Soybeans, winter wheat see solid gains
Soybeans were higher on commercial and technical buying, with the nearby January through May contracts closing back above $13. Crush demand is strong thanks to solid margins and there’s strong end user demand for bean meal. Soybean oil was supported by oversold signals and a higher move in crude oil, with the broader market generally buying back part of Monday’s losses. China’s General Administration of Customs says November U.S. soybean imports were 3.63 million tons, up sharply on the month, with total purchases of 8.57 million tons, under a year ago. Chinese purchases from Brazil during November were above October and November 2020 levels. India’s government says it has cut its palm oil import tax from 17.5% to 12.5% to limit domestic price inflation. The trade is keeping an eye on dry conditions in parts of southern Brazil and Argentina, in-line with the La Nina pattern, which could have a negative impact on yield. There’s early talk of weather delaying Brazil’s soybean harvest because of heavy rainfall in parts of Mato Grosso. The USDA will update South American production and publish the final 2021 U.S. soybean and corn production numbers January 12th. CONAB’s next set of estimates for Brazil is out January 11th.
Corn was higher on commercial and technical buying. Corn is also watching weather in South America, with limited near-term rain in the forecast for some areas. The big issue will be planting conditions for Brazil’s second crop, which was hit hard last growing season by drier than normal weather. Still, contracts did run into some overhead resistance, with March topping out at $5.99 and the May contract unable to trade higher than $6. Export demand is slow, largely due to competition from Ukraine, but that’s partially canceled out by good ethanol demand. The USDA’s next corn for ethanol use projection is out January 12th in the monthly supply and demand update. Ethanol futures were unchanged. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday.
The wheat complex was higher on commercial and technical buying, with Chicago and Kansas City up sharply, pulling Minneapolis higher. Contracts are oversold, U.S. and global supplies of higher protein wheat are much tighter than normal, and domestic cash demand is good, especially for hard red winter. The southwestern U.S. Plains remain very dry, but other U.S. winter wheat growing areas have received precipitation recently. The USDA’s 2021 planted area numbers for winter wheat and other small grains are out January 12th. Western and northwestern parts of the U.S. Plains into the Canadian Prairies will need more precipitation ahead of spring wheat planting, with long term outlooks generally dry. The trade is also monitoring conditions in Russia, along with harvest activity in Argentina and Australia.