Soybeans, corn down after rain in South America

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Soybeans, corn down after rain in South America

Soybeans were sharply lower on fund and technical selling. Argentina got rain over the weekend and parts of southern Brazil should see some early this week, bringing some short term relief. Most forecasts have a turn to generally drier weather in those portions of South America, in-line with La Nina. AgRural says 96% of Brazil’s soybean crop is planted, adding some signs of drought are already showing up in portions of the southern growing region. CONAB’s next set of crop estimates for Brazil is out January 11th. U.S. export inspections were down on the week and the year, with 2021/22 trailing 2020/21 by a substantial margin. The top destinations were China and Egypt. Soybean meal was down, except for the soon to expire December contract, and bean oil was lower on the bearish tone in the soy complex. Deliveries against December meal continue to be very light, reflecting the tight supply and demand situation.

Corn was modestly lower on fund and technical selling. Corn is also watching South America, with most forecasts continuing to favor central Brazil over southern areas of that country and Argentina. The biggest question for Brazil at this time is how will their critical second crop perform. That crop was hit hard by another La Nina event last year, drastically impacting production and exports. The USDA’s next round of U.S. and global supply, demand, and production numbers is out January 12th, including the final 2021 U.S. corn and soybean totals. Deliveries against the December corn contract have been very light. Ethanol margins have dipped, but still look good, and there’s talk exports will pick up steam. Ethanol futures were unchanged. Export inspections were above a week ago, but below a year ago, with China and Mexico leading the way. Ukraine has been a big competitor, with their ag ministry projecting production at 80.9 million tons and exports at 30.9 million tons, both well above a year ago.

The wheat complex was mostly higher, with Chicago and Kansas City up on short covering and Minneapolis mixed on bear spreading. The USDA did raise ending stocks last week, but near-term U.S. and world supplies are the tightest they’ve been in years. Long-term forecasts for the southwestern U.S. Plains remain dry. There is some rain in most outlooks for parts of the southern U.S. Plains, which would be welcome, and portions of the eastern Midwest. The trade is also monitoring harvest activity in Argentina and Australia. SovEcon sees Russia’s crop at 75.4 million tons, slightly less than the most recent USDA guess. Russia is reportedly considering revising its export tax program if prices continue to rise. The trade is also monitoring political tensions as Russian troops mass near the border with Ukraine, which could impact exports. Just over the halfway point, U.S. export inspections continue to lag last marketing year. Last week’s biggest destinations were Japan and Nigeria.