. markets will trade in their current trading ranges until traders are more comfortable with South American production estimates and the potential acreage mix in the U.S.

The last week of January’s export sales estimate was friendly to corn and soybeans but a little negative on wheat. Corn saw a sharp increase in exports with sales well over 1 million metric tons while wheat exports continue to struggle. It was expected USDA would decrease wheat’s export pace in their February Crop Production report and some were expecting soybean exports to increase (neither happened in the February 8 report). With last week’s sales pace and the uncertainty surrounding the South American corn crop, it is likely USDA will leave corn exports unchanged in this report. But USDA might cut corn ethanol demand (which it did in the report).

The main focus of trader’s attention continues to be South American weather forecasts.

Argentina’s on and off again rain has heads spinning as this forecast has flipped around faster than a politician’s opinion.

The winter wheat contracts continue to push higher with support coming from drought concerns in the U.S. southern Plains as well as from the escalation in the Ukraine war.

Map showing drought conditions in the United States.
The U.S. Drought Monitor map for Wednesday, Feb. 8, 2023.
Contributed by U.S. Drought Monitor

Although the southern Plains have reportedly received both snow and rain over the past few weeks, some of the driest regions of Kansas, Oklahoma, and Colorado have not seen the moisture and continue to see the wheat crop deteriorate. Mix in the increased escalation in Russia’s missile attacks on Ukraine and you have concerns about the ability to export grains out of the Black Sea region.


Corn continues to struggle as it looks for direction. Slow U.S. exports continue to be the biggest hurdle corn has to clear. Last week’s export sales estimate was a good start to see exports rebound, but it takes more than one week of solid sales to change a trend.

The biggest issue with corn is Brazil. Reports had Brazil’s corn exports for January at an all-time record 6.4 million metric tons. Mix that in with a little technical pressure as March corn has traded to $6.85 10 times since November 7, and failed to close above that level every time. On a positive note, Brazil’s soybean harvest continues to be delayed by rains, which in turn is delaying the planting of the second corn crop, and likely lowering its production potential.

Soybeans continue to be the bright spot in the grains, or at least soybean meal does.

Soybean meal continues to trade to new contract highs with Friday’s performance putting the March soybean meal contract above $500 and closing at the highest level in eight years. Delayed harvest activity in Brazil is adding support to soybeans. But traders are a little worried about China’s retaliation on the U.S. for shooting down their spy balloon.

Informa is estimating U.S. 2023 acreage at the following:

  • Corn acres : 90.5 million, up 1.9 million from last year, 
  • Soybeans: 88 million, up 550,000 acres from last year, and
  • Wheat: 49.8 million, up 4.1 million from last year.

The Stats Canada stocks report was neutral to friendly to the grains as wheat stocks came in as expected while canola stocks were lower than expected. All wheat stocks were estimated at 22.29 million metric tons versus expectations of 22.3 million metric tons. Canola stocks were estimated at 11.36 million metric tons versus expectations of 11.7 million metric tons.

USDA’s February 8 report was considered to be neutral to friendly even though it did show stocks increasing in all three grains. However, the increases were less than expected.

For wheat, USDA only made minor adjustments to food and seed demand. That surprised the trade as most expected to see a cut to exports. In the end U.S. stocks were increased by 1 million bushels, 10 million bushels less than expected. On the world side, USDA made a few more adjustments. Australia’s production was increased to another new record while Russia’s production was increased another 1 million metric tons. On the demand side, USDA put a little more competition in against the U.S. as exports were increased for four major exporting countries (EU, Australia, Russia, and Ukraine) but reduced for only one (Canada).


For corn, USDA cut ethanol production 25 million bushels, which was justified with how slow the ethanol demand has been. That 25 million bushels cut in ethanol resulted in an increase in stocks of the same amount, which put stocks at 1.267 billion bushels, 15 million bushels above expectations. World corn numbers were a lot more friendly as USDA cut both Argentina’s and Brazil’s corn production estimates.

Soybeans were probably the most bearish of the numbers. USDA cut soybean crush by 15 million bushels, which in turn increased stocks by the same amount. This put stocks at 225 million bushels, 14 million bushels above expectations. What makes this cut in crush so much more concerning, it brings into question all of the talk that has been hitting the market about increased crush capacity and the drive to crush soybeans for the renewable diesel fuel market and aviation fuel market. According to USDA, the U.S. is only looking at crushing an additional 26 million bushels of soybeans versus last year.

Rosario Grains Exchange also released their production estimates for Argentina. They put corn production at 42 million metric tons versus USDA’s estimate of 47 million metric tons. Soybean production was estimated at 34 million metric tons, a decline of 2.4 million metric tons from their prior estimate. This would be the lowest production in 14 years if realized. This compares to USDA’s updated estimate of 41 million metric tons.

CONAB released their estimates for Brazil as well. They are estimating corn production at 123.7 million metric tons versus USDA’s 125 million metric tons. Soybean production is estimated at 152.9 million metric tons versus USDA’s estimate of 153 million metric tons.

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