Market News

Another round of losses for soybeans, corn

Soybeans were lower on fund and technical selling, in addition to higher trade in the dollar. Brazil is expected to produce a record crop, which could cancel out losses in dry southern growing areas of that nation and Argentina. The Buenos Aires Grain Exchange reports 8% of Argentina’s soybean crop is in good to excellent condition, 2% less than a week ago, with 82% of the crop planted, slower than normal. CONAB’s updated outlook for Brazil is scheduled for Thursday, January 12th. That’s the same day as a slew of USDA numbers: the monthly supply and demand report, quarterly grain stocks, and the preliminary 2022 U.S. soybean and corn production totals, in addition to the usual weekly export sales report. This week’s export sales numbers are out Friday, January 6th, delayed a day by Monday’s holiday. Sustained demand from China is a concern because of rising COVID rates. Export demand is solid and crush margins remain in bullish territory. Soybean meal was mixed on bull spreading, supporting nearby contracts, while bean oil was down on follow through selling and the higher dollar.

Corn was modestly lower on fund and technical selling, along with the session’s gains in the dollar. Corn export demand is slow and demand for ethanol use is declining due to tighter margins and lower prices. The U.S. Energy Information Administration says ethanol production last week was a near two-year low at 844,000 barrels a day, the fourth week in a row with a decline and down 119,000 on the week and 204,000 on the year. Stocks were reported at 24.444 million barrels, 192,000 under the previous week, but 3.085 million above a year ago. The RFA says November ethanol exports were a three-month low at 81.4 million gallons, a decline of 3% from October and about 40% from November 2021, while DDGS exports were 728,409 tons, 9% less than the prior month and the lowest monthly volume since May 2020. Corn continues to monitor planting and development weather in South America. The Buenos Aires Grain Exchange says 13% of Argentina’s corn crop is in good to excellent shape, down 2% on the week, with planting slower than average at 70% complete. With losses for Argentina due to dry weather essentially locked in, the big test for South America’s corn crop will be Brazil’s second crop, which is planted after soybeans are harvested.

The wheat complex ended the session mixed. The fundamentals are bearish, mostly due to slow export demand linked to the relative strength of the dollar index, but contracts are oversold. Drought conditions have improved in many U.S. winter wheat growing areas, except for the southwestern Plains. However, Kansas City was unable to find much new interest despite that drought. The Black Sea region continues to be a big question mark for the wheat market. Russia and Ukraine are both exporting grain as fighting continues, but Russia is reportedly delaying inspections of some Ukrainian vessels and war insurance is increasingly hard to come by, both of which are having at least some effect on movement. Russia, for now, is the world’s biggest exporter of wheat and Ukraine continues to hold a solid share of the market as both hold price advantages over competitors.

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