Market News

Rally continues for soybeans, corn, wheat

Soybeans were sharply higher on commercial and technical buying. Contracts followed through on Monday and continued to bounce off of last week’s lows, supported by the strong demand and demand rationing. Rain is delaying early harvest activity in parts of Brazil and leading to condition concerns, and while conditions in Argentina have improved, timely rainfall will be needed in the coming weeks. The big questions hanging over South America are just how much was yield trimmed by the late start to planting and how much of an impact will La Nina have going forward. The trade is also watching domestic weather ahead of spring planting. The USDA’s Ag Outlook Forum is in mid-February, with prospective planting numbers out at the end of March. Soybean meal and oil were also supported by commercial buying.

Corn was sharply higher on commercial and technical buying. Corn also continued to come back from the recent lows, helped out by Ukraine capping corn exports at 24 million tons through the end of June following an agreement between Kyiv, grain groups, and livestock groups. Ukraine’s a competitor on the export market, so this will likely lead to further supply tightness in the U.S. and South America. Russia’s new export tariff on corn starts March 1^st and also runs through June 30^th. Corn is also watching weather in South America. The USDA’s attaché for Argentina now has production at 47 million tons, 500,000 less than the official USDA guess, but left exports unchanged for now. The office did raise Argentina’s sorghum export guess to 1.4 million tons on demand expectations for China. The delays in harvesting beans in Brazil will push back planting of their critical second corn crop. Tuesday morning, China bought 1,360,000 tons of U.S. corn, one of the largest on record, and unknown destinations picked up 102,800 tons, all for 2020/21 delivery. The USDA’s next set of supply and demand estimates is out February 9^th, while quarterly grain stocks are due March 31^st. Ethanol futures were mixed. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday.

The wheat complex was sharply higher on commercial and technical buying. Russia has officially announced new export taxes, probably sending at least some business to the U.S., along with the European Union. The first round goes into effect February 15^th, doubling on March 1^st, and running through the end of June. Condition ratings for U.S. winter wheat are mixed, with the next set of USDA state crop weather stories out in late February. The trade is also monitoring overwintering conditions in the European Union and Black Sea region, along with harvest activity in Australia. The USDA’s attaché in Australia estimates 2020/21 wheat production at 31 million tons, compared to the official USDA guess of 30 million, and the drought ravaged 2019/20 total of 15.2 million tons. Exports are pegged at 21 million tons, compared to 9.136 million last marketing year. DTN says Japan is tendering for 60,715 tons of food wheat from Australia, while Algeria is in the market for 50,000 tons of milling wheat.