Big drops for corn, soybeans, and wheat
Soybeans were sharply lower on speculative and technical selling, in addition to the outside markets, pushing contracts to sharp weekly losses. Conditions have improved in most of Argentina and Brazil after recent rainfall and while more will be needed, especially in Argentina, this has helped. The Buenos Aires Grain Exchange says Argentina is 98.6% planted, with 21% of the crop rated good to excellent, up 3% on the week, and 10% poor to very poor, down 9%. Harvest is underway in Brazil and while estimates have come down for Brazil, it still should be a record crop. Agroconsult sees Brazil’s crop at 132.4 million tons, compared to the November guess of 133.2 million, and also lowered exports slightly. Stateside, IHS Markit estimates 2021 U.S. planted area at 90.08 million acres, above their previous projection and up 8% from 2020, with production of 4.638 billion bushels and an average yield of 52 bushels per acre. As of Friday, just March and May beans were still above $13. Soybean meal and oil were sharply lower on the broader market and beans, along with the fundamental implications of large South American crops. China bought 136,000 tons of 2020/21 U.S. beans Friday. Weekly soybean export numbers were bullish, including solid 2021/22 sales, China led the way for both marketing year, while bean meal hit a marketing year high for the second week in a row and soybean oil sales improved.
Corn was sharply lower on speculative and technical selling, along with the outside markets, posting big week to week losses. Corn is also watching weather in South America, with significant improvements for conditions in many areas. The Buenos Aires Grain Exchange says 93.4% of Argentina’s corn crop is planted, with 28% of the crop rated good to excellent, a week-to-week improvement of 9%, with 8% called poor to very poor, half of the previous week. Agroconsult has 2020/21 total corn production for Brazil at 109 million tons, compared to the November projection of 108.8 million, with an increase in planted area for the critical second crop. For the U.S., IHS Markit has 2021 planted area at 94.244 million acres, more than 3 million above December and potentially 4% larger than last year, with production of 15.658 billion bushels and an average yield of 181.0 bushels per acre. Additionally, the speed of the recent rally made it all that much easier for corn to fall, but March and May did both close above $5. U.S. corn still has a price advantage over most exporters, but Argentina has stepped up sales as their prices have declined. Weekly corn and sorghum export numbers were solid. China bought 123,000 tons of U.S. sorghum Friday morning, with 60,000 tons for 2020/21 and 63,000 tons for 2021/22. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol production last week averaged 945,000 barrels a day, up 4,000 on the week, but down 104,000 on the year, while stocks totaled 23.628 million barrels, a decrease of 64,000 from the previous week and 403,000 below a year ago.
The wheat complex was sharply lower on fund and technical selling, cementing sharply lower weekly finishes at the three U.S. exchanges. The dollar was higher during the session, the global supply is neutral to bearish, and Russia’s proposed export tax isn’t in place yet. Moscow has not made the tariff official and while part of the plan is set to start February 15th, the more burdensome duty wouldn’t kick in until March 1st. That’s expected to drive at least some business to the U.S., but when, how much, and for how long are unknowns. SovEcon sees Russia’s wheat crop at 77.7 million tons, compared to 76.8 million a month ago thanks to improved precipitation. Weekly wheat export sales and shipments were bearish. DTN says there are several open export tenders, but it’s uncertain just how much of that will go to the U.S. Even if prices are competitive, freight costs can be an issue. The trade is watching expanding drought conditions in parts of the U.S. Plains. The USDA will update state crop conditions next week. IHS Markit pegs all 2021 U.S. wheat acreage at 45.281 million acres, a bit lower than in December, but more than 1 million acres above 2020, with non-durum spring wheat at 11.49 million acres, compared to 12.25 million a year ago.