Market News

Demand pulls soybeans, corn to new highs

Soybeans were sharply higher on commercial and technical buying, establishing another round contract highs. The trade is watching weather in South America and waiting to see if a grain worker strike in Argentina will end this week. No announcement about progress in talks was made during the session. Export and crush demand for U.S. beans continue to be strong, exacerbated by the slowdown of shipping out of Argentina as loading has been delayed on at least 160 boats. Weather-wise, near-term forecasts do show improved rainfall in South America, but that will actually need to materialize as expected to make much of a difference. There’s been talk of new demand from China this week, but nothing was reported ahead of the open. Unknown destinations did buy U.S. beans Monday morning. Soybean meal and oil were supported by the same factors as beans.

Corn was higher on commercial and technical buying, with new contract highs in the most active months. As with soybeans, demand was the big bullish spark, especially feed and export demand as U.S. corn continues to have a significant price advantage over other exporters. Ethanol demand is an issue but continued solid demand from other sectors would help to alleviate some of that pressure. Ethanol futures were higher. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday. Corn is also watching weather in Argentina and Brazil and the potential for increasing crop stress levels, especially in Argentina, and general long-term weather concerns because of the La Nina pattern.

The wheat complex was higher on commercial and technical buying. U.S. supplies are tight even as the global supply outlook remains bearish, with the USDA’s next set of supply and demand estimates out January 12^th, along with winter wheat planted area numbers, the 2020 corn and soybean production totals, and quarterly grain stocks. The trade is expecting at least some increase in export demand because of Russia’s export tax, which goes into effect February 15^th and runs through the end of June. Ukraine’s grain sales are behind last marketing’s pace, which could be a sign of unofficial demand rationing by Kyiv. DTN says Taiwan is tendering for 82,235 tons of milling and Algeria is in the market for 50,000 tons of milling wheat. The USDA’s weekly export sales numbers are out Thursday and markets are closed Friday for the New Year holiday. Weather forecasts have more beneficial near-term precipitation for U.S. winter wheat growing areas.