Market News

Soybeans, corn see more weather pressure

Soybeans were sharply lower on speculative and technical selling. Some of the drier parts of the Midwest and Plains have seen rain this week, with more on the way for parts of the region. That should help yields following what was a generally hot, dry late July and first half of August in some central and western growing areas. The trade is also monitoring economic concerns in China, which would have at least some impact on soybean demand. Mexico bought 228,606 tons of 2022/23 U.S. soybeans Tuesday morning. Soybean meal and oil were down on follow through commercial selling. Bean oil had additional pressure from another drop in crude, also tied to uncertainties about demand from China. There are reports of the “high probability” of a La Nina event by the start of 2023, which would lead to a drier weather pattern in some key South American growing areas, limiting production and potentially opening the door to more U.S. export business.

Corn was lower on speculative and technical selling. This early week rain in parts of the Midwest and Plains is expected to help stabilize yields. The shift in weather this week is probably too late to really boost yields in parts of the region but will likely help improve the USDA’s good to excellent rating next week and could limit further reductions in upcoming yield projections. The USDA’s first field-based yield guess of the season is out September 12^th. Export demand continues to be slow and ethanol margins have gotten tighter. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. The trade is keeping an eye on the tail end of Brazil’s second corn crop harvest and demand for that crop. There is talk China will start buying some of that second crop earlier than expected because of high domestic prices and a lack of available supplies from Ukraine. Ukraine’s government says that nation will be able to export 3 million tons of grain in September and that could rise to 4 million tons a month if the agreement with Russia holds.

The wheat complex was lower on fund and technical selling. The spring wheat harvest is much slower than average, but the USDA’s good to excellent rating was steady last week, while the winter wheat harvest is nearly complete. Recent rain in the southern U.S. Plains is helping recharge soil moisture ahead of the next round of winter wheat planting. Global supplies are tighter, even as export demand is slow for U.S. wheat. The dollar index was down during most of Tuesday’s regular session for grains and oilseeds but continues to hold much closer to the year’s highs than the lows. A higher dollar makes U.S. goods more expensive on the export market. The anticipated bump in demand for U.S. wheat post Russia’s invasion of Ukraine and India’s crop loss hasn’t materialized. Ukraine is exporting grain, but very little of it is wheat, and there are early expectations for a huge drop in winter grain planting without increased support from Kyiv and an improved pace of sales. There is some rain in the near-term forecast for dry parts of the European Union. SovEcon has Russia’s wheat crop at a record 94.7 million tons, up 3.8 million from their last guess.