Market News

South American weather uncertainties support soybeans

 

Soybeans were modestly higher on commercial and technical buying. Forecasts for Argentina are mixed, drier in some areas than others, while conditions in Brazil generally look good, with generally favorable temperatures and timely rainfall. The USDA could adjust South American production outlooks further in the supply and demand numbers out February 8th. La Nina conditions are expected to last through summer in the southern hemisphere, winter in the northern hemisphere. Weekly export sales have been delayed until Friday by Monday’s holiday. Soybean meal was higher and oil was lower on commercial spread adjustments. March meal was up for the fourth session in a row with additional support from the concerns about Argentina’s crop conditions. Argentina is a big export competitor for soybean product trade.

Corn was modestly lower on profit taking and technical selling. Contracts managed to stay just above the recent lows thanks to good commercial demand at these price levels and slow farmer selling. Cash sales could pick up after the recent rally and expected near term weather improvement in parts of the Cornbelt. Corn’s also watching weather in South America. The big questions are first crop yield and second crop corn acreage in Argentina and parts of Brazil. Argentina is the third biggest global exporter of corn. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production last week averaged 1.061 million barrels per day, up 65,000 on the week as plants went back on-line after the New Year’s holiday. Stocks were up modestly on the week and sharply on the year.

The wheat complex was mostly modestly higher, with Chicago and Kansas City up on commercial and technical buying. Winterkill concerns are easing in some winter wheat growing areas, but large parts of the Plains remain dry. The full extent of any damage can’t be quantified until the crop comes out of dormancy. While the fundamentals are bearish, there is buying interest at these price levels and wheat is viewed as a good value. Minneapolis was mixed, adjusting spreads, while keeping an eye on moisture levels in the northern Plains ahead of spring wheat planting. Japan bought 24,160 tons of U.S. food wheat, along with 37,383 tons from Canada and 30,190 tons from Australia. DTN says Algeria purchased 100,000 tons of durum, “likely” from Canada.