Soybeans down on meal, export pace

Market News

Soybeans down on meal, export pace

Soybeans were modestly lower on profit taking and technical selling, along with spillover from bean meal. China bought 130,000 tons of 2021/22 U.S. beans, but the overall pace of sales remains slower than expected. That does bring the total over the last three business days to 546,100 tons. Inspections topped 2 million tons, mainly to China and Germany, but that slower demand from China and shipping disruptions earlier this year have kept 2021/22 behind 2020/21. Most forecasts have a turn to drier weather in parts of South America, in-line with La Nina. That faster than average planting pace in Brazil, at more than 94% complete, is expected to put their beans on the export market earlier than normal, further stymieing U.S. sales. Bean meal was lower on profit taking and commercial selling, while bean oil was up on product spread adjustments and a higher move in crude oil. The USDA’s attaché in Indonesia has 2021/22 palm oil production at 45.5 million tons, compared to 43 million in 2020/21 due to better weather, increased fertilizer usage, and higher prices. The USDA also raised domestic use and export projections.

Corn was narrowly mixed, down for much of the day, but with deferred contracts seeing late, light support as losses in bean meal eased. Export demand for corn also is slower than expected and corn is also keeping an eye on conditions in Argentina and Brazil. Some rain is in the forecast for parts of South America, but longer-term outlooks are uncertain, especially for Argentina and southern Brazil. Export inspections failed to break 80,000 tons last week and were down on the month and the year, with 2021/22 trailing 2020/21. The top destinations were Mexico and China. There’s been more talk, but no confirmation, of China recently buying corn from the U.S. and Ukraine. Ethanol demand continues to be solid, with the trade waiting to see what the EPA does with 2022 mandates. Ethanol futures were unchanged. New USDA supply and demand numbers are out Thursday, with the USDA’s final 2021 U.S. production totals scheduled for January.

The wheat complex was mixed, with Chicago and Minneapolis up on commercial buying and Kansas City mixed, adjusting spreads.  Drier weather in parts of Australia should help harvest pick up steam, but some damage to quality has been done to their expected record crop. As much as a quarter of their crop could be downgraded to feed quality due to heavy rainfall in some eastern and southern areas. Most near-term forecasts have continued dry weather in the southern U.S. Plains, which, along with wetter than normal conditions in parts of the eastern Midwest, has dragged pre-dormancy condition ratings to more than 10-year lows. Wheat is also monitoring conditions in Europe, Russia, and Ukraine, along with harvest activity in Argentina. Just past the halfway point of the marketing year, it was another bearish week for export inspections, with South Korea and Mexico leading the way. Russia’s Federal Service for Veterinary and Phytosanitary Surveillance says that wheat exports since the start of the marketing year are 18.8 million tons, 18% behind last marketing year because of higher export taxes, which rose again this week, now at $84.90 per ton. The agency has production at 79 million tons, compared to 88.1 million a year ago.