Corn, wheat buy back some recent losses
Soybeans were steady to modestly lower. Beans continue to monitor forecasts for improved rain in Argentina and southern Brazil. That should help boost conditions for later planted beans. Drought caused planting delays in those portions of South America last year, so this could represent about half of the crop in Argentina and southern Brazil. Harvest is in the early stages in Brazil and will likely be delayed to some extent in most of Argentina. With much better conditions in the rest of the nation, Brazil remains on track to produce a record large crop, which might not fully close the U.S. window for exports, but is expected to substantially narrow the opening. Sustained demand from China is a question mark because of COVID infection rates and concerns about depopulation. The USDA’s next round of supply and demand estimates is out February 8th. Soybean meal was mixed, mostly higher, on bear spreading. Bean oil was down on the lower move in crude oil.
Corn was higher on fund and technical buying. Corn saw an oversold bounce while keeping an eye on rainfall totals and coverage in key growing areas of South America. The big test for South America will be Brazil’s second crop, which is planted after soybeans are harvested and doesn’t hit the market until summer. The export window is starting to open wider for U.S. corn and should remain open until that crop is harvested. Unknown destinations bought 130,000 tons of 2022/23 U.S. corn Tuesday morning. That’s the second announced purchase by unknown destinations this week, following a soybean sale Monday. This could be China, which does have a track record of buying commodities during Lunar New Year celebrations despite officially out of the market. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. A big background factor is the uncertainty about sustained demand from Mexico, with a ban on GMO imports set to take effect next year. Negotiations are ongoing, but there’s been little reported progress.
The wheat complex was higher on fund and technical buying. Wheat found some new interest after the recent drop even as slow export demand continues to be an issue. The dollar moved modestly lower around midday Tuesday, but remains high priced relative to most other major exporters, especially Russia. A Ukrainian grain business is asking Turkey and the U.N. to speed up inspections of vessels set to leave port, citing delays caused by “logistical bottlenecks.” There are anecdotal reports of increased feed wheat usage in portions of the U.S. following the decline in price. Most forecasts have another round of winter weather in the Plains, with part of the system expected to spread into the central and eastern Midwest. The event won’t be a drought buster but will help to recharge soil moisture during the critical dormancy period for the winter wheat crop. Updated state crop condition and weather reports are out next week. India’s domestic wheat prices hit record highs Monday after the government delayed a release of supplies from domestic reserves planned to limit price increases.