Market News

Corn, soybeans firm, watching weather in Argentina

Soybeans were modestly higher on fund and technical buying. Brazil’s harvest is slow because of rain in central and northern growing areas, but moving forward, with that record crop likely making up for the losses in Argentina. CONAB’s updated crop production outlook for Brazil is scheduled for March 9^th. Bean meal made contract highs on strong domestic demand. Soybean oil was down on product spread adjustments and a lower move in palm oil ahead of the U.S. session. Export inspections topped 1.5 million tons, down on the week, but up on the year with the 2022/23 pace ahead of 2021/22. The main destinations were China and the Netherlands. Sustained demand from China is a twofold question because of Brazil’s record expected crop and diplomatic tensions. China’s government is indicating it will encourage increased domestic planting.

Corn was modestly higher on fund and technical buying. There is some rain in the near-term forecast for dry parts of Argentina and southern Brazil, but it won’t be a drought breaker. The USDA’s attaché in Argentina has the crop at 45 million tons, 2 million less than the most recent supply and demand report and, if realized, 7 million under last year’s total. The office also downgraded exports. The USDA’s next round of projections is out March 8^th. That slow pace of Brazil’s soybean harvest is delaying second crop corn planting. For now, projections show a much larger than a year ago crop, but there could still be some change in acreage if delays persist. While the export window for U.S. corn is starting to open a little wider, it’s expected to snap shut once Brazil’s second crop harvest gets underway. U.S. export inspections were modestly above a week ago, but sharply lower than a year ago, with this marketing year’s pace considerably slower than last marketing year due to heavy competition from Brazil and Ukraine. Last week’s top destinations for U.S. corn were Mexico and Saudi Arabia.

The wheat complex was steady to modestly higher. There are improved chances for precipitation in parts of the central and southern Plains this week. That should help conditions, at least somewhat, in parts of the hard red winter region, but a sustained pattern shift will be needed ahead of the crop coming out of dormancy to limit yield loss and the potential for increased abandonment. An extension of the Black Sea Grain Initiative is a question mark, with the deal set to expire in about a month. Moscow this week called an extension of the initiative “inappropriate” because of sanctions. Russia continues to hold most of the world wheat export market due to price and Ukraine is still moving grain despite continued Russian aggression. Strategie Grains estimates 2023/24 European Union soft wheat production at 129.7 million tons, slightly more than the January guess.  Export inspections were below the prior week, more than last year, primarily to Japan and Vietnam. Export demand for U.S. wheat remains basically slack, but inspections are still on pace to meet USDA projections. The USDA’s attaché in Argentina cut its export guess to 6.2 million tons, a big reduction from a year ago because of a much smaller crop.