Market News

Domestic demand supports soybeans, corn

Soybeans were higher on commercial and technical buying. Malaysian palm oil futures hung around recent four year highs heading into Wednesday and NOPA crush numbers were bullish. In January, member firms crushed 160.621 million bushels, larger than expected, in addition to be up on the month and the year. South American harvest conditions generally look good. Soybean meal was sharply higher and bean oil was lower on aggressive product spread trade. Bean oil was also pressured by a year to year increase in stocks. The USDA’s 2017 baseline acreage projections are out this week.

Corn was higher on commercial and technical buying. Corn’s also watching harvest conditions in South America, along with the planting of Brazil’s second corn crop. Domestic demand should remain strong, but there’s a lot of export competition on the horizon. For now, U.S. corn is still cheaper than Brazil. Brazil’s government currently has production at 90 million tons, 30 million of that from the first crop. According to Allendale, Argentina is negotiating with Mexico for increased corn access, potentially taking advantage of the strained relationship between the U.S. and Mexico. Ethanol futures were higher, with average daily production declining for a third straight week.

The wheat complex was mostly higher on commercial and technical buying. The supply side of the market remains bearish, but wheat’s reluctant to sell-off too far, too fast. Near term forecasts for the Midwest and Plains are warmer than normal and there’s potential for winterkill if there’s a cold snap. It is only mid-February, so there’s still a significant chance. March Minneapolis was the exception, down fractionally on spread trade.