Market News

Higher dollar sends wheat lower

Soybeans were mixed, mostly modestly lower. Private firms and the USDA FAS are projecting a record crop in Brazil this year, likely canceling out the expected losses in Argentina. Updated numbers from CONAB for Brazil and the USDA Office of the Chief Economist are out Thursday. The USDA’s attaché in Brazil estimates the crop at 153 million tons, up 1 million from the most recent OCE guess and 26.4 million more than a year ago, but with the FAS noting that could be reduced unless there’s timely rain in southern growing areas. The FAS sees Brazil’s 2022/23 soybean exports at a record 97 million tons with a domestic crush of 51.5 million tons. It remains to be seen what kind of potential changes, if any, Brazil’s soybean industry could see under the new presidential administration. Mexico bought 174,181 tons of 2022/23 U.S. soybeans Tuesday morning. Mexico is the second biggest buyer of U.S. soybeans, following China. Soybean meal was mostly lower, consolidating, and bean oil was down on profit taking.

Corn was mixed, mostly weak. Rain is in the near-term forecast for Argentina ahead of a return to drier conditions, with better weather in most of Brazil. In addition to the updated supply, demand, and production numbers Thursday, the USDA will be issuing quarterly grain stocks and preliminary 2022 U.S. corn and soybean production totals, along with the usual weekly export sales report. Export demand for U.S. corn is slow and demand for ethanol use has declined. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. UkrAgroConsult says 2023 corn production for Ukraine could fall to 21.4 million tons due to continued war, compared to 26.5 million in 2022 and 42.1 million in 2021.

The wheat complex was lower on fund and technical selling, along with a higher move in the dollar during the session. The dollar has bounced off the recent six-month low and remains high relative to export competitors, pricing the U.S. out of the market. Most of that market share is currently held by Russia and Ukraine, even as that war persists and shipping insurance becomes more expensive. UkrAgroConsult projects Ukraine’s 2023 wheat crop at 15.8 million tons, compared to 18.9 million last year and 32.2 million the year before that. The USDA confirmed Monday the previous week’s export inspections total was the lowest since early 1983, reflecting that lack of demand for U.S. wheat. The USDA could raise production estimates for Russia and Australia Thursday. Early estimates for India’s next crop are record large. Drought conditions continue to be an issue in much of the southwestern U.S. Plains. The USDA’s winter wheat seeding report is also out Thursday.