Soybeans, wheat drop, corn mostly lower
Soybeans were sharply lower on fund and technical selling. Most forecasts do have a chance of rain in dry parts of South America this weekend, and while some damage has been done, a less stressful weather pattern would generally be welcome. Still, that’s a big question mark, with several government and private entities recently lower projections for Argentina and Brazil, where it’s roughly the equivalent of mid-July for crops. The Rosario Grain Exchange has Argentina’s soybean crop at 40 million tons, compared to the prior projection of 45 million. The Buenos Aires Grain Exchange says 31% of Argentina’s bean crop is called good to excellent, compared to 48% last week. The International Grains Council sees global production at 368 million tons, compared to the November estimate of 280 million, also lowering trade, consumption, and carryover. The U.S. export sales pace remains well behind last marketing year. Last week’s old crop sales were short of 750,000 tons, with just under half purchased by China. New crop sales of 183,000 tons were to unknown destinations and China. China says it wants to produce 40% more soybeans domestically by 2025, around 23 million tons, in order to become more self-sufficient. Soybean meal and oil were lower on those forecasts for South America and the generally bearish tone in grains and oilseeds. There are still no deliveries against January bean meal, which expires Friday, reflecting the solid demand. Malaysian palm oil futures were up sharply ahead of the U.S. session on concerns about global vegetable oil production.
Corn was mostly lower on spread trade, along with spillover from beans and wheat. Corn is also watching conditions in Argentina and southern Brazil. As with soybeans, projections have been trending lower recently as some yield potential has been lost to hot, dry weather in parts of South America. The trade is waiting to see what happens with Brazil’s critical second corn crop, the source of most of their exports, which is planted after soybeans are harvested. The Rosario Grain Exchange has Argentina’s corn crop at 48 million tons, compared to 56 million in their previous update. The Buenos Aires Grain Exchange says 23% of Argentina’s crop is rated good to excellent, compared to 40% a week ago. The International Grains Council estimates world corn production at 1.207 billion tons, compared to the November guess of 1.212 billion, also trimming the outlook for consumption, while leaving trade and carryover unchanged. The export sales pace for U.S. corn continues to be slower than last marketing year. Corn export sales last week were just over 450,000 tons, up solidly from the previous week, but still behind the average pace, with Mexico and Japan leading the pack and a small amount purchased by China. Ethanol margins are good, but have moved lower recently, with a growing supply. The U.S. Energy Information Administration Wednesday reported stocks last week hit a 47-week high as production fell towards 1 million barrels a day. There’s talk of a lower federal blending mandate, but no confirmation. Ethanol futures were unchanged. Strategie Grains raised its 2021/22 corn production estimate for the European Union 100,000 tons to 68.4 million, leaving 2022/23 unchanged at 66.4 million tons.
The wheat complex was sharply lower on fund and technical selling. Wednesday’s domestic USDA numbers were bearish, with higher acreage and ending stocks projections. The trade is monitoring overwintering conditions in the U.S., Europe, and the Black Sea region, political tensions between Russia and Ukraine, and harvest activity in Argentina and Australia. Strategie Grains pegs 2021/22 European Union soft wheat production at 129.8 million tons, compared to their last guess of 129.3 million, and projects 2022/23 at 127.7 million tons, compared to 127.6 million in December. 2021/22 soft wheat exports are seen at 31.2 million tons, compared to 31.5 million a month ago, citing competition from Argentina and the Black Sea region. The International Grains Council estimates world wheat production at 781 million tons, compared to the November projection of 777 million, raising consumption and carryover slightly, while holding trade steady. Wheat is also looking at slow U.S. export demand ahead of a cap on sales by Russia, which goes into place February 15th and runs through the end of their marketing year. Last week’s U.S. sales were just over 250,000 tons, a big improvement from the prior week’s marketing year low, but below the four-week average, mainly to the Philippines and Mexico. Iraq passed on all U.S. offers in their recent tender, buying 150,000 tons of wheat from Australia.