Market News

Liquidation, dollar hammer wheat

Soybeans were lower on fund and technical selling. Beans and bean oil saw another round of long liquidation by funds linked to slow export demand. Old crop soybean sales were up sharply from last week, but relatively unimpressive, Mexico and Japan topped the list with routine demand from unknown destinations, and there were no reported new crop sales. Soybean meal export sales were above a week ago, while soybean oil was down sharply. Bean meal futures were mixed Thursday, consolidating. Near-term supplies are tight and contracts are heavily oversold, but domestic crush margins have narrowed. Brazil’s record harvest is nearly over and while they continue to dominate the export market because of price, that’s only going to last for so long and recent demand from China hasn’t met expectations. However, that’s partially due to a lack of storage and logistical issues impacting shipments. Concerns about Argentina’s crop total are factored in. Beans are also watching early U.S. planting and development weather.

Corn was lower on fund and technical selling. Most forecasts have mixed planting and development conditions in the Corn Belt over the next few days. Some areas are expected to make some progress, while other areas will see better conditions for activity. It’s still early in the season, with no real talk about any significant changes to the acreage mix, yet. China canceled on 233,000 tons of previously purchased old crop U.S. corn, the second announced cancellation this week, for a total of 560,000 tons. That reflects the continued presence of Ukraine in the export market and the lower than anticipated demand for U.S. corn, with some buyers seemingly okay to sit on the sidelines until Brazil’s second crop harvest starts. Brazil is expected to produce a record corn crop this year, led by that second crop. CONAB’s updated outlook for Brazil is set for May 11th, with new USDA supply and demand numbers out May 12th. The weekly sales numbers for corn showed an improvement from the prior week, but were still lower than average, primarily to Japan and Mexico, with net cancellations by China and unknown destinations.

The wheat complex was sharply lower on fund and technical selling, as traders continue to sell off positions because of slow demand, with additional pressure from the dollar. Parts of the southern Plains had better than expected rain, but it might not help hard red winter all that much, while soft red winter is still in comparatively good condition. Weather outlooks generally have better spring planting conditions in the northern Plains. Wednesday’s wheat planted area numbers from Statistics Canada were a bearish factor for the second session in a row. The trade continues to keep an eye on Russia, Ukraine, and signals surrounding the Black Sea Grain Initiative. The USDA’s export sales report showed old crop wheat down on the week and lower than average, mostly to Japan and unknown destinations for old crop. New crop sales were mainly to the Philippines and South Korea, both of which had net old crop cancellations. The USDA’s attaché in Australia projects 2023/24 wheat production at 29 million tons, compared to 39.19 million in 2022/23 because of the shift from a La Nina weather pattern to El Nino. Exports next marketing year are seen at 23 million tons, compared to 30 million this marketing year.

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