Market News

Wheat shrugs off dollar, focusing on weather, Ukraine

Soybeans were lower on profit taking and technical selling. Parts of the Midwest and Plains will see cooler temperatures, but limited rain, keeping early harvest moving. Anecdotal yields are still hard to come by but will start to surface shortly ahead of the next USDA production update October 12th. Farmer selling in Argentina appears to be set to stall after the recent increase in sales. After some heavy movement in recent weeks and strong demand from China, Buenos Aires has cut foreign currency availability for producers. Argentina is typically the world’s biggest exporter of soybean products. Soybeans are also monitoring early planting activity in Brazil, with a potential record crop. Soybean meal was mostly lower, adjusting spreads, and bean oil was down on the lower move in crude oil.

Corn was modestly lower on profit taking and technical selling. Corn is watching early U.S. harvest activity, along with planting conditions in Argentina and Brazil. The big test for South America though will be Brazil’s second crop, which is planted after soybeans are harvested, early next year. Ethanol demand has slowed down and production fell to a more than 18-month low last week. The U.S. Energy Information Administration says production averaged 901,000 barrels a day, down 62,000 on the week and 25,000 on the year, with stocks declining for the fourth consecutive week to a nine-month low at 22.501 million barrels. Still, that is above a year ago when the industry was looking at stronger demand, also during a maintenance phase. The USDA’s quarterly grain stocks numbers are out on the 30^th, which will give some indication of demand and effectively serve as the first official look at 2021/22 ending stocks. U.S. exports are hampered by Ukraine and South America, with the USDA’s weekly numbers out Thursday morning.

The wheat complex was higher on short covering and technical buying, shrugging off the higher move in the U.S. dollar. The trade’s watching U.S. winter wheat planting conditions, with planting potentially limited in the southern Plains by drought, while waiting to see what happens in the Black Sea region. Russia is expected to call up more troops, which would impact Ukraine’s exports and planting. A grain consulting firm in Ukraine says it expects winter wheat planted area to be down 10.5% from the Ag Ministry’s late August projection and nearly half of the previous winter growing season’s total because of Russia’s invasion. Ukraine’s Ministry of Agrarian Policy says that nation has exported 2.581 million tons of grain so far this month, including 1.044 million tons of wheat, well behind a year ago. Russia was already unlikely to extend Ukraine’s export corridor past November 22^nd and the recent actions by Moscow are making that even less likely. The U.S. spring wheat harvest is nearly over with the USDA’s small grains summary out on the 30^th.