Market News

Tight supplies fuel gains in soybeans, corn

Soybeans were sharply higher on commercial and technical buying, pulling November 2021 and January 2022 above $14. There was another round of support from the tight soybean supply, strong domestic demand, and strong global demand for vegetable oils. U.S. planting delays are probable in some areas over the next few days, with rain and cooler temperatures expected in parts of the Midwest and Plains. Export demand has slipped as Brazil’s crop continues to move to market, but shipments remain ahead of what’s needed to meet projections for the 2020/21 marketing year. China didn’t outright buy any U.S. beans last week, but unknown destinations led the way for old and new crop. Still, U.S. beans remain significantly less expensive than China’s domestic prices. Domestically, crush demand remains strong, even with high U.S. prices. The Buenos Aires Grain Exchange says 53% of Argentina’s soybean crop is harvested, compared to the five-year average of 66%. Soybean products were mostly higher, with bull spreading the big feature for meal and bear spreading the order of the day for oil.

Corn was higher on commercial and technical buying, with July and December hitting new highs. Corn remains focused on the tight supply, solid demand, planting delays, and concerns about probable yield loss in Brazil’s second crop. The USDA is expected to lower its production estimate for Brazil next week in the supply and demand report. Those numbers are out Wednesday, May 12^th at Noon Eastern/11 Central. Those crop condition concerns for Brazil have pushed their FOB and domestic prices higher, while China’s domestic prices remain well above U.S. levels. Weekly corn export sales reflected the impact of the runup in price. China bought a routine amount of old crop, while unknown destinations canceled on more than a half a million of old crop and was the leading buyer for new crop. The trade is also monitoring shipping and movement issues in Argentina caused by low water levels on a key river. The Buenos Aires Grain Exchange says 22% of Argentina’s crop is harvested, compared to 32% on average. Ethanol futures were unchanged.

The wheat complex was higher on commercial and technical buying, with July Kansas City making a fresh high and deferred Minneapolis closing in on $8. The rain in the forecast for the Plains won’t break the region’s drought or near drought conditions. That extends from the hard red winter growing areas in the southern and central Plains into the spring wheat growing region of the northern and northwestern Plains and Canadian Prairies. The complex is also watching livestock feed demand, with wheat reportedly replacing corn and bean meal in some rations. The USDA in March, surprisingly, lowered the U.S. feed wheat guess, but as expected, hiked the global outlook because of China. Argentina is expected to increase barley acreage, nearly identical to wheat in terms of feed value, in response to the continued trade tensions between China and Australia. Beijing is also reportedly expected to raise minimum purchase prices for wheat and rice and further subsidize corn and soybeans to limit price inflation and shore up domestic reserves. Old crop export sales were a net reduction and new marketing year low, but new crop sales were solid. The new marketing year for wheat gets underway June 1^st.