Market News

Heavy rainfall in Argentina supports soybeans, corn

Soybeans were higher on commercial and technical buying. There was heavy rain and flooding over the weekend in northern Argentina with more potentially in the forecast for late this week. Some of this year’s crops have likely been lost, the question now is how much. Near term demand looks solid, but there are uncertainties about long term factors. In any event, there’s a long way to go. Over the weekend, Brazil announced new farm subsidies for the 2016/17 and 2017/18 marketing years. Early harvest has begun in Brazil, but farmer selling is slow as producers hold out for higher prices. 5.3% of Mato Grosso’s harvest is complete, compared to 2% a year ago. Soybean meal was sharply higher on spillover from beans, along with product spread activity, which sent bean oil modestly lower. The National Oilseed Processors’ Association reports member firms crushed 160.176 million bushels of soybeans in December, down slightly on the month, but up more than 2 million on the year.

Corn was higher on commercial and technical buying. Corn’s also watching conditions in South America following weekend flooding in northern Argentina and with rain expected in parts of Brazil this week. The trade’s watching a truck strike in Brazil, which could delays shipments. Unknown destinations bought 102,944 tons of 2016/17 U.S. corn. Ethanol futures were higher. According to wire reports, China canceled on several cargoes of ethanol and Beijing’s import tax is expected to jump from 5% to 30%. Recent tariff moves by China are reportedly to shore up the domestic ethanol industry. China’s also scaling back corn production to lower domestic supplies, with the Ag Ministry expecting a 4% decline in 2016/17. Beijing’s National Grain Oils Information Center expects 2016/17 corn imports to be 2 million tons, while the Ag Ministry expects imports to be 1 million tons. Either way, that’s down sharply from 2015/16.

The wheat complex was mixed, mostly higher. Chicago and Kansas City were up on short covering, spillover from corn, and the mostly lower dollar. Kansas City had additional pressure from good weekend precipitation in the Southwestern Plains. Minneapolis was down on profit taking and some early acreage position squaring. Egypt bought 253,000 tons of wheat from Russia and Romania, Tunisia purchased 100,000 tons of optional origin durum, and Turkey picked up 99,000 tons of European Union milling wheat. Japan is tendering for 118,000 tons of food wheat from the U.S. and Canada.