Market News

Soybeans rebound, back to watching weather in Argentina

Soybeans were higher on speculative and technical buying. Most forecasts have a return to drier weather in Argentina, with only scattered rain over the next couple of weeks. Conditions have improved slightly and recent rain could help second crop beans, but there’d need to be a sustained pattern shift. Rainy conditions in parts of Brazil have delayed soybean harvest activity. ABIOVE left its outlooks for Brazil’s crop, crush, and exports unchanged at 152.6 million tons, 52.5 million tons, and 92 million tons, respectively. The trade is watching South America closely because of likely export competition from Brazil and the potential for increased soybean product exports because of lower production in Argentina. Additionally, beans might be trying to buy acreage ahead of U.S. planting. Weekly export sales were lower than average at 736,000 tons, mainly to China and Japan, with a cancellation by unknown destinations. The overall pace remains ahead of what’s needed to meet projections for the current marketing year. Domestic demand continues to be strong and crush margins are bullish. Soybean meal futures were up on demand expectations, while bean oil was mixed on bull spreading.

Corn was lower on profit taking and technical selling, unable to break overhead resistance. Corn is watching weather in South America, with questions about improvements in condition for Argentina, along with second crop planting delays in parts of Brazil. That slow second crop planting is due to soybean harvest delays in some areas. CONAB’s updated outlook for Brazil is scheduled for February 9^th. Stateside, early expectations are for an increase in planted acres this year with the USDA’s prospective planting report out at the end of March. A bullish corn export sales report was largely ignored. Sales were nearly 1.6 million tons, significantly larger than average, primarily to unknown destinations, Mexico, and China. There were good new crop sales, mainly to Mexico. Sustained demand from Mexico is a question mark because of an impending GMO import ban. The first shipment of Brazil to China has landed, with 68,000 tons arriving this past weekend.

The wheat complex was mixed. Drought continues to be a big concern in the southwestern Plains, potentially leading to lower hard red winter yields and higher abandonment. Eastern and central portions of the Plains have had some beneficial precipitation, but more will be needed. Conversely, soft red winter growing areas in the eastern and southeastern Midwest are expected to see a wetter weather pattern. The trade also has an eye on the northern U.S. Plains and Canada ahead of spring wheat planting. While export demand is slow, U.S. ending stocks are seen at a multi-year lows. The current marketing year runs through the end of May. The USDA’s weekly report put sales at 136,400 tons, sharply lower than last week, with Egypt and Jamaica topping the list, against a handful of cancellations. Russia continues to hold a large share of the export market due to price. Ukraine is still exporting grain, just at a slower pace. The USDA’s next round of supply, demand, and production estimates is out February 8^th.