Market News

Soybeans manage modest gains with corn, wheat mixed

Soybeans were modestly higher on short covering and technical buying. Crush margins remain very profitable but long-term soybean demand from China is a concern because of Beijing’s zero-COVID policies. It was an up and down day, with the close tied to the higher move in crude oil. There was early support from higher moves in bean meal and oil, but bean meal was unable to follow through on its early gains and bean oil did finish mostly firm, but beneath the day’s highs. Beans are also monitoring planting and development weather in South America. Most projections for Brazil are growing, while expectations for Argentina are shrinking, slightly. CONAB’s updated outlook for Brazil is scheduled for December 8^th, with the USDA’s next set of supply, demand, and production estimates out December 9^th.

Corn was mixed on bear spreading. Export demand for U.S. corn remains slow, even as use for feed, food, and fuel continues to be solid. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday. Argentina’s corn is being hit by drought, but conditions for Brazil’s first crop generally look good. There is some rain in the near-term for Argentina ahead of a return to drier conditions, while dry portions of Brazil are expected to see rainfall next week. The USDA sees Brazil’s combined corn crop at 126 million tons, up 5% from their last guess and 8.6% from the 2021/22 total because of higher planted area and expectations for improved yields. 2022/23 exports are projected at 47 million tons, 2.5 million more than the current marketing year.

The wheat complex was mixed, unable to follow through on the initial oversold bounce. Near-term forecasts for U.S. winter wheat growing areas are mixed, but longer-term outlooks point to expanding drought in the Plains. The USDA says 34% of U.S. winter wheat is in good to excellent condition, up 2% on the week, with 26% rated poor to very poor, down 7%, and 40% called fair, 5% higher. 91% has emerged, compared to the five-year average of 90%. Those weather issues are a positive and global supplies are shrinking, but the fundamental outlook on U.S. wheat is neutral to bearish because of slow export demand. The trade continues to monitor the situation in the Black Sea region. Russia continues to attack Ukraine while slowing down inspections of vessels trying to leave the Black Sea. That followed an extension of the Black Sea grain export agreement that carried a few capitulations to Moscow. 94% of Ukraine’s winter wheat crop is planted, with sowing far below a year ago due to Russia’s invasion. The trade is also watching the yield impact from drought in Argentina and quality issues following heavy late season rainfall in Australia. The USDA says it expects Brazil to produce a record wheat crop this year at 9.4 million tons.