Market News

Soybeans, corn, wheat extend losses

Soybeans were lower on fund and technical selling, unable to follow through on early gains. Near-term forecasts for Argentina and parts of southern Brazil are drier, further stressing the crop and potentially limiting production. That could open up a wider window for U.S. soybean and product exports, but that shortfall in South America could be made up by production in central and northern Brazil. StoneX lowered its outlook for Brazil to a still record large 153.8 million tons. ANEC estimates Brazil’s 2022 soybean exports at 77.8 million tons, compared to the 2021 total of 86.6 million. Long-term demand from China continues to be a question mark because of rising COVID rates. Contracts are a little overbought and there was spillover from crude oil. Unknown destinations bought 124,000 tons of 2022/23 U.S. soybeans.  Soybean meal was mostly lower, all except lightly traded January, and bean oil was down, with both also unable to sustain periodic gains.

Corn was sharply lower on fund and technical selling. Export demand is slow, demand for ethanol use is declining, and there was spillover from a lower move in crude oil. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Thursday. Corn continues to monitor the weather issues in Argentina and southern Brazil. Still, any likely loss in South America could be offset by Brazil’s second crop, which is planted after soybeans are harvested. StoneX sees Brazil’s combined corn crop at 128.71 million tons, compared to the prior projection of 130.3 million. CONAB’s updated outlook for Brazil is out January 12^th, the same day as the USDA’s new set of supply and demand projections and the preliminary 2022 U.S. corn and soybean production totals.

The wheat complex was sharply lower on fund and technical selling. Conditions have improved or held for large parts of the U.S. winter wheat region, except the southwestern Plains. Between drought and winterkill, there could be some significant damage to hard red winter, but the extent won’t be fully known until the crop emerges from dormancy in spring. While conditions for U.S. soft red winter wheat might not be great, they are at least comparatively better than HRW. Insurance companies are reportedly pulling shipping coverage or raising rates in the Black Sea region, likely impacting export business. Russia continues to hold most of the global wheat market thanks to record production and the relative weakness of the ruble, while Ukraine also taking up a big portion, at least for now. The U.S. continues to be priced significantly higher than most competing sellers, primarily because of the dollar.