Soybeans rally on products, crude oil
Soybeans were higher on commercial and technical selling. Beans started lower but turned higher with the gains in meal and the rallies in soybean and crude oils, all uncovering new buying interest during Monday’s session. The initial losses in beans, bean oil, and crude oil were due to demand concerns for China with rising COVID cases and increasing resistance to Beijing’s zero-COVID policy. Domestic crush margins remain in solidly positive territory. Unknown destinations bought 110,000 tons of 2022/23 U.S. beans. Export inspections topped 2 million tons, but were down from last week and last year, mainly to China and Germany. AgRural says 87% of Brazil’s projected crop has been planted, but increasing dryness is a concern in some central and western growing areas. CONAB’s next round of projections for Brazil is out December 8th. Very dry conditions are also an issue in most of Argentina. Argentina’s government says it will re-implement its “soy dollar” policy through the end of the year in an effort to spark sales. China is expected to buy 1 to 1.5 million tons of soybeans from Argentina under this adjusted exchange rate.
Corn was narrowly mixed. Planting and development weather in South America favors most of Brazil over Argentina. According to analysts, fertilizer procurement for Brazil’s critical second crop is slower than average, but Russia is set to increase its fertilizer quota, which could boost purchases. Corn planting in Argentina has been limited by drought or near drought conditions in some areas. Export demand continues to be slow, while feed and fuel use are solid. Export inspections were just over 300,000 tons, under a week ago and a year ago, primarily to Mexico and China. Continued demand from Mexico is a question mark because of an impending ban on GMO corn imports. Mexico’s President and U.S. Ag Secretary Tom Vilsack met Monday to discuss the situation, which would be a serious hit for U.S. corn demand. The USDA’s next set of supply, demand, and production numbers is out December 9th.
The wheat complex was lower on fund and technical selling, along with higher trade in the U.S. dollar. Export demand is slow with a lot of competition out of the Black Sea from Russia and Ukraine, due in part to strength in the dollar relative to other currencies. November export projections for Ukraine are short of 3 million tons due to Russia slowing down inspections for boats leaving the Black Sea. The current version of the Black Sea grain export agreement runs through March. Estimates for Russia’s November grain exports are around 5 million tons. U.S. export inspections were below 200,000 tons, a drop on both the week and the year, with Mexico and Ethiopia topping the list. The fundamental outlook for U.S. wheat is neutral to bearish because of that slow export demand, even with tighter world supplies. Most forecasts have expanding drought conditions in large swaths of the U.S. Plains through this winter. The USDA’s weekly crop progress and condition report has been delayed by a system outage, with the report now out Tuesday afternoon. The trade is also monitoring the impact of drought on Argentina’s crop and quality issues in portions of Australia following heavy rainfall.