Market News

Soybeans down, corn mostly weak, watching Argentina

Soybeans were lower on fund and technical selling, cementing the lower weekly finish. Most forecasts have improved much-needed near-term rainfall for Argentina and southern Brazil. Argentina’s crop is in dismal shape and will need more than just one round of rain, while the rest of Brazil looks good. Weekly export sales were up on the week and above average, mainly to China and Mexico, but with a cancellation by unknown destinations. Unknown destinations Friday did buy 220,000 tons of 2022/23 U.S. soybeans, bringing the announced sales total for the week to 339,000 tons. That might be China getting ahead of the New Year celebrations, which start on the 21^st. Sustained demand from China could be viewed as a question mark due to global economic issues, rising COVID rates, and depopulation. Soybean meal and oil followed beans lower.

Corn was mostly modestly lower, ending the week mixed. Corn is watching weather in South America, with just 5% of Argentina’s crop reportedly in good to excellent condition and more than half tasseling, so most of the benefit will be to later planted corn. Dry weather is an issue in Brazil, but the big test there is the second crop, which is planted after soybeans are harvested. Exports were up sharply on the week at more than 1.1 million tons, but the overall pace is slower than expected ahead of a window opening later this month or early next month. The leading buyers were Japan and Mexico. Brazil is still moving old crop and first crop corn, but those supplies will be exhausted soon and the second crop won’t be available until this summer, while Argentina is likely holding onto some of their corn because of production issues, and even if Ukraine is a major player on the market, their crop was reduced by Russia’s invasion with the likelihood of an even smaller crop next year. One potential new area of competition is favorably priced feed wheat.

The wheat complex was higher on short covering and technical buying, closing mixed for the week. Recent winter weather has boosted soil moisture in the central and southern Plains, with more on the way in the coming week. Hard red winter isn’t out of the woods, but this could mean higher crop ratings when it emerges from dormancy in spring. The soft red winter crop is seeing increasingly dry conditions in parts of the Midwest, while conditions are generally favorable in southeastern growing areas. Export sales were up on the week but the overall pace remains bearish with Russia continuing to dominate the market. Last week’s big buyers for U.S. wheat were Mexico and South Korea. Ukraine also has a significant presence on the export market but their out-movement has been stalled by slower inspections by Russia and while Australia produced a record large crop, the quality was lower than normal following heavy rainfall during late development and harvest.