Market News

Soybeans bounce as corn, wheat fall further

Soybeans were higher on short covering and technical buying, pulling the pit to a firm weekly finish. Contracts were oversold and due for a bounce, shrugging off losses in soybean oil, which was down for the second consecutive session following the RVO announcement. Soybean meal was mixed early but rallied on solid demand. Soybeans are also monitoring export demand and planting and development conditions in South America. Parts of Argentina have recently received some rain, but hotter, drier conditions are on tap. Irregular precipitation is an issue in parts of Brazil, but on the balance, conditions remain mostly beneficial. Domestic crush margins have tightened in parts of the Midwest but remain in positive territory. Statistics Canada says that nation produced 18.174 million tons of canola in 2022, up 32.1% from 2021 with a big jump in yield canceling out a decrease in harvested area. Canadian soybean production was 6.543 million tons, 4.3% more than the previous year.

Corn was lower on fund and technical selling, adding to the week’s losses. Export demand for U.S. corn continues to be slow with a lot of competition from Brazil and Ukraine. That’s really cut into U.S. business, especially with China. Weather conditions in South America continue to generally favor Brazil over Argentina. The big test though will be the performance of Brazil’s second crop, the largest of the three and the source of most of their exports, which is planted after soybeans are harvested. CONAB’s updated outlook for Brazil is scheduled for Thursday, December 8^th, with the USDA’s next round of supply, demand, and production numbers out Friday, December 9^th. Statistics Canada says Canadian corn production this year was 14.539 million tons, up 4% from last year with a rise in harvested area.

The wheat complex was lower on fund and technical selling, with the most active months at the three U.S. exchanges seeing a significant weekly decline. The fundamentals are neutral to bearish, with slow demand canceling out shrinking U.S. and world supplies. That slow demand is largely due to the relative strength in the dollar against other currencies, especially the Russian ruble. Russia is the world’s biggest exporter of wheat, even with ongoing sanctions restricting some trade following Moscow’s invasion of Ukraine. Ukraine’s also a significant exporter of wheat, but movement out of the Black Sea has slowed down after the extension of the regional export agreement because of Russia slowing down inspections of vessels. Statistics Canada says 2022 wheat production totaled 33.824 million tons, the third largest on record and 51.7% more than in 2021, largely driven by higher production in the Prairies. That included 25.649 million tons of spring wheat, 58% larger than a year ago.