Soybeans up, following bean meal

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Soybeans up, following bean meal

Soybeans were higher on commercial and technical buying. Bean meal took lead for the soy complex, moving back to multi-month highs supported by solid end user demand and strong crush margins. Soybean oil was lower on product spread adjustments and a drop in crude oil futures. Most forecasts have warm, dry weather in southern Brazil and Argentina over the next couple of weeks, in-line with La Nina conditions. For now, conditions are generally good overall, but significant crop loss in South America would inflate global prices even further, likely limiting any improvements in demand for U.S. beans. The USDA’s next set of supply and demand estimates is out January 12th. Soybean export inspections were down on the week and the year, primarily to China and Egypt. India’s market regulatory body says it will suspend trading in soybean oil, crude palm oil, soybeans, and wheat, along with other commodities, to limit domestic food price inflation.

Corn was modestly lower on fund and technical selling. Corn had spillover pressure from the broader market, which sold off on concerns over the Omicron variant. Crops in southern Brazil and Argentina are generally in good shape, but there could be some stress during the pollination phase. The big question for South America is the performance of Brazil’s second crop, which is planted after the soybean harvest. Export inspections were up from last week and last year, but still slower than what’s needed to meet the USDA’s target for the marketing year. The main destinations were Mexico and China. Export demand remains slower than expected with China favoring Ukraine over the U.S., but improved ethanol demand is helping to allay some of those concerns. Ethanol futures were unchanged.

The wheat complex was mixed, with Chicago and Kansas City up, bouncing back after the initial losses, and Minneapolis mostly weak, adjusting spreads. Paris milling wheat was lower ahead of U.S. trade and Russia’s prices fell last week, with their export tariff moving higher again this week. Moscow announced it will lower limit wheat export availability to 8 million tons starting February 15th through the end of the marketing year. Those export restrictions have pushed Russia’s wheat export pace well behind last marketing year. U.S. export inspections were below a week ago and a year ago, with Mexico and South Korea leading the way. The southwestern U.S. Plains are dry and there’s at least some damage from recent dust storms in Kansas. Eastern and northwestern parts of the Plains have recently received precipitation but will need more to help those crops offset some of the expected yield loss from other areas. The trade is also monitoring harvest activity in Argentina and Australia.