Market News

Soybeans see profit taking as corn ekes out firm finish

Soybeans were lower on profit taking and technical selling. Soybeans were watching U.S. harvest activity and planting in South America, with spillover pressure from the higher trade in the dollar. Crude oil was down early but rallied on signals OPEC and Russia will cut back production. On the domestic side of things, there are concerns about interior movement because of low river levels, with at least one section of the Mississippi River below St. Louis closed due to groundings and water restrictions. For South America, rain is falling in some key growing areas of Brazil, but large swaths of Argentina remain dry. China is on their Golden Week holiday, which could limit export demand. That won’t show up until next week’s report. This week’s sales numbers are out at the usual time Thursday morning. ANEC projects 2022 soybean exports for Brazil at 75.5 million tons, up 1.5 million from the last guess. Most of that will go to China. Soybean meal was lower and bean oil was higher on the adjustment of product spreads. The USDA’s attaché in Malaysia estimated 2021/22 palm oil production at 18.2 million tons, 800,000 less than the official guess due to labor issues, with 2021/22 exports at 16 million tons, a half a million below the prior projection from the office because of that decline in production and increased competition from Indonesia. The attaché has 2022/23 production at 19 million tons with exports of 16.45 million.

Corn ended a two-sided session modestly higher on short covering and technical buying. Corn was monitoring the U.S. harvest pace ahead of a possible frost/freeze event in some northern areas later this week, along with South American planting. Planting is being delayed by dry conditions in parts of Argentina, while the planting of Brazil’s first crop is being aided by beneficial rainfall. ANEC sees Brazil’s 2022 corn exports at 41 million tons, steady with the previous projection, but with the association anticipating strong sales this month. Ethanol production was up on the week, but well below a year ago. The U.S. Energy Information Administration says ethanol production averaged 889,000 barrels a day last week, up 34,000 on the week, but down 89,000 on the year, with stocks at their lowest level for the year-to-date at 21.685 million barrels, a decrease of 1.006 million from the previous week, but an increase of 1.754 million from a year ago. The RFA says August ethanol exports were the lowest in more than a year at 77 million gallons, down 28% from July, but that did include 52.9 million gallons to Canada, the 17^th month in a row with that nation taking the top slot. DDGS exports were 981,020 tons, a three-month low and a decline of 7% from July, with Mexico accounting for a fifth of the total. The USDA’s attaché for China estimates 2022/23 domestic production at 270 million tons, down 2.5 million from the office’s last guess because of smaller planted area and lower yields following heavy rain in northeastern growing areas. 2022/23 imports by China are seen at 18 million tons ahead of a corn trade pact with Brazil taking effect later this year.

The wheat complex was mixed, mostly modestly higher, largely ignoring the gains in the dollar. The complex is waiting for new developments in the war between Russia and Ukraine. Russia is reportedly set to fully occupy illegally annexed portions of eastern Ukraine but has run into heavy resistance with Ukraine retaking some ground. For now, Ukraine’s Black Sea exports are still moving out, but Moscow is unlikely to extend that corridor past the November 22^nd end date and the continued conflict is expected to drastically slash winter wheat acreage in Ukraine. Export demand for U.S. wheat continues to be slow, but that could change because of the probability of that shutdown in movement from Ukraine and the continued sanctions impacting trade with Russia. There’s at least some rain in the near-term forecast for dry parts of the southern and southwestern U.S. Plains with the possibility of more next week, but the big test for that region will be what condition the hard red winter crop is in when it emerges from dormancy next spring. The European Union says wheat exports for the marketing year to date are 9.15 million tons, compared to 9.48 million this time last year.