Correction continues for soybeans

Market News

Correction continues for soybeans

Soybeans were lower on profit taking and technical selling. Beans gave back more of the recent gains, while still looking at bullish near-term supply and demand fundamentals. U.S. weather forecasts are mixed, with planting delays in some areas, and more dry conditions in others. Ahead of the first notice day for May contracts on Friday, no deliveries are expected on either beans or bean oil, while deliveries against May meal are seen at 0 to 100 contracts. Old crop soybean export sales had a solid increase from both the previous week and the four-week average, with Mexico leading the way, and new crop sales were solid, with China and unknown destinations topping the list. The International Grains Council projects 2020/21 global soybean export production at 362 million tons, up 1 million from March because of a larger estimate for Brazil, with 2021/22 at 383 million tons, unchanged on the month. Argentina’s Ministry of Agriculture says producers have sold 15.53 million tons of their 2020/21 crop, compared to 20.26 million this time last year because of slow farmer selling due to weak domestic currency. Soybean meal was modestly higher and bean oil was lower on the unwinding of product spreads, with May oil closing 296 points lower because of expanded trading limits. Soybean meal sales were bullish, soybean oil sales were bearish.

Corn was mixed, with nearby contracts up, including a close above $7 for May, and deferred months modestly lower. Corn was adjusting spreads, while watching U.S. planting and development conditions. No first notice day deliveries are expected against the May contract Friday due to tight supplies and solid demand. Old crop export sales were up on the week, but a little bit below average, with Mexico taking the top slot, and new crop sales topped 500,000 tons, thanks to solid demand from unknown destinations and Guatemala. The trade is also monitoring rain chances in the coming week for Brazil’s second crop. Improved precipitation would help, but some yield potential has likely been lost because of the slow start to planting and dry weather during key development phases. Parts of Argentina could see some near-term harvest delays. Argentina’s Ministry of Agriculture says 2020/21 corn sales by producers are 22.63 million tons, compared to 22.930 million at this stage of 2019/20. The International Grains Council pegs 2020/21 global corn production at 1.14 billion tons, compared to 1.134 billion a month ago, with 2021/22 at 1.192 billion tons, 1 million less than in March. Ethanol futures were unchanged.

The wheat complex was mixed, with Chicago and Minneapolis up on commercial buying and Kansas City down on profit taking. Near-term flooding is possible in some soft red winter areas, while long-term dry weather is an issue for hard red winter and spring wheat. There are some areas of concern, but world crop conditions generally look good. The International Grains Council estimates 2020/21 world wheat production at 774 million tons, 1 million higher than the last guess, with 2021/22 at a record large 790 million tons, unchanged from last month’s expectation. A grain trade group in Ukraine projects that nation’s 2021/22 wheat crop at 27.7 million tons, up 9.5% on the year, with potential exports of 21 million tons, compared to 17.5 million for 2020/21. Weekly old crop export sales were down on the week, but larger than average, Mexico was the biggest buyer in a list of fairly routine sales, and new crop was just over a quarter million tons, with the Philippines taking the top spot. The new marketing year for wheat starts June 1st. Argentina’s Ag Ministry says 12.14 million tons of the 2020/21 wheat crop have been sold, well below year ago levels. The USDA’s attaché for Canada estimates 2021/22 wheat production at 33.5 million tons, compared to 35.183 million in 2020/21, with exports of 24.1 million tons, compared to 27.1 million last marketing year. First notice day deliveries for May Chicago are projected at zero to 200 contracts and Minneapolis is seen at zero to 300, with a wide range of estimates for Kansas City. Part of the uncertainty about Kansas City is due to the uncertainties about increased use of hard red winter in livestock feed rations.