Market News

Commercial demand pulls soybeans higher

Soybeans were higher on commercial and technical buying. Near-term forecasts have more harvest delaying rain in parts of central and northern Brazil against continued drought in Argentina. CONAB’s updated monthly outlook for Brazil is scheduled for Thursday. Safras e Mercado says 35.4% of Brazil’s 2022/23 soybean crop has been sold, considerably slower than normal. Soybean meal is the most bullish part of the complex thanks to strong domestic demand, blunting any bearish impact from the lack of improved export demand as Argentina’s crop fails. Argentina is typically the world’s largest exporter of soybean products and while U.S. meal was expected to help fill the void, it hasn’t happened. Soybean oil was lower on the adjustment of product spreads. Just past the halfway point of the marketing year, 2022/23 U.S. soybean export inspections were down on the week and the year, but still ahead of 2021/22 and more than what’s needed to meet USDA projections. The top destinations were China and Japan.

Corn was modestly lower on fund and technical selling. There are expectations the USDA will lower the export guess and raise ending stocks in Wednesday’s supply and demand report. Any concerns about conditions in South America were on the back burner, with corn also looking at generally good conditions in the Midwest ahead of spring planting. Japan and unknown destinations did buy U.S. corn Monday morning, 110,000 tons and 182,400 tons, respectively, both for 2022/23 delivery. That’s the first USDA announced sale of any U.S. commodity in weeks and might be a sign that anticipated export window is opening. That sale to unknown could turn out to be China, fulfilling some recent rumors, but Beijing’s near total absence from the U.S. market is a big concern. Export inspections were above a week ago, below a year ago, mainly to Mexico and Colombia with no U.S. corn leaving port for China last week.

The wheat complex was lower on fund and technical selling. Export demand is slow, with Russia holding most of the market share, and the trade is waiting to see if the Black Sea Grain Initiative is extended past the 18^th. Negotiations have yet to get underway, with Ukraine pushing for faster inspections and access to more ports, while Russia wants sanctions dropped, despite continuing its offensive. Winter wheat acreage is down in Ukraine because of the Russian aggression, but what has been planted is reportedly in mostly good condition. U.S. wheat inspections were under last week and last year, primarily to China and Mexico. Early in the final quarter of the marketing year, the 2022/23 pace remains just behind 2021/22. Near-term U.S. weather continues to favor soft red winter areas over most of the hard red winter region. The trade also has an eye on conditions in the northern U.S. Plains and Canada ahead of spring wheat planting.