South American weather supports soybeans, corn
Soybeans were sharply higher on commercial and technical buying. Most forecasts have more hot, dry weather in southern Brazil and Argentina, lowering production potential. Parts of central and northern Brazil are seeing early harvest delays due to excessive rain, which could have an impact on export availability. China has reportedly purchased significant amounts of Brazil’s new crop, anticipating an early harvest following faster than normal planting. CONAB’s next round of estimates for Brazil is out on Tuesday, the 11th. There was also spillover from soybean products and crush demand is solid. Soybean oil was supported by global vegetable oil demand expectations. Bean meal was mostly higher on bull spreading. There are still no deliveries against the January soybean meal contract.
Corn was sharply higher on commercial and technical buying. Corn is also watching development conditions in South America, with La Nina conditions a big factor. Some private firms are already cutting expectations for Argentina and Brazil, with new USDA supply and demand numbers out on the 12th, along with the final 2021 U.S. corn and soybean production totals. The critical crop for South America will be Brazil’s second corn crop, which is planted after soybeans are harvested. Export demand has picked up a little recently, but the U.S. is still facing competition from Ukraine, especially when it comes to trade with China. The big bright spot for corn continues to be ethanol demand. Ethanol futures were unchanged. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday.
The wheat complex was higher on commercial and technical buying. The USDA says winter wheat condition ratings in some prime growing areas were down on the month due to either drought in the Plains or excessive precipitation in the eastern Midwest. The bigger question is if there will be a significant shift in conditions by the time crops emerge from dormancy. The USDA’s 2021 winter wheat planted area report is out on Wednesday, January 12th. Parts of the northwestern U.S. Plains and Canadian Prairies have recently received rainfall ahead of spring wheat planting but many areas will need more. Argentina and Australia are expecting record production, limiting gains. The trade is also monitoring overwintering conditions in Europe and the Black Sea region, in addition to tensions between Russia and Ukraine. Those tensions haven’t led to any appreciable changes in the export market yet. Russia’s ever-rising wheat tariff and announced export cap haven’t really helped U.S. sales. There is some talk the U.S. could play a role in a recent tender from Iraq.