Higher ending stocks push wheat lower
Soybeans were modestly higher on short covering and technical buying. It was up and down day for beans, with some pressure from the lower move in soybean oil and support from bean meal. The big feature for soybean products was spread adjustments tied to demand expectations. In the monthly supply and demand update, the USDA left U.S. ending stocks unchanged at 340 million bushels while CONAB raised its production outlook for Brazil to a record 142.79 million tons. CONAB does note that conditions in central Brazil are better than southern Brazil thanks to timely rainfall. That dryness is indicative of a La Nina pattern and is also impacting Argentina. The USDA left its guess for Brazil unchanged at 144 million tons, with the outlook for Argentina also steady on the month at 49.5 million. Imports by China and exports for Brazil were also unchanged. Ahead of the open, unknown destinations bought 280,000 tons of U.S. beans, half for 2021/22 and half for 2022/23, pushing the total over the last six business days to 1,079,100 tons, all to either China or unknown destinations. Last week’s sales jumped 54% from the previous week, with China and Egypt leading the way.
Corn was mixed, adjusting spreads. U.S. corn ending stocks were also unchanged from November, no changes to either exports or ethanol use, and CONAB increased its corn production guess for Brazil to a total of 117.182 million tons. That included month-to-month increases for Brazil’s first, second, and third crops. The USDA has Brazil’s corn crop at 118 million tons, steady with a month ago, and Argentina at 54.5 million tons, also unchanged. Argentina’s corn producers are reportedly planning to step up planting to get ahead of the drier conditions expected in the coming weeks. Ukraine’s corn production and export numbers were up on the month. The USDA’s next set of supply, demand, and production numbers is out January 12th. Corn export sales were back above a million tons, with Canada, Colombia, and China topping the list. Ethanol futures were unchanged.
The wheat complex was lower on commercial and technical selling. U.S. wheat ending stocks were up, with a lower export projection canceling out a cut in imports. World wheat ending stocks were higher and the USDA raised production for Australia, Canada, the European Union, and Russia. Those domestic and global ending stocks numbers were up more than expected, but remain well below last marketing year, leaving the fundamental outlook neutral to a little bullish. Still, contracts remain overbought and export demand for U.S. wheat remains slow halfway through the marketing year, with sales up from the previous week’s marketing year low, but still lower than average. The biggest buyers were Guatemala and Thailand.