Market News

Soybeans start 2022 with good gains

Soybeans were higher on commercial and technical buying, along with the strength in soybean meal. Weather is an issue in South America, with dry conditions in some areas and recent excessive rainfall in others. Early yield numbers have been lower than expected in some key growing areas, but there is still a long way to go. A private U.S. firm lowered its outlook for Brazil by 11 million tons to 134 million with CONAB’s new projection out January 11^th. The Buenos Aires Grain Exchange says 81.4% of Argentina’s crop is planted, with 56% rated good to excellent, a drop of 15%, and 8% in poor to very poor shape, a rise of 5%. Bean meal was up on solid commercial demand, with no deliveries against the January contract. Soybean oil did finish weak, but world vegetable oils were higher ahead of the U.S. session, led by palm oil, and crush margins are solid. The USDA says November’s soybean crush was lower than expected at 190 million bushels, down 7 million from October and 1 million from November 2020. Export inspections were down on the week and the year, mainly to China and Italy.

Corn was mixed on spread trade, with nearby months unable to follow through on the early gains. Hot, dry weather is impacting corn conditions and development in Argentina and southern Brazil. A private U.S. firm now has Brazil’s combined crop at 117.5 million tons, 2.5 million less than their last guess, with second crop corn planting underway in some areas as the soybean harvest advances. The Buenos Aires Grain Exchange says 37% of Argentina’s corn is silking, compared to 27% a week ago, with more than 66% of the crop planted. According to the BAGE, 76% of Argentina’s corn is called good to excellent, a decline of 18% from the prior week, with 8% poor to very poor, a jump of 7%. The USDA’s next set of estimates is out January 12^th, along with the final 2021 domestic corn and soybean production totals. Export demand has improved to some extent and corn for ethanol use continues to be strong. The USDA says corn for ethanol use in November was 468.655 million bushels, up less than 1% on the month and 9% on the year. DDGS production was 1,997,444 tons, 2% more than the previous month and 11% above last year. Ethanol futures were unchanged. Corn export inspections were well below the prior week and a year ago, with Mexico and Colombia topping the list. Russia’s export tax on corn will decline next week.

The wheat complex was lower on fund and technical selling. Drought remains a significant issue in the southwestern U.S. Plains, with possible freeze damage in other U.S. growing areas after the recent cold snap. The USDA’s 2021 winter wheat planted area numbers are out January 12^th. Globally, yield numbers in Argentina and Australia suggest production projections for both nations are expected to top the previous record-large estimates. The trade is also monitoring overwintering conditions in Europe and the Black Sea region, along with pre-planting conditions in U.S. and Canadian spring wheat growing areas. Political tensions between Russia and Ukraine are remain in the background, for now. Russia’s export tax continues to move higher, but demand for U.S. wheat remains slow. More than halfway into the 2021/22 marketing year, wheat inspections trail 2020/21, with last week’s movement failing to break 150,000 tons.