Market News

Soybeans, corn consolidate as wheat gains

Soybeans were mixed on bull spreading, supporting nearby contracts, and pressuring deferred months. Soybeans consolidated after Monday’s gains, continuing to monitor weather in South America. Forecasts for Argentina remain mostly dry over the next two weeks, while parts of Brazil should see more early harvest delays. There are no reported quality issues, yet, for the parts of Brazil seeing those delays and that nation remains on track for record production. The USDA’s next set of supply and demand estimates is out February 8^th, with CONAB’s updated outlook for Brazil the following day. Soybean meal was lower on profit taking, while soybean oil was up on renewable diesel demand expectations. Crush margins remain solid and product spread trade was also a feature for meal and oil.

Corn was mixed on bear spreading, with nearby months down and deferred contracts up. Corn is watching the dry extended forecast for Argentina and Brazil’s soybean harvest ahead of widespread second crop corn planting. Those harvest delays for soybeans in central and western Brazil are delaying second crop planting, but the precipitation should provide a beneficial set-up for development. Export and ethanol demand are bearish, but the cash basis is strong. The U.S. Energy Information Administration’s weekly ethanol production and stocks report is out Wednesday. Export demand should improve in the coming weeks as the U.S. becomes one of the few sources of exportable corn, but it will likely be a narrow window, depending on when Brazil’s second crop harvest starts.

The wheat complex was higher on fund and technical buying. Conditions did improve in some U.S. winter wheat growing areas, but there were month-to-month declines in parts of the hard and soft red winter regions. The U.S. Plains largely remain in some stage of drought, while dry conditions are an issue in parts of the eastern Midwest and excessively wet weather has been a problem in some southeastern growing areas. Fundamentally, supplies are tighter, domestically and globally, accounting for most of the support, and there’s more talk of increased wheat feeding as a replacement for corn. Export demand continues to be slow, with Russia holding most of the market. Ukraine continues to export grain, but at a slower pace due to reported inspection delays by Russia under the Black Sea Grain Initiative.