Corn clings onto modest gains

Market News

Corn clings onto modest gains

Soybeans were modestly lower on profit taking and technical selling. Contracts were up early but were unable to break overhead resistance and the USDA hasn’t announced a U.S. soybean export sale in more than a month. Demand is solid and the U.S. and world supplies will only get tighter until harvest starts in South America. The trade is also monitoring conditions in Argentina and Brazil, with good recent precipitation against some longer-term questions about coverage. Analyst Dr. Michael Cordonnier left his soybean crop outlook for Brazil unchanged at 130 million tons and reduced Argentina by 1 million tons to 48 million. Brazil’s National Association of Cereal Exporters (ANEC) estimates December soybean exports at 89,000 tons, down from last week’s guess of 93,000 and the year ago total of 2.5 million tons. The USDA’s final 2020 U.S. bean and corn production numbers are out January 12th, along with several other key reports. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. Meal picked up additional support from an ongoing grain worker strike in Argentina and reportedly crushers have pulled meal and oil offers from the spot market.

Corn was modestly higher on commercial and technical buying. Recent rain has helped crops in South America, but there are long-term concerns because of the La Nina pattern. Planting has picked up steam, while the big questions are about Brazil’s second crop, the larger of the three and the source of most of their exports, which gets planted after soybeans are harvested. Analyst Dr. Michael Cordonnier sees Brazil’s combined corn crop at 102 million tons, down 2 million, and lowered the guess for Argentina by 1 million tons to 47 million. ANEC estimates Brazil’s corn exports for December at 4.46 million tons, compared to the prior projection of 2.9 million tons and 53% above December 2019. The USDA’s weekly U.S. export sales numbers are out Thursday morning. The U.S. Energy Information Administration says ethanol production last week was a seven-week low, averaging 957,000 barrels a day, while supplies hit a 29-week high at 22.95 million barrels, an increase of 867,000 on the week and 1.152 million on the year. Ethanol futures were unchanged. Brazil’s government will allow a tariff rate quota on U.S. ethanol expire, pushing the tax rate to 20% on all imports.

The wheat complex was modestly lower on profit taking and technical selling. U.S. winter wheat conditions are mixed as the crop gets further into dormancy, also with longer-term concerns because of La Nina. Parts of the Black Sea region, especially Russia, have seen bitterly cold conditions with little or no snow cover, and there are also concerns about Ukraine’s crop. While yield potential is better measured by conditions coming out of dormancy, enough of the global winter wheat crop went into that state in less than ideal condition that it could trim production in coming months. For now, the global supply fundamentals remain bearish. The USDA’s next set of supply and demand estimates is out January 12th, along with winter wheat planting figures and quarterly grain stocks.