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Canada Know-Risk Market Outlook | Argentina Soybean Production Could Be 30 MMT

By: Craig Turner, Senior Risk Management Consultant

Canada Know-Risk Market Outlook 
 
Craig Turner
Office: 312-706-7610
Twitter: @Turners_Take
Network: LinkedIn
 

Canola down 3, soybeans down 4, corn down 2, HRS down 7, HRW up 2, SRW up 1.

GRAINS & OILSEEDS | Overnight trading volumes are lower than average.  Canola, wheat, soybeans and corn are all trading in a tight range.  Traders don't want to take on many new positions with the USDA March WASDE coming out tomorrow at 11am CT.  The trade is looking for cuts in Arg production but also cuts in demand.  The net could be a wash and a neutral report.

The March WASDE is usually not a game changer. The big report in March is the last day of the month when we see Quarterly Stocks and the annual Prospective Plantings report.  The early thoughts are farmers will try to plant corn when possible and maybe spring wheat too up in the N. Plains.  Soybeans could be flat and no one seems excited about planting oats.

Australia's BARES yesterday raised their 2022/23 (old crop) wheat production estimate from 36.6 to a record 39.2 MMT!  That also helps explain some of the price weakness in the global export market.  However, they see new crop production lower for 2023/24 at 28.2 MMT due to unfavorable weather and soil conditions.  Australian canola production came in at 8.3 MMT (old crop), and that is up from 6.8 MMT in 2021/22.  This is three consecutive years of higher canola production out of Australia.

Argentina is still in drought and the trade is talking about sub 30 MMT soybeans and corn in the mid 30s.  That is more bullish for soybeans (and oilseeds overall) than it is for corn and other grains.  Canola should find support due to the disappointing soybean production out of S. America this season.

The loss of production in S. America and the continued fighting in Ukraine puts the three major grain/oilseed markets in a tough position.  Growing weather in N. America, Europe, and the Black Sea will be followed closely and there is no room for error again this growing season.  Rallies in new crop will be selling opportunities.  

Old crop soybeans could rally to $16 or higher if Arg production is sub 30 MMT. That could drag old crop canola to $850 or higher IF we have weather issues this summer.  Farmers looking to have more exposure to old crop canola this summer should look at July calls.

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