Soybeans mostly lower to start March
Soybeans were mostly lower, adjusting spreads. Brazil’s soybean harvest remains slower than average due to rain in some key growing areas and near-term forecasts for Argentina are dry. The U.S. and world supply remains tight, but export demand has slowed down and there’s talk China has been buying beans from Brazil, when available. Weekly export inspections were more than what’s needed to meet projections for the current marketing year, which has hit the halfway point. Chinese soybean prices hit record highs heading into the U.S. session on tight domestic supplies and expectations for domestic acreage loss in favor of corn, while soybean meal prices dropped on concerns about new cases of African swine fever reducing demand. Losses in new crop contracts were limited by acreage position squaring ahead of widespread U.S. planting. Soybean meal and oil were lower. The USDA says the 2020 soybean crush was 66.223 million tons, up 6% from 2019, with meal and oil production also up on the year. January’s crush of 5,895,360 tons was above December and January 2020.
Corn was lower on fund and technical selling. Corn is also watching South America, with second crop corn planting slower than average in Brazil and possible stress in portions of Argentina from warm, dry weather. The USDA’s next set of international production estimates is out March 9th in the monthly supply and demand update. Stateside, early planting delays are probable in parts of the south and the Delta. The USDA’s Ag Outlook Forum expects 2021 acreage to be above 2020. The USDA’s survey-based prospective planting numbers are out March 31st, along with quarterly stocks data. Weekly export inspections were bullish for corn and sorghum. Ethanol futures were unchanged. The USDA says 4.776 billion bushels of corn were used for ethanol production in 2020, down 10% from 2019, with DDGS production of 20.163 million tons, a decline of 11%. In January, corn for ethanol use was 415.804 million bushels, with DDGS production of 1.75 million tons, both 10% less than last year.
The wheat complex was lower on fund and technical selling. The trade is watching conditions in the U.S. Plains and Midwest as winter wheat starts to emerge from dormancy, with concerns about drought and recent winterkill damage. The trade is also monitoring conditions in the European Union, Russia, and Ukraine, weather ahead of spring wheat planting in the northern U.S. Plains and Canada, and Australia’s harvest activity. Australia is expected to produce a record crop this year, but Australia’s Bureau of Agriculture and Resource Economics and Sciences projects 2021/22 production at 25 million tons, down 25% on the year, because of lower planted area and a return to drier weather. U.S. wheat prices are generally competitive, at least until freight costs are factored in. Weekly export inspections were bearish as wheat enters the fourth quarter of the 2020/21 marketing year. China reportedly sold 1,681,496 tons of wheat from state reserves last week, 41.68% of the offering, as producers continue to fill feed rations with wheat, in place of other, higher priced ingredients.