Market News

Soybeans extend rally

Soybeans were higher on commercial and technical buying, carrying over some of last Friday’s momentum. Beans followed bean oil which followed a sharply higher move in crude oil following a surprise production cut by OPEC due to the link between biofuels and fossil fuels. Soybean oil had additional support from the sale of 20,000 tons of 2022/23 U.S. soybean oil to unknown destinations. Soybean meal was down on profit taking. The trade is monitoring the potential for early planting delays in some areas, while trying to both position itself to buy back some acres from corn, depending on the duration of those delays, and ration demand to some degree. Near-term supplies are tight and Brazil already has a significant price advantage to U.S. beans. Export inspections were down from last week and last year at just shy of 500,000 tons, mainly to China and Indonesia. The 2022/23 pace remains just ahead of 2021/22. The USDA says 177 million bushels of soybeans were crushed in February, a decrease of 14 million on the month, but an increase of 3 million on the year. Argentina’s “soy dollar” program to encourage exports resumed this week.

Corn was mixed, mostly firm. Early planting delays are likely in parts of the southeast, Delta, Midwest, and Plains. The USDA says 2% of U.S. corn is planted, matching the five-year average. There was also some support from the higher move in crude oil. Mexico bought 150,000 tons of new crop U.S. corn, which might not have been China buying old crop, but that did continue the recent hot streak of sales. That is helping to make up for the slow sales pace for the first half of 2022/23, but if shipments don’t accelerate faster, the USDA could lower its outlook for U.S. exports in the next round of supply and demand numbers on the 11^th. Export inspections topped a million tons and were above the previous week, but below a year ago, with Mexico and South Korea leading the way. Just over the halfway point of the marketing year, 2022/23 continues to trail 2021/22 by a wide margin. The USDA says 399.844 million bushels of corn were used for ethanol production in February, down 9% from January and 2% from February 2022, with DDGS production at 1,560,717 tons, a decline of 9% on the month and 8% on the year.

The wheat complex was mixed, with Chicago up and Kansas City and Minneapolis down. Drought is the big issue in the southern Plains while planting delays are probable in parts of the northern Plains. They were already probable prior to the winter-like storm expected to impact parts of that region this week. That’s just going to add to the snowpack, which will likely create at least some flooding issues in the region and downriver once it melts. Analysts were expecting the first winter wheat rating of the season to be close to or below the most recent rating from last November. According to the USDA, 28% of U.S. winter wheat is rated good to excellent, compared to 34% at the end of November and 30% this time last year, with 6% of the crop headed, compared to the usual pace of 2%. U.S. export inspections were below the prior week and this time last year, primarily to the Philippines and Ethiopia. Nearing the final two months of the marketing year, 2022/23 is behind 2021/22, but the pace remains just ahead of what’s needed weekly to meet USDA projections. Russia continues to dominate the export market and some Eastern European continues are asking the European Commission for a renewal of import taxes on Ukrainian grains because of the increase in competition. Recent actions by western companies to pull out of Russian grain will likely lead to at least tacit nationalization of the industry as oligarchs buy the remaining trade infrastructure. France’s Agrimer says 94% of their winter wheat crop is in good to excellent condition, steady with last week.