Market News

Soybeans mixed as corn extends losses

Soybeans were mixed, with nearby months up and deferred contracts down on bull spreading tied to demand expectations. It was an up and down day for beans after Friday’s USDA numbers, which were neutral to bearish. More private firms have lowered their outlooks for Brazil as harvest moves forward. It’s very early, with the harvest around 2% complete, nationally. CONAB’s updated outlook for Brazil and the USDA’s next round of supply, demand, and production numbers are both out February 8^th. U.S. soybean export inspections were up on the week, down on the year, mainly to China and Mexico. The 2023/24 pace remains behind 2022/23 as Brazil continues to hold on to a big chunk of the global market. Soybean meal was higher and bean oil was lower, adjusting product spreads. The NOPA says member firms crushed a record large amount of soybeans in December at 195.33 million tons and while bean oil stocks were above a month ago, the supply continues to be considerably tighter than a year ago.

Corn was modestly lower on fund and technical selling. Corn followed through on last week’s losses with USDA confirming record large U.S. production and yield. Most forecasts have another round of welcome rainfall in dry portions of Brazil this week, while conditions in Argentina remain generally favorable. Tuesday, the USDA announced the sale of 127,600 tons of 2023/24 U.S. corn to Mexico. Last week, U.S. export inspections were below the previous week, but above last year, primarily to Mexico and Japan. The 2023/24 pace of shipments for corn continues to run ahead of 2022/23. A small amount of corn did leave U.S. shores for China, but U.S. corn has largely been squeezed out of that market by Brazil and Ukraine. Chinese demand for U.S. corn could fall further after domestic production hit an all-time high last year. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Thursday.

The wheat complex was lower on fund and technical selling. Much of the U.S. winter wheat region has seen bitterly cold temperatures over the past few days, but winterkill chances have been limited by snow cover in many areas. Winterkill is also a concern in parts of Russia and Ukraine. However, any damage would not be known until the crops emerge from dormancy. The U.S. winter crop has likely benefited from recent precipitation ahead of the next round of USDA state crop and weather stories due later this month. The big bearish factor remains slow export demand. U.S. export inspections, delayed by Monday’s holiday, were bearish, with wheat shipments below the prior week and a year ago, with the 2023/24 pace continuing to trail 2022/23. The leading destinations Japan and Mexico. Russia continues to dominate the export market. The trade is monitoring shipping issues in the Red Sea and Suez Canal. India’s government says the domestic supply is ample enough to avoid imports, but it is not removing export restrictions on several key commodities, including wheat.