Market News

Soybeans, wheat see solid gains

Soybeans were higher on fund and technical buying. Soybeans are watching South America, with some questions about rain coverage and totals after months of drought. Some damage has been done and while condition ratings do tell part of the story, the full impact won’t be known until widespread harvest activity gets underway. Unknown destinations bought 130,000 tons of 2022/23 U.S. beans, the second announced sale of the week for a running total of 322,000 tons. There’s some question as to whom “unknown destinations” is this week. Normally, it’d be attributed to China almost immediately, but Beijing is officially on Lunar New Year holiday. Still, this would not be the first time that buys were announced during those celebrations. ANEC estimates Brazil’s January soybean exports at 1.3 million tons, compared to 2.2 million a year ago. The big question continues to be sustained demand from China because of rising COVID rates and signs of a trend towards depopulation. Soybean meal was higher and bean oil was lower on the adjustment of product spreads.

Corn was modestly lower on profit taking and technical selling. Corn is monitoring weather in Argentina and Brazil, but the big test will be the conditions for Brazil’s second crop. That’s the largest of the three crops and source of most of their exports, planted after soybeans are harvested. Unknown bought 100,000 tons of 2022/23 U.S. corn, the second consecutive with a sale for a running total of 230,000 tons. The USDA’s weekly sales numbers are out Thursday. ANEC estimates Brazil’s January corn exports at 5.2 million tons, which would be sharply above a year ago, but all signs point to Brazil being out of exportable corn shortly, opening the window wider for U.S. supplies. The U.S. Energy Information Administration says ethanol production last week averaged 1.012 million barrels a day, up 4,000 on the week, but down 23,000 on the year, while stocks hit a 42-week high at 25.077 million barrels, an increase of 1.675 million from the previous week and 601,000 from a year ago. The USDA’s attaché in South Africa left its corn production estimate unchanged at 15.6 million tons citing weather uncertainties.

The wheat complex was higher on fund and technical buying. There’s more snow in the forecast for the Plains, but it has missed some areas with bitterly cold temperatures in the forecast. That system is also expected to bring at least some precipitation to dry soft red winter growing areas as well. The USDA’s updated monthly state crop and weather stories are out next week. Part of the crop will remain in generally poor condition, but that could change by the time the crop emerges from dormancy in spring, if this anticipated weather pattern shift occurs. The trade is also watching domestic and international feed wheat demand. While long-term trend in the dollar is down, which could help exports, U.S. wheat is still high priced relative to most other origins, especially Russia. India is expected to release 3 million tons of wheat to end users, including flour mills, to tamp down record prices. Ukraine continues to export grain, but the pace has declined due to slower inspections.