Market News

Commercial demand supports soybeans, corn

 

Soybeans were higher on commercial and technical buying. Many forecasts for most of South America this week have more scattered rainfall, while some areas should remain dry. The USDA last week raised its soybean production estimate for Brazil, while lowering the outlook for Argentina. Parts of Brazil could see heavier rainfall during early harvest activity, which would also impact the planting of that nation’s second corn crop. Current La Nina conditions are expected to persist through summer in the southern hemisphere. The USDA’s attaché in Buenos Aires says 90% of soybeans have been planted in Argentina and while most of the crop is in good shape, it’ll need timely rainfall, and the biggest issues could be faced by second crop beans. Soybean meal was higher and bean oil was lower, adjusting product spreads and reacting to the crush numbers from the National Oilseed Processors Association. NOPA member firms crushed 166.382 million bushels of soybeans during December, a new monthly record and up 4% on the year. Bean oil stocks were up and while meal production increased, so did exports.

Corn was modestly higher on commercial and technical buying, along with spillover from beans. Corn’s also watching weather in South America, along with cold temperatures in the U.S. Plains and Midwest that could mean at least a short term increase in feed demand. Contracts stayed near Friday’s new lows and within the recent tight trading range, with any significant upside still limited by the large available supply and slow export demand. Ethanol futures were mostly weak. The weekly EIA production and stocks numbers are delayed until Thursday. Weekly export sales are pushed back until Friday. According to wire reports, Brazil’s government is considering removing their 20% import tax on U.S. ethanol, but that could be dependent on the U.S. lifting a ban on fresh beef imports from Brazil. Ukraine’s UkrAgroConsult lowered its 2017/18 corn export estimate to 19 million tons because of a smaller domestic crop and increased competition from South America.

The wheat complex was mixed, mostly modestly lower. Last Friday’s USDA numbers reinforced the bearish fundamentals, especially on the supply side of the market, pressuring Chicago and Kansas City. Winterkill continues to be a background concern, but temperatures are expected to warm up a bit in the near term and in any event, it probably wouldn’t be a bigger factor until the crop emerges from dormancy and the damage could be assessed. Another issue is the drought or near drought conditions in the northern Plains ahead of spring wheat planting. Minneapolis was mixed, mostly firm, on commercial spread trade. Egypt is in the market for an unknown amount of wheat from Russia and Japan is tendering for 91,733 tons of food wheat from the U.S., Australia, and/or Canada. DTN says Tunisia is tendering for 92,000 tons of milling wheat and 75,000 tons of durum, while Algeria is in the market for an unknown amount of durum and Jordan is tendering for 50,000 tons of milling wheat – all optional origin.