Market News
Soybeans mixed, pausing hot streak
Soybeans were mixed on old crop/new crop spread trade after an up and down day. Nearby contracts made new highs and then peeled back, with a relatively routine week for export sales, including a small cancellation by China. Sales did top a million tons, with Mexico and Egypt leading the way. Weather in South America continues to be bullish for U.S. prices, with more yield loss probable in some key growing areas. The USDA’s next set of South American production projections is out on the 9th and CONAB’s updated outlook for Brazil is set for the 10th. Some recent estimates for Brazil from several major private firms have fallen below 130 million tons. The Buenos Aires Grain Exchange says soybean planting in Argentina has wrapped up, with production seen at 42 million tons, 2 million under the previous estimate. 37% of Argentina’s beans are called good to excellent, 1% below a week ago. Stateside, there’s also some position squaring between beans and corn for 2022 acreage. Soybean meal was higher and bean oil was modestly lower on the adjustment of product spreads.
Corn was modestly lower on follow through fund and technical selling. Ethanol margins have moved into negative territory and China canceled on 380,000 tons of old crop U.S. corn ahead of the open. Corn exports were just shy of 1.2 million tons, down on the week and up sharply from the four-week average, with Japan and Mexico claiming the top slots. Corn is also monitoring development conditions in Argentina and southern Brazil, along with soybean harvest activity in central and northern Brazil. Brazil’s critical second corn crop is planted after soybeans are harvested. The Buenos Aires Grain Exchange says 99.1% of Argentina’s corn crop is planted, with total area up on the year. 28% of that crop is in good to excellent shape, 4% less than last week. In the U.S., the big question is how will input costs and demand outlooks impact U.S. planting, with some early estimates calling for a slight decline in domestic acreage. The USDA’s attaché in China estimates 2021/22 corn production at 272.552 million tons, compared to 260.67 million for 2020/21, with increased feed demand and lower imports. Ethanol futures were unchanged.
The wheat complex was mostly lower, with Chicago and Minneapolis down and Kansas City mixed, adjusting spreads. Some dry U.S. winter wheat growing areas have received some much-needed precipitation this week. Still, it’s going to take more than that to break drought conditions in an area that stretches from the southern to the northwestern U.S. Plains, which is stressing winter wheat and could limit spring wheat acreage in the U.S. and Canada. For the eastern Midwest, while the snow cover was welcome for portions of the soft red winter crop, some of that region is excessively wet. Tensions have eased somewhat between Russia and Ukraine, but there’s been no resolution. A return to the heightened tensions or outright conflict would impact shipping out of the Black Sea region for two of the world’s largest suppliers of wheat. The bulk of that business would probably go to the European Union, but some of it would likely be picked up by the U.S. Those tensions have also been a supportive factor for corn and energies. Weekly U.S. sales dropped sharply from last week, with a routine set of purchases almost entirely canceled out by a few cancellations. The USDA’s attaché in China has 2021/22 wheat production at 136.946 million tons, compared to 134.25 million for 2020/21. Imports are expected to be 8.5 million tons, compared to the official guess of 9.5 million and the 2020/21 total of 10.618 million tons.
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