Sell-off continues for soybeans, corn
Soybeans were lower on fund and technical selling, closing towards the middle of the day’s range. Most forecasts have more rain in Brazil while a drier pattern in Argentina could be followed by another round of precipitation. Recent precipitation has aided prospects, but parts of South America will still need timely rainfall to meet production potential. A truck strike in Argentina over highway tolls and road taxes is blocking roads and delaying shipments to ports. Consulting firm Datagro estimates Brazil’s 2020/21 soybean crop at 135.61 million tons, up from the previous guess of 134.98 million tons. Demand is strong, with weekly export sales out Friday. China’s General Administration of Customs says it bought 25.89 million tons of soybeans from the USDA in 2020, short of the 40 million needed to meet the Phase One agreement, while purchases from Brazil were 64.28 million tons. Soybean meal was lower and bean oil was higher, adjusting product spreads. The gains in bean oil were despite another drop in Malaysian palm oil heading into the U.S. session.
Corn was modestly lower on fund and technical selling. Corn is also watching weather in South America, but the early slow soybean harvest activity in Brazil will mean delays for second crop corn planting. Consulting firm Datagro projects Brazil’s total corn crop at 109.93 million tons, compared to the prior estimate of 114.04 million. U.S. corn continues to hold a price advantage over other exporters. The trade is waiting to see what happens with export policy in Ukraine as Kyiv looks to implement a restriction on sales, supported by domestic livestock groups, but opposed by grain groups. The decision will reportedly be announced next week. Ethanol futures were unchanged. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Friday.
The wheat complex was lower on fund and technical selling. Wheat is overbought and the global supply outlook remains neutral to bearish, with the next set of supply and demand estimates out February 9th. Russia’s higher export tax is expected to drive at least some business to the U.S., but that’s not yet final. The first tariff would go into effect February 15th, but it rises sharply March 1st. According to reports, Russian officials estimate the 2021 grain harvest at 131 million tons, with 81% of the crop said to be in good condition. The complex is also monitoring overwintering conditions in the U.S., European Union, and Ukraine, along with harvest activity in Australia. Consulting firm IKAR estimates Russia’s 2021 wheat exports at 37.5 million tons, down 1 million from the previous guess and 2.5 million less than the current USDA projection. DTN says Japan is tendering for 72,653 tons of milling wheat from the U.S. and Canada.