Market News

Dollar strength pushes soybeans, corn, wheat lower

Soybeans were sharply lower on fund and technical selling. There was another round of pressure from the broader market and concerns about inflation. The Dow Jones Industrial Average was down for much of the session but did close in positive territory. Unknown destinations bought 396,000 tons of U.S. beans, the third announced sale this week for a running total of 827,000 tons, all for delivery this marketing year, which started September 1^st. The big question is sustained demand from China, with recent COVID lockdowns in some major cities and economic issues potentially impacting U.S. sales. That’s at a time of year when demand typically switches from South America to the U.S. Chinese crush margins have improved, with better feed demand for meal. Soybean meal was mixed, unwinding spreads, while bean oil was down sharply on drops in palm and crude oil, linked to demand concerns. The USDA says 181 million bushels of soybeans were crushed in July, up 7 million on the month and 15 million on the year, with soybean meal and oil production also rising.

Corn was lower on fund and technical selling. Corn was watching the broader market in addition to early harvest activity, with dry weather in the forecast for much of the region. That should help activity in southern portions of the Corn Belt, but if that continues, it will impact yields and test weights in parts of the Midwest and Plains. Even if there is some rain in drier portions of the Corn Belt over the next week, it’s not expected to be enough to break drought conditions. The USDA will likely lower yields on the 12^th. Export demand is slow, with the USDA’s weekly numbers delayed until the 15^th due to “unanticipated difficulties” during the switch to a new reporting system. The USDA says 445.723 million bushels of corn were used for ethanol production in July, a slight increase from June, but a decrease of 1% from July 2021, with DDGS production of 1,934,355 tons, also above a month ago, but below a year ago.

The wheat complex was sharply lower on fund and technical selling. The dollar hit a 20-year high during the session, making U.S. goods more expensive on the export market. Slow export demand for U.S. wheat is keeping the fundamentals neutral to bearish, even as global supplies tighten. The USDA expects global supplies, minus China, to be the tightest in more than a decade at the end of the current marketing year on May 31^st, 2023. Global production has been impacted by crop weather issues in India and the European Union, in addition to Russia’s attack on Ukraine. Still, that’s been largely offset by better crops in Canada, Australia, and Russia. Russia is starting to lose some of its wheat export edge, ironically, to Ukraine. Russia might be on pace for a record crop, but quality is much lower than a year ago, and the instability in Ukraine and attempts to aggressively market stored grain have pressured their prices.