Market News

Soybeans fall on demand questions, spillover pressure

Soybeans were lower on fund and technical selling. Contracts gave back Tuesday’s gains and then some with pressure from lower moves in crude and palm oils, along with soybean products. Those losses can be linked to the recent bearish Chinese economic data and concerns about the potential for U.S. and global recessions, all of which would impact demand for U.S. soybeans to some degree. Near-term weather looks favorable for most of South America ahead of an expected return to a drier pattern in most of Argentina. The trade is also monitoring the very tail end of this year’s U.S. harvest. River levels have moved higher in some areas, but barge restrictions remain in place on some key waterways, inhibiting interior movement. The USDA’s next set of supply, demand, and production numbers is out December 9^th, with an updated outlook for Brazil from CONAB scheduled for December 8^th.

Corn was mixed, mostly lower, on bear spreading. Mexico continues to buy U.S. corn even as talk swirls about a ban on GMO corn imports starting in 2024. Tuesday’s purchase was 1,866,900 tons, with 1,242,060 for 2022/23 and 624,840 for 2023/24. That brings the running total for the week to 2,097,085 tons, 1,472,245 of that for delivery this marketing year. Mexico also picked up more than a half a million tons of 2022/23 U.S. corn last week. It almost goes without saying losing Mexico as a corn customer would be devastating to demand. Feed and fuel demand is strong, but U.S. export sales are slow with prices at a premium to most major competitors, including Brazil and Ukraine. The USDA’s weekly sales numbers are out Thursday morning. Midwest weather should allow some areas to wrap up the corn harvest in the next few days. The U.S. Energy Information Administration says ethanol production last week averaged 1.011 million barrels a day, a five-week low and down 40,000 from the previous week and 49,000 from a year ago. Stocks were reported at 21.298 million barrels, the tightest since December 2021, and a decrease of 894,000 on the week, but an increase of 1.217 million on the year.

The wheat complex was lower on fund and technical selling. The trade continues to wait for news on a potential extension of the Black Sea export agreement. Part of Tuesday’s gains were tied to concerns about expanded conflict in Eastern Europe, but it appears that initial reports didn’t reflect the entire situation. While Moscow continues to indicate it is open to extending Ukraine’s grain export corridor, it has been asking for some significant concessions during negotiations. The Black Sea grain export agreement is scheduled to end this Saturday. There’s a chance of snow in the forecast for parts of the U.S. Plains ahead of a return to a drier pattern and expanding drought conditions. The USDA’s winter wheat rating is near multi-year lows with most of the crop moving into dormancy. A full move into that phase might wait a little while longer, with parts of the region expected to see warmer temperatures next week. Iraq bought 150,000 tons of 2022/23 U.S. hard red spring wheat, a little less than what was rumored earlier in the week.