January 22 - Wall Street euphoria pushed the S&P 500 stock index to a fresh record high this morning boosted by mega cap and chip stocks, while the commodity sector also boasted a positive bias on the screen as well. The VIX continues to trade just above 13 at midday, while the dollar index is trading quietly near 103.2. Yields on 10-year Treasuries are trading near 4.10%, while yields on 2-year Treasuries are trading near 4.38%. Crude oil prices rose by more than 2%, testing areas of overhead chart resistance, as Middle East geopolitical risks escalated. Grain and oilseed prices also moved into positive territory during the morning, although the rallies there continue to be met by willing sellers. Strength in the crude oil market gave a boost to soyoil prices, which then added support for soybeans. Even so, the grain and oilseed sector remains well supplied, with producers on both sides of the equator currently undersold and looking for rallies to sell. The protein complex spent the bulk of the morning in the red, led by the feeder cattle complex as the activity picks up in the auction barns after adverse weather kept it quiet there in recent weeks.
USDA inspected 42.7 million bushels of soybeans for export in the week ending January 18, as shown below, along with 28.1 million bushels of corn, 11.6 million bushels of wheat and 3.1 million bushels of grain sorghum. The portion of the above that was inspected for shipment to China included 29.4 million bushels of soybeans, 0.07 million bushels of corn, 3.3 million bushels of wheat, and 3.1 million bushels of grain sorghum. Marketing year to date wheat export inspections fall short of the seasonal pace needed to hit USDA's target for the year ending May 31 by 52 million bushels, where the deficit has largely been holding for a while now as China has been slow to take shipment of its large purchases this winter. On the other hand, marketing year to date grain sorghum export inspections exceed the seasonal pace needed to hit USDA's target by 36 million bushels, because China has largely been taking shipment of its purchases of the feed grain.
USDA has inspected 983 million bushels of soybeans for the marketing year to date, down from 1.192 billion bushels at this point last year. As such, this year's total falls short of the seasonal pace needed to hit USDA's target by 53 million bushels, and the deficit is 10 million bushels wider this week than it was last week. We're basically where we were a few weeks ago, when I stated that we could see USDA cut its soybean export target in the January 12 WASDE report. It did not do so. So, now we'll watch to see if it does so in the February report. Soybean bulls have been holding out hope that Brazil's crop will be so short - due to hot dry conditions in Center-West Brazil - that it necessitates an increase in U.S. exports. Thus far we see no evidence of that in Brazil's cash market, with soybeans booked for shipping in February, March, and April running roughly $2 per bushel cheaper than U.S. Gulf soybeans shipped into China, after freight, currency, and import taxes are considered. Brazilian basis has fallen sharply as harvest has begun, reflecting little worry about the crop size. Meanwhile, marketing year to date corn export inspections total 579 million bushels, up from 453 million the previous year, and 17 million bushels above the seasonal pace needed to hit USDA's target for the year. The next several months are seasonally our strongest corn shipping period of the year ahead of Argentina's crop harvest.
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