Market News

Grains, oilseeds up, watching supply issues, Ukraine

Soybeans were higher on short covering and technical buying. Grains and oilseeds found support despite the bearish outside markets ahead of an expected interest rate hike from the Federal Reserve. Unless there’s a bullish shock out of the Fed Wednesday, there’s a decent chance grain and oilseeds could give back gains, without some independent support. The USDA’s condition rating for beans declined slightly over the past week and harvest weather generally looks good for most of the region. China is reportedly stepping up purchases of soybeans from Argentina following Buenos Aires’ adjustment to the exchange rate for that crop. That’s in contrast to the declining Chinese demand for beans from Brazil. China’s General Administration of Customs says August imports were 7.17 million tons, including 6.25 million tons from Brazil, down 2.79 million tons on the year, and 286,762 tons from the U.S., up fractionally from August 2021. AgRural says soybean planting is underway in Brazil’s key state of Mato Grosso. Soybean meal and oil futures were supported by demand expectations. Soybean oil is monitoring palm oil planting in Asia, but availability of sprouts and seedlings is reportedly tight.

Corn was higher on short covering and technical buying. Corn bounced off the recent lows, while watching harvest activity, which is a little bit behind average. U.S. exports continue to be impacted by competition from Ukraine and Brazil. There’s still a long way to go for Brazil’s first crop planting, much less the second crop, and forecasts generally point towards a third consecutive La Nina event beginning this winter. AgRural says 22.1% of Brazil’s first corn crop has been planted in central-southern growing areas. Ukraine’s export pace will depend on whether or not that nation’s breakaway republics and Russia decide to escalate the ongoing conflict. The European Union’s crop agency MARS has lowered its corn yield projection because of drought on the continent. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday.

The wheat complex was sharply higher on short covering and technical buying. The fundamental outlook for U.S. wheat remains neutral to bearish because of slow demand, but the USDA is projecting tighter global supplies outside of China, which doesn’t really trade wheat. That supply tightness will only be exacerbated if Russia decides to escalate the conflict with Ukraine, which would further restrict exports, drive prices higher, and create even more issues with global food insecurity, continuing to harm the world’s most vulnerable populations. Russia’s exports have been limited by sanctions and Moscow was already unhappy with the export agreement with Putin unlikely to extend Ukraine’s Black Sea shipping corridor past November 22^nd. Russia’s invasion of Ukraine is also impacting harvest and planting activities. Wheat is oversold with the U.S. spring wheat harvest nearly over and winter planting ongoing. U.S. hard red winter acreage is a big question mark because of the drought or near drought conditions impacting much of the southern and southwestern U.S. Plains. The USDA’s small grains production summary is out on the 30^th with the next set of supply and demand estimates scheduled for October 12^th.