Market News

Global factors push soybeans, wheat higher

Soybeans were higher on commercial and technical buying. There’s talk of China buying U.S. beans and world vegetable oils are showing more strength this week. Several global vegetable oils notched new highs ahead of the U.S. open, including palm oil, Canadian canola, and Chinese soybean oil. U.S. harvest activity and planting in South America are both ongoing. Stateside, harvest conditions generally look good aside from some rain delays, while there are concerns about the impact of La Nina on production in Argentina and Brazil. The USDA’s attaché in Brazil sees production at a record 145 million tons, compared to the official guess of 144 million and the year ago total of 137 million. 2021/22 exports are projected at a record 92 million tons, a little bit less than the last official estimate, but above 2020/21. CONAB’s second estimate of the season for Brazil is out November 11^th. For 2022, IHS Markit sees U.S. planted area at 87.335 million acres, with production at 4.455 billion bushels and an average yield of 51.5 bushels per acre. Soybean oil was sharply higher on global vegetable oil bullishness while bean oil was up, trying to keep pace. The USDA’s Foreign Ag Service says Mexico put a first come, first served tariff rate quota on soybean imports of 500,000 tons effective October 1^st through December 31^st.

Corn was higher on commercial and technical buying as farmer selling stays slow and basis levels remain high. Corn is also watching harvest activity in the U.S. and the planting paces in Argentina and Brazil. U.S. harvest delays are probable next week. Conditions have generally favored Brazil over Argentina ahead of the full arrival of the La Nina pattern. The USDA’s next set of global production projections is out in the monthly supply and demand report on November 9^th. High fertilizer prices are creating some early concerns about 2022 U.S. acreage. IHS Markit estimates planted area at 92.374 million acres, with production at 15.213 billion bushels and an average yield of 181 bushels per acre. Russia’s Ag Ministry says the running total for the corn harvest is 7.6 million tons, compared to 8.2 million at this stage in 2020. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol production last week averaged 1.096 million barrels a day, tied for the third highest daily average on record, and up 64,000 on the week and 183,000 on the year. The supply increased for the first time this month to 20.08 million barrels, 233,000 higher than last week and 359,000 more than last year.

The wheat complex was higher on commercial and technical buying, along with the lower U.S. dollar. Paris milling wheat hit a fresh contract high ahead of the U.S. session, while December Minneapolis also hit a fresh contract high and nearly broke the $10 mark following a difficult spring wheat growing season in parts of the world. U.S. winter wheat conditions remain mixed, with a drier pattern expected in the southern Plains. Parts of the northwestern U.S. Plains remain drier than normal, while conditions are generally good for the eastern Midwest. IHS Markit projects 2022 spring wheat planting at 12.7 million acres and has winter wheat at 34.153 million acres, both above 2021. Export demand remains slow due to relatively high prices, but the world supply will only get tighter in the near-term. Russia’s Ag Ministry says 77.3 million tons of wheat have been harvested so far this year, compared to 87.2 million this time last year. Winter wheat planting is ongoing in Russia, Europe, and Ukraine. The trade is also monitoring development conditions in Argentina and Australia. The USDA’s attaché in Australia pegs production at 31.5 million tons, down from the 33.3 million in 2020, but well above the ten-year average thanks to better growing conditions. 2021/22 exports are seen at 23 million tons, compared to the official guess of 23.5 million and the 2020/21 total of 24 million. The Kazakhstan office has 2021/22 production at 12 million tons, compared to the official estimate of 12.5 million. The FAS says the 2020/21 crop was 12.5 million tons, about 1.75 million under the official total. Exports this marketing year are expected to be 6.5 million tons, compared to the FAS number of 7.4 million last marketing year.