Market News

Wheat falls on Ukraine grain export deal extension

Soybeans were lower on fund and technical selling. Global vegetable oils were down on demand concerns linked to China’s zero-COVID policy. Outside markets were mostly bearish during the session, with the dollar up and crude oil down sharply. Domestic crush margins have dipped a bit, but remain firmly in positive territory. Soybean meal was down on the bearishness in the soy complex and the fundamental implications of another big crop in Brazil. Also, while China is very short of soybean meal, it’s not turning to the U.S. to fill needs, but part of that is also slower U.S. farmer selling. Most near-term forecasts have more rain in South America ahead of a drier pattern for Argentina. Export sales were strong at more than 3 million tons, or more than 111 million bushels, mainly to China and Mexico. The USDA’s next round of supply, demand, and production numbers is out December 9^th.

Corn was mixed on bull spreading. The Ukraine grain export deal has been extended another 120 days, likely further limiting export demand for U.S. corn. Both Ukraine and Brazil have a decided price advantage over U.S. supplies, due in part to the relative strength of the U.S. dollar. U.S. corn sales climbed back above a million tons, with Mexico and Canada leading the way. But sustained demand is a concern due to the U.S. price disadvantage and Mexico’s anticipated ban on GMO corn imports, set to start in 2024. Brazil’s ANEC raised its projection for that nation’s November corn exports to 6.64 million tons. U.S. cash basis levels are strong and demand for feed and fuel use is solid.

The wheat complex was lower on fund and technical selling. Wheat reacted to the export deal agreement extension, with wheat from Russia and Ukraine currently the cheapest in the world. Even with that extension, the conflict in Ukraine continues to rage on, with no end in sight to Russia’s aggression. No confirmation yet, but there’s talk Egypt bought 300,000 tons of wheat from Russia through private sellers. The U.S. dollar was up during Thursday’s session, making U.S. goods more expensive on the export market. U.S. export sales were down on the week, primarily to Mexico and Japan. Most forecasts have expanding drought in the U.S. Plains, with the USDA’s winter wheat good to excellent rating already the lowest in years ahead of full dormancy. Drought and poor crop conditions are also an issue in parts of the eastern Midwest. Heavy rainfall in parts of Australia is leading to concerns about crop quality, while drought or near drought conditions have had a big impact in Argentina.