Market News

Wheat, corn bounce, still down on week

Soybeans were modestly lower on fund and technical selling, capping off a bearish week. Soybeans and products continued to largely ignore the crop issues and lower estimates in Argentina. It’s looking more than more likely the record crop in Brazil might not make up for the losses in Argentina as further reductions are probable with more hot, dry weather in the forecast. Argentina is normally the world’s biggest exporter of soybean products but is expected to increase imports to fill some contracts. The USDA’s next round of supply and demand estimates is out April 11^th and CONAB’s updated outlook for Brazil is scheduled for April 13^th. Soybean meal was mixed on bear spreading and soybean oil was down on demand uncertainties. Those demand uncertainties are also despite expectations for tighter global vegetable oil supplies in the back half of 2023.

Corn was modestly higher on short covering and technical buying, still ending the week in the red. Corn was oversold, but unable to generate a lot of upward momentum, even with those drought issues in Argentina. Planting of Brazil’s second corn crop continues to move forward with projections generally north of 95 million tons, which would help account for at least some of the anticipated shortfall. Export demand for U.S. corn has shown some signs of improvement, it’s going to take a significantly faster pace of shipments for the USDA to not cut its projection further next month. A lot of that will depend on if Argentina’s normal buyers decide to shift to the U.S., or if they move to something else, like feed wheat. China remains almost totally absent from the U.S. corn market when compared to last marketing year. Stateside, conditions in the Midwest generally look good, maybe a little cool, with the USDA’s prospective planting numbers out on the 31^st.

The wheat complex was higher on short covering and technical buying, along with the lower dollar, but still posted significant week-to-week losses. Contracts were oversold and due for a bounce after recent moves to multi-month lows. Kansas City took the lead as most forecasts have more dry conditions in the southwestern U.S. Plains. While other U.S. winter wheat growing areas are in generally better shape, as hard red winter inches towards fully breaking dormancy, there are increasing concerns about mostly miserable conditions impacting yield and higher rates of abandonment. A potential shift to an El Nino pattern this summer could alleviate some of those issues for the 2024 HRW crop. The trade is also watching conditions in the northern U.S. Plains and Canada ahead of spring wheat planting. Russia and, to an extent, Ukraine continue to dominate the export market, with the current version of the Black Sea Grain Initiative set to expire on the 18^th. While there hasn’t been much public progress in negotiations, recent futures trade seems to indicate the market is betting on an extension.