Market News

Soybeans up, corn mixed ahead of Friday’s USDA numbers

Soybeans were modestly higher on short covering and technical buying. Weekly export sales were a little better than expected at just over a million tons mainly to China and Mexico against a small cancellation by unknown destinations. There’s been more competition recently from Argentina following Buenos Aires’ introduction of the “soy dollar”, but that special exchange rate is set to end Friday. Even with that competition from Argentina, the normal seasonal dominance of Brazil, and the political tensions with China, 2022/23 U.S. sales remain ahead of the 2021/22 pace. Near-term supplies remain very tight and domestic crush margins are in positive territory. Soybean meal was lower on and bean oil was higher on the adjustment of product spreads. The current marketing year for soybeans ends Friday. The trade is also monitoring U.S. harvest and South American planting conditions. Some soybean crush facilities in Brazil are reportedly suspending productions due to poor margins. The Buenos Aires Grain Exchange currently pegs this year’s crop in Argentina at 48 million tons, which, if realized, would be quite a bit larger than last year. Most projections for Brazil are north of 150 million tons.

Corn was mixed, mostly firm. Corn was getting ready for Friday’s quarterly grain stocks report, with a history of surprises in this round of numbers. Ahead of the report, most analysts expect fairly minor adjustments, but again, there have been a few September surprises over the years. Export sales were bearish at slightly more than a half million tons, with competition from Ukraine and South America, especially Brazil. Last week’s big buyers were Mexico and unknown destinations, with a cancellation by Egypt. The USDA also reported 160,000 tons sold to Mexico for 2023/24 delivery. Interior movement is an issue in some areas due to lower river levels. That’s leading to higher barge freight rates against lower cash basis levels as harvest moves forward. The Buenos Aires Grain Exchange sees Argentina’s crop at 50 million tons, down 2 million on the year due to drought in some key growing areas. First crop planting is underway in parts of Brazil, but the big test for that country will be the second crop, which is planted after soybeans are harvested.

The wheat complex was lower on profit taking and technical selling. The trade continues to wait for new developments in the Black Sea region. Moscow has shown every indication of wanting to ramp up troop presence in Ukraine but is running into many issues with conscription as the war seems generally unpopular in Russia. Russia will likely annex parts of Ukraine in the near future, but the veracity of the vote can safely be called into question. Any significant rise in tensions in the region would likely have some impact on exports out of the Black Sea, which is a major artery for global trade. The trade is also keeping an eye on drought conditions in the southern and southwestern U.S. Plains, which could cut acreage in some areas, but will likely be a bigger issue when the crop emerges from dormancy next year. Export demand is slow, with U.S. prices among the most expensive in the world. Last week’s big buyers were Guatemala and Thailand, with a cancellation by unknown destinations. The USDA’s small grains production summary is also out Thursday, along with quarterly grain stocks. The USDA’s next set of supply and demand estimates is scheduled for October 12^th.