Market News

Soybeans, corn up on lower Brazil estimates

Soybeans were higher on commercial and technical buying. CONAB lowered its outlook for Brazil’s crop, but it’s still above some private estimates. Production is now pegged at 160.177 million tons, 1.4% less than November, but 3.6% more, if realized, than a year ago. CONAB also lowered its export outlook for Brazil slightly. Near-term forecasts for dry areas of Brazil do have some rain, but the coverage and totals are questionable, while parts of southern Brazil remain excessively wet. Argentina continues to be in better than a year ago condition. Beans had some help from a commercial rally in bean oil and the sale of 121,000 tons of 2023/24 U.S. beans to unknown destinations ahead of the open. That was the second announced purchase of the week for a running total of 257,000 tons. Last week’s sales were down from the prior week and below average at just under 56 million bushels, mainly to China and Spain. Shipments were ahead of what’s needed to meet USDA projections for the current marketing year. Ahead of Friday’s supply and demand update, analysts see 2023/24 U.S. ending stocks at 242 million bushels, compared to 245 million in November. No official production updates this month, with the USDA’s preliminary 2023 production estimates out in January. Globally, the spotlight will fall on South America. Still, adjustments this month could be relatively minor. Soybean meal was mixed on bear spreading. The USDA’s attaché for Indonesia estimates 2023/24 palm oil production at 45.8 million tons, citing dry weather.

Corn was modestly higher on short covering and technical buying. CONAB lowered its outlook for Brazil’s first crop and total production, while raising the second crop guess slightly. The first crop is projected at 25.309 million tons, a decrease of 2.1% on the month, with total production of 118.528 million tons, 0.5% less than last month and potentially 10.2% below last year. The key second crop is now seen at 91.235 million tons, a little bit above a month ago and 10.9% below a year ago. That’s a big wildcard because of the soybean planting delays, which imply harvest delays, and could push second crop corn planting past the optimal window in some areas. Forecasts for central and northern Brazil have more rain starting this weekend, but coverage and totals are uncertain. Corn export sales peeled back a little from the prior week’s marketing higher, but were still solid at 50.7 million bushels, mostly to Japan, China, and Mexico. 2023/24 shipments have been lackluster, but the pace of sales is ahead of 2022/23, helped out by recent improvements in demand from several key customers. Still, Brazil continues to ship last year’s crop aggressively, even as U.S. corn prices become more competitive on the export market. The USDA’s December supply and demand report is out Friday, with the average guess for 2023/24 U.S. ending stocks at 2.157 billion bushels, compared to 2.156 billion the prior month. Analysts aren’t expecting many changes for the global numbers either. Adjustments for Brazil and Argentina are possible. The USDA’s attaché for the European Union pegs corn production at 60.2 million tons, compared to 52.9 million in the previous growing season, with 2023/24 exports at 3.5 million tons, compared to 4.208 million in 2022/23.

The wheat complex was higher on short covering and technical buying. The trade was getting ready for Friday’s USDA supply, demand, and production numbers out at Noon Eastern/11 Central. The biggest changes for wheat will likely be on the global side of the ledger. On average, 2022/23 world wheat ending stocks are projected at 269.9 million tons, which would be unchanged from November, with 2023/24 estimated at 258.8 million tons, compared to 258.7 million a month ago. 2023/24 U.S. wheat ending stocks are seen at 684 million bushels, steady with last month. There’s some talk the USDA might bump up U.S. export numbers. There were no announced sales to China, breaking a three-day streak, and the weekly export numbers were bearish. Sales of 13.4 million bushels were under last week, but still above average, primarily to Taiwan and China, with a cancelation by unknown destinations. Essentially at the halfway point in 2023/24, wheat exports are behind 2022/23, continuing to reflect the hefty competition from Russia, along with, to a lesser extent, Ukraine, the European Union, and Australia. U.S. soft red winter wheat prices are much more competitive though and there’s been more talk of demand from China, which could surface in the coming days. CONAB cut its Brazil wheat production guess 15.5% from last month to 8.143 million tons because of weather issues. Russia’s state weather group says just 4% of that nation’s winter grains are in poor condition, compared to the five-year average of 8%. The USDA’s attaché in the European Union estimates 2023/24 wheat production at 13.44 million tons, compared to 134.3 million in the prior guess and the 2022/23 total of 134.01 million tons. Exports are projected at 34 million tons, compared to 35.085 million last marketing year.