Lack of exports weakens crop futures

Market News

Lack of exports weakens crop futures

Soybeans flipped to trade lower after profit taking on an overbought bounce. January beans closed three and a quarter cents lower at $13.59 and March beans closed three and a half lower at $13.68. Soybean meal kept its strength finishing $1.10 higher at $415.90. Soybean oil drew back, losing 17 points closing at $56.55. A lack of export news was bearish across the board for commodities. Soybean futures have been supported by drought conditions in South America, mostly Brazil and Argentina. A strong soybean basis is creating strong soybean meal demand, but that strength could be limited on extended feed stock demand.

Corn is lower on an overbought bounce after closing at a six-month high Monday. March corn closed 10 cents lower at $6.04 and May corn closed 10 and a quarter cents lower at $6.06. A lack of new market information and quiet trade front seemed to be the main market factor on Tuesday, driving down futures prices. Argentina’s crop reports are positive for the competitor, but the looming weather concerns are limiting bearish action. U.S. corn inspections are down 15 percent compared to this time a year ago which could push down corn futures as the year closes. Last week, corn hit its highest break-even price since 2012 which might add pressure for profit taking. A mostly hot and dry extended forecast for Brazil and Argentina is still bullish for the market but any potential rain would reverse that support. Ethanol plants are expected to be active buyers of corn indefinitely despite a recent drop in ethanol prices, adding support into the market. The demand picture for feedstocks and exports are more uncertain with cattle on feed numbers coming into December down six percent and corn export sales lower than this time last year.

Wheat traded sharply lower on the day after overpricing its limited supply. News of a good harvest in Australia was also bearish for the complex. The March Chicago contract closed 20 and a half cents lower at $7.83, March Kansas City closed 25 and a quarter lower at $8.21, and March Minneapolis fell below $10 – losing 25 cents to close at $9.99. The value of the dollar, although firm, seems to be limiting trade value adding some bearish action into the wheat complex. The tight ending stocks especially for hard red winter wheat seems to have been priced into the market.  Transportation difficulties from the U.S. Gulf to China is hampering the market. The wheat complex is seeing a downward push on global weather reports being bullish for competitors. Russian and Ukrainian tensions have settled a bit adding bullish pressure into the long-term outlook.