Wheat buys back some recent losses
Soybeans were lower on fund and technical selling. Most forecasts have improved chances of rain in Argentina into midweek next week, which should also hit ports of southern Brazil. Some production potential has been lost, reflected in recent lower estimates from private and governmental entities, but the precipitation will help in parts of the region. Forecasts for central and northern Brazil look drier, which should allow harvest pick up steam. The USDA’s next round of projections is out February 9th. Soybean export inspections were up sharply on the week, down sharply on the year, led by China and Italy. The USDA says Mexico bought 239,486 tons of 2021/22 U.S. soybeans ahead of Tuesday’s open, adding last Friday’s reported sale of 100,422 tons of 2021/22 U.S. corn to Mexico was soybeans, not corn. The NOPA says member firms crushed 186.438 million bushels of soybeans during December, above expectations and up from November. Soybean meal was lower, with most months down sharply on commercial selling, while bean oil was up, modestly, on commercial buying and strength in palm oil. Indonesia’s government is reportedly considering some restrictions on palm oil exports, citing higher domestic prices.
Corn was mixed, adjusting spreads. Corn is also looking at those weather forecasts for South America, which are expected to help stabilize yields to some extent. A big question for corn is the speed of Brazil’s soybean harvest, which has to wrap up before the critical second corn crop can be planted. Export inspections were more than 1.2 million tons, above the previous week and a year ago, with Mexico and China topping the list. Export sales demand continues to be slow, even with a U.S. price advantage over Ukraine, and ethanol margins have tightened. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Thursday, delayed a day by Monday’s closure of most federal offices. Ethanol futures were unchanged. Unknown destinations bought 126,000 tons of 2021/22 U.S. sorghum Tuesday. China’s General Administration of Customs says record 2021 corn imports of 28.35 million tons were up 152% from 2020.
The wheat complex was sharply higher on fund and technical buying. Contracts were oversold and Paris milling wheat was higher ahead of the U.S. session. The simmering political tensions between Russia and Ukraine, two of the world’s biggest wheat exporters, probably also played a role. Russia’s export tax could decline next week, but will remain at a relatively high level, and Moscow’s export cap is still set to go in place February 15th. Drought continues to be an issue in much of the U.S. Plains, while parts of the eastern Midwest are too wet. The USDA’s next round of monthly state crop condition and weather reports is out next week. The trade is also watching overwintering conditions in Europe and the Black Sea region, along with harvest activity in Argentina and Australia. Wheat export inspections were up on the week and the year, but the overall pace remains well behind last marketing year. The leading destinations were Mexico and Vietnam. China reportedly sold 501,283 tons of wheat from state reserves last week, 100% of the offering for the second consecutive week. On the export side, China’s General Administration of Customs says 2020 wheat imports were a record 9.77 million tons, an increase of 16.6% on the year.