Market News

Down day for soybeans, corn, wheat

Soybeans were modestly lower on profit taking and technical selling. Contracts were up early, following bean meal, but sold off with drops in soybean and crude oils. China bought 130,000 tons of U.S. soybeans Monday, with supply and demand numbers out Friday. Beijing is reportedly relaxing its zero-COVID policy, easing some concerns about sustained demand. Still, it’s only a narrow window for U.S. soybeans this year, with Brazil holding the price advantage on beans for delivery early next year, after their harvest starts. Development conditions in Brazil remain generally favorable, with CONAB’s next set of estimates for Brazil scheduled for Friday. Soybean export inspections were below last week and last year, mainly to Mexico and China. Early in the second quarter of the 2022/23 marketing year, U.S. soybean inspections remain behind the 2021/22 pace.

Corn was lower on fund and technical selling, in addition to spillover from the broader market. Corn is watching weather in South America, which continues to generally favor Brazil over Argentina. There are some areas of concern in southern Brazil, but that might be offset in the long run by production in central and northern growing areas. That said – the big test for Brazil will be the second crop, which is planted after soybeans are harvested. Brazil’s second crop is the largest of the three and the source of most of their exports. Export demand remains slow and ethanol demand has gotten softer following a decline in margins. Export inspections were higher than a week ago, lower than a year ago, primarily to China and Mexico. The main competition continues to come from Brazil and Ukraine.

The wheat complex was sharply lower on fund and technical selling, along with the higher trade in the dollar. The fundamentals for U.S. wheat remain neutral to bearish due to slow export demand caused by the relative strength in the dollar, even with tighter global supplies. U.S. export inspections were up on the week and the year, but the overall pace remains behind 2021/22. The Philippines and Mexico led the way. Russia continues to hold a commanding share of the export market due to its price advantage. Ukraine’s Ag Ministry says cumulative 2022/23 exports remain behind 2021/22, hindered by Russia’s invasion earlier this year. There are significant concerns that most of Ukraine’s winter crops were planted after the optimal period. Australia’s ABARES says winter wheat production was a record 36.6 million tons, 1% above 2021, but with quality concerns following heavy rainfall in some areas ahead of and during harvest. Still, there’s a drier pattern on tap for eastern Australia, which should help harvest activity.