Market News

Argentine rain forecasts send soybeans, corn lower

Soybeans were lower on fund and technical selling. Broad rain coverage is expected in Argentina through the end of the month, stabilizing conditions for part of their crop. Brazil remains on track to produce a record large crop, with early harvest ongoing. That rain in South America is expected to miss dry portions of southern Brazil, but there is precipitation on tap for other growing areas. The USDA’s updated supply and demand report is out February 8^th, with CONAB’s updated outlook for Brazil set for February 9^th. Soybean meal and oil were down on the losses in beans and the fundamental implications of improved rain in Argentina, which is the largest exporter of soybean products. Reports have confirmed some movement of Brazilian soybeans to Argentina in anticipation of a smaller crop. A big wildcard for commodities is currently depopulation in China, which would drastically impact demand.

Corn was lower on fund and technical selling. Corn is watching weather in South America, with rain too late to help some of the crop but seen as a positive for later planted corn in Argentina. The big test for Brazil will be the second crop, which is planted after soybeans are harvested and would hit the export market this summer. The USDA’s weekly export sales numbers are out Friday, delayed by Monday’s holiday. Mexico bought 195,000 tons of U.S. corn for delivery this marketing year. Long-term demand from Mexico, the biggest buyer of U.S. corn in the Western Hemisphere, is questionable because of the ban on GMO corn imports set to take effect in 2024. The U.S. Energy Information Administration says ethanol production last week averaged 1.008 million barrels a day, up 65,000 on the week, but down 45,000 on the year, with stocks reported at 23.402 million barrels, a decrease of 398,000 from the previous week and 190,000 from a year ago.

The wheat complex was mixed, with Chicago and Kansas City down fund and technical selling and Minneapolis seeing some bull spreading. Most forecasts have more winter weather in the Plains through the end of the month, recharging soil moisture. Midwestern soft red winter growing areas are getting drier, while SRW growing portions of the southeastern U.S. have adequate soil moisture. Global supplies are getting tighter, but export demand for U.S. wheat is slow because of price. Russia continues to hold most of the market share and while Ukraine is still exporting grain, the pace has decelerated with Russia slowing down inspections of vessels. Russia’s Ag Ministry says it expects to export 55 million to 60 million tons of grain during the current marketing year, saying it does not plan to cut its export quota, contrary to some earlier, vague comments from President Vladimir Putin. Australia’s record crop is starting to go to market, but quality is an issue following heavy rainfall late in the growing season and during the early stages of harvest.