Market News

Another higher close for soybeans, corn, wheat

Soybeans were higher on commercial and technical buying, making new highs for the move. There was continued support from the tight domestic soybean supply pushing cash bids higher and solid global demand for vegetable oils. Soybean oil finished above $.60 per pound and May soybeans traded as high as $14.99 and ¾ per bushel during the session. That strength pulled soybean meal futures higher. The USDA’s weekly export sales report is out Thursday and demand from China, or a lack thereof, will be watched closely. Brazil’s 2021 soybean harvest is nearly complete. The USDA’s attaché in Argentina projects 2021/22 planted area at 51.5 million tons, compared to 45 million for 2020/21, down 2.5 million from the prior estimate, assuming higher planted area and improved weather conditions. Export and crush demand are also expected to see year to year increases. Argentina is the world’s biggest exporter of soybean products. Next week, Statistics Canada is set to release 2021 planting intentions projections, with the average guess for canola at 22.6 million acres, compared to about 21 million in 2020.

Corn was higher on commercial and technical buying, notching new highs in the most active months. U.S. planting has been slowed down by cooler temperatures and snow in some areas, while other parts of the region remain dry. Higher cash prices because of the tight domestic supply are also significant factors. Dry weather during key phases of development is expected to lower second crop yields in Brazil. According to reports, condition ratings have dipped in most of Brazil’s key second crop production states, pushing domestic prices higher. Rabobank and AgRural have both lowered their production projections for Brazil this week. Conversely, Argentina is expected to see rain-related harvest delays. The USDA’s attaché in China estimates 2021/22 corn imports at 15 million tons because of expectations for increased domestic production due to high prices and encouragement from Beijing. Commercial stocks are reportedly at a 15-year high and some feed mills reportedly have months of supply on hand with corn auctioned off from state reserves not being used immediately for feed but being moved to end users. Beijing is suggesting lower corn use in feed rations to fight domestic price inflation. 21/22 domestic production is seen at 268 million tons, up 2.8% on the year, with total consumption of 297 million tons. Ethanol futures were ethanol. The U.S. Energy Information Administration says ethanol production last week averaged 941,000 barrels a day, unchanged on the week and up 378,000 on the year, while stocks were reported at 20.447 million barrels, a decrease of 71,000 from the previous week and 7.242 million from this time last year, the tightest supply since mid-November 2020.

The wheat complex was higher on commercial and technical buying. Some of the U.S. winter wheat crop could see freeze damage, with mixed rain forecasts for parts of the central and southern Plains, and dry weather is expected limit spring wheat acreage in the northern and northwestern Plains and Canada. Statistics Canada is scheduled to release planting intention numbers on the 27^th, with an average guess of 23.7 million acres for all types of wheat, compared to just under 25 million acres in 2020. Dry and cold conditions are also an issue in parts of Europe. The USDA’s attaché in China projects 2021/22 domestic wheat production at 135 million tons, up slightly on the year because of a modest increase in planted area. Demand is expected to rise because of increased feed wheat usage. The United Kingdom office sees 2021/22 wheat production at 14.75 million tons, compared to 9.658 million in 2020/21 because of higher planted area. The Kazakhstan office says the 2021/22 planting strategy is expected to be about the same as 2020/21, with production potentially holding steady at 13.2 million tons. France reportedly bought 45,000 tons of wheat from Romania. Customs data from Russia shows January through February wheat exports at 7.6 million tons, compared to 3.67 million the same period a year ago. The trade is also monitoring military tensions between Ukraine and Russia.