Market News

Corn, wheat up, soybeans close mostly higher

Soybeans were mostly higher on bull spreading. Forecasts have improved rain in Argentina and southern Brazil, which could stabilize conditions, at least to some extent. That, and profit taking, brought some initial pressure, but this round of rain could be scattered and any potential true shift in pattern is at least a couple of weeks away. Early soybean harvest activity is underway in parts of Brazil. Slower economic growth and rising COVID rates in China are concerns for demand. However, the trade has had demand questions about China for quite some time and demand hasn’t slowed down all that much. Unknown destinations bought 119,000 tons of 2022/23 U.S. soybeans, which could turn out to be China when it’s time for delivery. Export inspections were more than what’s needed to meet projections for the current marketing year, mainly to China and Mexico. The NOPA says member firms crushed 177.505 million bushels of soybeans during December, lower than expected. That’s likely more of a function of slow farmer selling than margins or demand. Soybean oil stocks were larger than expected. Soybean meal and oil futures were up on that mostly higher move in beans and demand expectations.

Corn was higher on speculative and technical buying. Corn is watching weather in South America, with near-term rain expected to be scattered and a potential pattern shift likely too late for some growing areas. Damage has been done in Argentina, while the big test for Brazil will be the second crop, which is planted after soybeans are harvested. Export demand is slow but could pick up steam starting later this month with exportable corn nearly exhausted in South America. Ukraine is also a competitor but is continuing to grapple with Russia’s war, delaying last year’s harvest and likely impacting this year’s acreage. Ukrainian grain storage is also being affected by the war. U.S. corn export inspections continued their bearish trend, with China and Mexico topping the list. Mexico says it will place a 50% export tariff on white corn to limit tortilla price inflation, which is scheduled to run through the end of June. The potential ban on GMO corn imports by Mexico remains unresolved. Colombia bought 150,000 tons of 2022/23 U.S. corn Tuesday morning.

The wheat complex was higher on short covering and technical buying. Forecasts have better chances for precipitation over the next two weeks in the southern U.S. Plains. Still, a long-term shift in the pattern is questionable and the hard red winter crop went into dormancy in poor shape. U.S. exports remain high-priced compared to most competing origins, limiting the upside. Russia continues to be the most favorably priced origin and while Ukraine is still exporting wheat during the war, Russia is slowing down inspections. Australia produced a record crop this year, but quality was harmed by heavy rainfall late in the growing season and during harvest. U.S. export inspections were up on the week, down on the year, primarily to the Philippines and China. The USDA could cut its domestic export projection in the next round of supply and demand numbers on February 8^th.