Market News

Wheat continues to wilt, with corn, soybeans also down

Soybeans were lower on fund and technical selling. Early follow-through support was stifled by broader market pressure ahead of a Federal Reserve announcement on interest rates. That also pressured soybean meal. Soybean oil was mixed, adjusting spreads. 19% of soybeans are planted, ahead of average, even with delays in some areas. Forecasts for most of this week in much of the region are generally favorable. Beans are also monitoring the tail end of this year’s harvest in Brazil ahead of CONAB’s next round of numbers on the 11^th and the updated USDA supply and demand outlook on the 12^th. Fundamentally, exports are on pace to meet projections for the current marketing year despite the competition from Brazil and domestic demand is solid. Crop losses in Argentina appear to be factored into current price levels, but beans are oversold, technically. The losses in crude oil were also a bearish factor Tuesday.

Corn was lower on fund and technical selling. There are no reported deliveries on May corn, a reflection of solid domestic demand, even if exports haven’t met analysts’ expectations. That’s especially true over the last couple of months, with a spike in sales to China rapidly evaporating ahead of a return to what we’ve seen most of this marketing year. The recent losses have helped make U.S. corn theoretically more competitive, but it would take sustained demand between now and Brazil’s second crop coming online to avoid the USDA lowering the export projection. That said – the supply is already tight, so demand rationing could be a factor between now and the U.S. harvest. 26% of U.S. corn is planted, in-line with the normal pace, and 6% of the crop has emerged. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. Ukraine’s Ag Ministry estimates 2023 corn production at 22 million tons with 15 million of that expected to be available for export, well below the current marketing year.

The wheat complex was lower on fund and technical selling. The USDA’s good to excellent rating for winter wheat did improve, but remains at historically low levels, and spring wheat planting is slow. The poor to very poor rating on winter wheat also moved higher, negating some of that gain in the good to excellent category. Negotiations on the Black Sea Grain Initiative are expected to resume this week. The trade sentiment is that the deal won’t last past the May 18^th deadline, but even getting Moscow to the negotiation table is kind of a win given statements about sanctions and the “unfairness” of the deal. In any event, Ukraine’s likely going to be planting even less grain this season because of the continued attacks by Russia and Russia would likely fill most of that void on the export market. Ukraine’s Ag Ministry sees the 2023 wheat crop at 17 million tons with 11 to 12 million tons available for export, both down from 2022.