Soybeans up on fundamental support

Market News

Soybeans up on fundamental support

Soybeans were higher on commercial and technical buying. Beans had another round of support from the tight supply and solid demand, with bullish weekly export inspections. The top destinations were China and Pakistan. The USDA has not announced a sale of U.S. soybeans in more than a month. Most forecasts have mixed rain in South America, with much better coverage in some areas than other parts of the region, largely favoring Brazil over Argentina, but parts of Argentina should see a wetter pattern this week. Oil World sees Brazil’s crop at 129.5 million tons, compared to the USDA’s most recent guess of 133.0 million. The next set of supply and demand estimates is out January 12th. Soybean meal and oil were up, following the lead of beans. The NOPA member crush numbers for November are out Tuesday, with an average estimate of 180.025 million bushels. That’d be below the record for any month set in October, but up solidly from November 2019.

Corn was fractionally mixed on commercial spread adjustments, along with spillover influence from beans and wheat. Corn is also watching weather in South America, with good weekend rain in parts of Brazil against less than what’s needed in others and concerns about long-term conditions because of the prevailing La Nina pattern. Brazil’s got a tight corn supply and those soybean planting delays will push back second crop corn planting. Solid export and feed demand provided some support. Weekly corn export inspections were more than what’s needed to meet USDA projections, with China and Mexico leading the list of recipients. In addition to the updated supply and demand estimates, the USDA will also be issuing the 2020 U.S. corn and soybean production totals on January 12th, along with quarterly grain stocks. Ethanol futures were lower. Sorghum inspections were up on the week and the year, with China and Japan the primary destinations.

The wheat complex was lower on profit taking and technical selling. Traders bought a rumor last week and sold the fact to start this week as Russia says it will impose an export tax on wheat starting in February to limit domestic price inflation. The tax of $30.40 per ton is expected to run from February 15th to June 30th. That news sent Russian wheat prices sharply lower ahead of the U.S. session. SovEcon says that could cut 2020/21 Russian wheat exports by a couple of million tons. Concerns about winter wheat conditions are on the back burner as the crop heads into dormancy. The bigger factor for yield potential will be what do crops in the U.S., European Union, Russia, and Ukraine look like after emerging from dormancy. The USDA’s U.S. winter wheat planted area numbers are out January 12th, along with a few other key reports. China was the top destination for weekly wheat export inspections, Indonesia took second place, and while the 2020/21 pace remains ahead of 2019/20, it’s by a very small margin.