Market News

Soybeans extend gains, corn and wheat mixed

Soybeans were sharply higher on commercial and technical buying. Most forecasts have a return to hot, dry weather in Argentina and southern Brazil next week. That’s expected to further lower yield potential for both of those key producers. Several private and governmental entities have issued reduced production projections for South America over the past few weeks. Harvest is just getting underway in portions of northern and central Brazil. The USDA’s next set of global production projections is out February 9^th, while CONAB will update its outlook for Brazil on February 10^th. The Buenos Aires Grain Exchange says 30% of Argentina’s soybean crop is rated good to excellent, 1% lower than the last report, with 95% of the crop planted. Soybean oil was up sharply on the strength in global vegetable oils, which has been supported by supply and demand fundamentals, while meal was mixed on bull spreading. China’s General Administration of Customs says China bought 58.15 million tons of soybeans from Brazil in 2021, down 9.5% from 2020, with purchases from the U.S. at 32.3 million tons, up 25%.

Corn was mostly modestly lower on spread trade and profit taking. Corn consolidated, while also continuing to monitor conditions in South America. Similar to soybeans, some yield potential has been lost, but the big thing for South American corn production will be the performance of Brazil’s second crop, the largest of their three crops and the source of most of their exports, which is planted after soybeans. The Buenos Aires Grain Exchange says 22% of Argentina’s corn crop is in good to excellent shape, 1% less than last week. There’s been talk, but no confirmation, of China buying U.S. corn and soybeans. Export demand remains slow, but has shown signs of improving, while ethanol margins are tighter and well below the late 2021 highs. The U.S. Energy Information Administration says ethanol production last week averaged 1.053 million barrels a day, up 47,000 on the week and 112,000 on the year, while stocks hit a 48-week high at 23.592 million barrels, 681,000 more than the previous week, but 100,000 less than last year. Ethanol futures were unchanged.

The wheat complex was mixed, with Chicago and Kansas City down on profit taking and Minneapolis up with light commercial support. Wheat continues to watch the tensions between Russia and Ukraine, two of the world’s biggest wheat exporters. Increased border incursions or outright conflict would not only disrupt the internal export mechanisms of both nations, but would also drastically slow, if not outright halt, the majority of grain movement out of the Black Sea. For now, export demand for U.S. wheat remains slow, with the USDA’s weekly numbers out Friday morning. Dry weather continues to be an issue in much of the U.S. Plains, stretching from southern to north and northwestern portions of the region. Additionally, unless there’s significant relief, those conditions would also impact spring wheat planting, not only in the U.S., but also in Canada. Domestic prospective planting numbers will be out at the end of March. Meanwhile, portions of the eastern Midwest have excessive soil moisture levels. The USDA’s latest set of monthly winter crop condition and weather reports will be out next week. The trade is also monitoring overwintering conditions in the Black Sea region and Europe, along with yield results in Australia. DTN says Japan is tendering for 72,350 tons of milling wheat from the U.S. and/or Canada.