Market News

Wheat up on oversold signals, lower dollar

Soybeans were lower on fund and technical selling. Conditions in Brazil mostly look good and a recent drier weather pattern has helped push harvest past 50%. Conversely. Argentina’s crop remains in very poor shape, with the potential for further production projection reductions in the coming weeks. There’s some expectation that record crop in Brazil won’t be enough to fully make up for those losses in Argentina, which could exacerbate what’s could be a tight global vegetable oils situation in the second half of the year. There was also spillover from soybean products and crude oil, which all also saw liquidation. Soybean export inspections were below a year ago but remain ahead of the pace needed to meet USDA projections for the current marketing year. Last week’s top destinations were Mexico and Germany. The 2022/23 marketing year is just over the halfway point. The USDA’s next round of supply and demand estimates is out April 11^th.

Corn was mostly lower. Contracts are oversold, but crude oil was lower and export demand remains slow. Last week’s corn export inspections were nearly a million tons and up on the week, but still down on the year, reflecting the slower demand in the 2022/23 marketing year, largely due to increased competition in the feed realm and the slower demand from China. The leading destinations were Japan and Mexico. Spring planting in the Ukraine remains a big question mark because of the ongoing war with Russia and input scarcity. Stateside, the trade is waiting for the prospective planting and quarterly stocks numbers on the 31^st. There’s some rain in the forecast for parts of Argentina, but it’s likely too late to provide much help. The planting of Brazil’s second crop is 82% complete, with production expected to top 95 million tons, significantly larger than last year’s total, potentially slamming shut the U.S. export window this summer. Brazil’s first crop is 45% harvested. CONAB’s updated outlook for Brazil is scheduled for April 13^th.

The wheat complex was modestly higher on short covering and technical buying, along with the lower dollar. Wheat is oversold and drought remains a huge issue in parts of the southern U.S. Plains. Recent precipitation has missed most of the drier parts of the southwestern U.S. Plains and while it has alleviated drought conditions in other areas of the region, it hasn’t been enough to fully break the drought. Still, that might change if the shift to an El Nino pattern materializes this summer as expected, which would help the 2024 hard red winter crop. Negotiations are underway for an extension of the Black Sea Grain Initiative. Ukraine is requesting access to more Black Sea ports and faster inspections, while Russia wants sanctions removed even as it continues its offensives in the region. Russia and Ukraine continue to dominate the export market because of price. The trade is also monitoring soft red winter conditions in the eastern Midwest and southeastern U.S., a potential slow start to spring planting in the northern U.S. Plains and Canada, and development conditions in India. U.S. export inspections last week were just above what’s needed to meet the USDA’s estimate for the marketing year. The main destinations were Malaysia and El Salvador.