Market News

Soybeans, corn, wheat fall to start 2023

Soybeans were sharply lower on profit taking and technical selling, in addition to spillover from the broader market. Soybeans continue to monitor weather in South America, with more hot, dry weather in Argentina impacting production potential. That’s also affecting parts of southern Brazil, but conditions in the rest of that nation are good and Brazil still appears to be on pace for a record soybean crop, which could help offset losses elsewhere in South America. Very early harvest results in Brazil are in-line with expectations. Seasonal trends have opened up a brief window for U.S. soybean exports and substantial crop loss in Argentina would likely lead to improved demand for U.S. soybean products. Soybean meal closed lower Tuesday, unable to hold onto early gains, while bean oil fell on spillover from crude oil. The USDA says 189 million bushels of soybeans were crushed during November, down 8 million from October and 2 million from November 2021, with bean meal and oil stocks down on the year. Soybean export inspections were down on the month and year, mainly to China and Mexico.

Corn was lower on profit taking and technical selling, along with outside market influence. U.S. exports remain slow and ethanol demand is declining, even as the national cash basis holds near multi-year highs. The USDA says 447.397 million bushels of corn were used for ethanol production in November, down less than 1% on the month and 4% on the year, with DDGS production at 1,778,479 tons, an increase of 2% from the prior month, but a decrease of 11% from a year ago. Corn is also monitoring weather conditions in Argentina and Brazil. Some of Argentina’s corn production potential has been lost, while the big test for Brazil will be their second crop, which is planted after soybeans are harvested. CONAB’s updated outlook for Brazil is set for January 12th, the same day as the updated USDA supply, demand, and production numbers. That will also include the 2022 U.S. preliminary crop production totals. U.S. corn export inspections were below last week and last year, with China and Mexico topping the list.

The wheat complex was lower on profit taking and technical selling, also seeing pressure from the higher move in the dollar to start 2023. Exports are still moving out of the Black Sea region, but that will change as insurance companies pull war coverage. The war between Russia and Ukraine is ongoing and Russia is reportedly slowing inspections of the Ukrainian vessels that are leaving ports. Russia continues to hold a huge chunk of the global wheat market, with Ukraine holding a lesser, but still substantial, portion. Precipitation continues to miss hard red winter wheat in the southwestern U.S. Plains, even as a wetter pattern is benefitting other types of winter wheat. That part of the Plains also likely saw some winterkill during the recent bitter snap, but any damage from winterkill or drought won’t be known until the crop emerges from dormancy. U.S. export inspections were just a shade over 85,000 tons, well below a week ago and a year ago, with the lone listed destinations for the week Mexico and Italy.