Market News

Broader market bullishness aids soybeans, corn, wheat

Soybeans were higher on commercial and technical buying, adding to the week’s gains. Beans followed soybean products, with bean oil up on global vegetable oils and fuel prices, including a higher move in diesel due to regionally tight U.S. supplies. Outside markets were also generally supportive of commodities, with a lower move in the dollar against a big gain in crude oil. Soybean crush margins continue to be strong, supporting bean meal, and export demand is good. There are some uncertainties about sustained demand from China because of likely record production in Brazil and Beijing’s zero-COVID policy, but for now, China remains a consistent customer for U.S. beans. Planting and development weather in South America continues to vary widely, with Brazil on pace thanks to good conditions, while planting in Argentina is delayed by drought or near drought conditions. The Solvent Extractors Association projects India’s vegetable oil demand to hit 26 million to 27 million tons in 2025/26, with increased domestic production and imports.

Corn was higher on short covering and technical buying, with modest to fractional weekly changes for most contracts. Solid domestic demand for feed and fuel use is supportive, canceling out some of the bearish influence from slow exports. Corn also saw support from the broader market. Planting and development conditions generally look good in Brazil. Still, the big test for Brazil will be the performance of the second crop, which is planted after soybeans are harvested. There’s some near-term rain in the forecast for Argentina ahead of a drier pattern, which will exacerbate current conditions. The USDA’s attaché in South Africa estimates 2022/23 corn production at 15.6 million tons, compared to the 2021/22 total of 15.996 million, with exports next marketing year at 2.5 million tons, compared to 3 million this marketing year.

The wheat complex was higher on short covering and technical buying, along with the lower trade in the dollar index, also finishing the week higher. There was some rain in the near-term forecast for some winter wheat growing areas, but drought is expected to expand in the Plains. The U.S. winter wheat crop is in historically poor shape for this time of year, which could just get worse when the crop emerges from dormancy next spring. The export situation in the Black Sea region remains extremely fluid. The viability of Ukraine’s Black Sea export corridor continues to be in question. Moscow has pulled out and then rejoined the agreement, also signaling it’s unwilling to an extension unless some concessions are made in negotiations, while continuing to attack Ukraine’s infrastructure. For now, Ukraine is still able to export grain via the Black Sea, but that will probably change when the agreement expires later this month. The trade is also monitoring the declining conditions in Argentina and probable quality loss in Australia.