Market News

Another round of highs for soybeans

Soybeans were higher on commercial and technical buying, notching more contract highs. The trade continues to monitor weather in Argentina and Brazil and its impact on production. The USDA’s Foreign Ag Service lowered 2020/21 production for Argentina to 50 million tons, down 1 million and matching the official USDA guess, also cutting outlooks for exports and crush demand. The work stoppage by grain inspectors in Argentina is ongoing, even as talks continue. Brazil’s Department of the Rural Economy says 1% of the nation’s soybean crop is ready for harvest. There are reports of at least 20 cases of Asian soybean rust in parts of Brazil. Technically, contracts are overbought, but that’s being canceled out by the supply and demand fundamentals and demand rationing is becoming a feature. U.S. beans are now more expensive than Brazil’s beans, but the U.S. is expected to see solid demand continue, especially from China. Soybean meal and oil were supported by the strength in beans and the continued slow pace of sales from the world’s largest soybean product exporter Argentina.

Corn was higher on commercial and technical buying. Some farmers in Argentina are expected to strike next week, protesting the government’s ban on corn exports, with corn also watching weather in South America. Nearby contracts did break $5 overnight but didn’t approach that mark during the regular session. Unknown destinations bought 102,616 tons of U.S. corn ahead of the open. Russia is placing corn and other grains under a 17.5 million-ton tariff-rate quota system from February 15^th to June 30^th. Ethanol futures were unchanged. The U.S. Energy Information Administration says production last week averaged 935,000 barrels a day, up 1,000 on the week, but down 127,000 on the year, with stocks declining for the first time since October at 23.284 million barrels, which is still well above a year ago.

The wheat complex was lower on profit taking and technical selling. Wheat saw a correction, while continuing to watch dry weather in parts of the U.S. and the Black Sea region, along with harvest activity in Australia. New USDA supply and demand estimates are out January 12^th, in addition to quarterly grain stocks and winter wheat acreage numbers. The pace of export registrations in Argentina is increasing on concerns over a suspension of sales by Buenos Aires. Wheat in Russia will also be covered by Moscow’s new TRQ with a rate of 25 Euros per ton within the system and a rate of 50% but not less than 100 Euros per ton outside of the system. Ukraine’s Ministry of the Economy estimates grain production at 64.5 million tons, compared to 75.1 million in 2020. DTN says Bangladesh has two tenders for 50,000 tons of milling wheat, while Japan is in the market for 120,228 tons of food wheat from the U.S., Australia, and Canada.