Market News

Soybeans up again, corn and wheat down

Soybeans were higher on commercial and technical buying, scoring another round of fresh highs for the move. The trade continues to monitor weather in Argentina, Brazil, and Paraguay, which have all been impacted by drier than normal conditions in key growing areas, in-line with a La Nina pattern. One of the most recent estimates, from Refinitiv, puts Brazil’s crop at 131.5 million tons, below the USDA’s January guess. The USDA’s next set of production projections is out on the 9^th, with an updated outlook for Brazil from CONAB on the 20^th. The USDA says unknown destinations bought 380,000 tons of 2021/22 U.S. soybeans. That could turn out to be China when it’s time for delivery. China has recently stepped-up purchases of U.S. soybeans, likely in response to those declining production projections for South America. The USDA’s weekly sales numbers are out Thursday at 8:30 AM Eastern/7:30 Central. Soybean meal and oil were both mixed, adjusting internal spreads.

Corn was lower, with some months down more than a dime, on profit taking and technical selling. Contracts were up early, but unable to sustain those modest gains, picking up some pressure from the continued build in ethanol supplies. Also, there are some uncertainties about feed demand following recent USDA reports showing general contractions in the U.S. livestock industry, most recently in the USDA’s biannual Cattle Inventory report. Corn is monitoring conditions in Argentina and southern Brazil as warmer and drier than normal weather limits some yield potential. The trade is also watching Brazil’s soybean harvest for conditions that could impact second crop corn planting. Brazil’s second crop is the largest of the three, the source of most of that nation’s exports, and is planted after soybeans are harvested. Refinitiv has that critical crop at 108.1 million tons, 4% less than their last guess and below the most recent estimates from the USDA and CONAB. There’s also been some position squaring between beans and corn ahead of widespread planting. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol production last week averaged 1.041 million barrels a day, up 6,000 on the week and 105,000 on the year, as stocks grew to a near two year high at 25.854 million barrels, an increase of 1.378 million from a week ago and 1.538 million from a year ago. Iowa State University’s Center for Agricultural and Rural Development says ethanol margins fell into the red for many producers last week. The USDA’s attaché in Ukraine has 2021/22 corn production at 41.96 million tons, compared to the most recent official estimate of 42 million and the 2020/21 total of 30.297 million tons. Exports for the current marketing year are seen at 36.5 million tons, compared to 23.864 million last marketing year. Brazil’s export body ANEC estimates corn exports this month at 447,414 tons, compared to 508, 407 in February 2020.

The wheat complex was lower on fund and technical selling, with the steepest losses in Chicago and Kansas City. There has been precipitation in parts of the U.S. Plains this week, but not enough to break excessively dry to drought conditions in parts of the region. That’s not only having an impact on winter crop quality but will likely have an effect on spring planting decisions in the U.S. and Canada. Conditions in the eastern Midwest are comparatively better, but some areas have reported excessive soil moisture levels. The complex is continuing to monitor the simmering political tensions in the Black Sea region between Russia and Ukraine. Any significant shift in rhetoric or a move to outright conflict would curtail, if not stop, export movement for two of the world’s largest sellers of wheat. The USDA’s attaché in Ukraine pegs 2021/22 wheat production at 32.655 million tons, compared to the official guess of 33 million and the 2020/21 total of 25.42 million tons. Exports this marketing year are expected to be 24.3 million tons, compared to 16.847 million last marketing year.