Grains, oilseeds buoyed by broader market, commercials
Soybeans were higher on commercial and technical buying, with some help from the broader market. End user demand for soybeans and soybean products continues to be strong and crush margins are very positive. That’s helping to cancel out some of the concerns over the export pace. The USDA’s weekly export sales report is out Thursday morning at 8:30 Eastern/7:30 Central. Soybean meal and oil were also supported by commercial buying and the trade in the broader market. According to reports from South America, soybean conditions are declining in Brazil’s state of Parana due to hot, dry weather, consistent with La Nina, with that weather also causing some stress to soybeans in Argentina and Paraguay. Conditions in other areas of Brazil are generally favorable. CONAB’s next guess for Brazil is out January 11th, with updated USDA projections on the 12th, in addition to the first “official” 2021 U.S. production totals for beans and corn.
Corn was modestly higher on commercial and technical buying, in addition to the outside market influence. Corn for ethanol use is solid, with very good margins for most Midwestern producers. The U.S. Energy Information Administration says ethanol production last week averaged 1.051 million barrels a day, down 36,000 on the week, but up 75,000 on the year, while stocks declined for the first time in five weeks to 20.705 million barrels, a decline of 178,000 from the previous week and 2.464 million from a year ago. The trade is monitoring dry weather in parts of southern Brazil and Argentina, in-line with La Nina. The big issue for South America will be how that weather pattern impacts Brazil’s key second corn crop, the source of most of their exports. A quarter into the current marketing year, export demand for U.S. corn has been slower than expected, with China favoring Ukraine over the U.S., despite a price advantage. Ethanol futures were unchanged.
The wheat complex was higher on commercial and technical buying, along with the lower trade in the U.S. dollar. Chicago and Kansas City were in the lead, supported by recent cash strength, which propped up Minneapolis. Drought continues to be a concern ranging from the southern to the northwestern U.S. Plains. Long-term outlooks for the southwestern U.S. Plains remain dry, typical for La Nina, and while southeastern and northwestern parts of the Plains have received rain, more will be needed. Precipitation has been ample, if not overly ample, in portions of the eastern Midwest. The winter wheat planted area is expected to be above a year ago, with the USDA’s acreage numbers out January 12th. The trade is also monitoring conditions in Europe, Russia, and Ukraine, along with harvest activity in Argentina and Australia.