Market News
Weather woes support corn, soybeans, wheat
Soybeans were sharply higher on commercial and technical buying. Contracts bought back part of the recent losses, with most rain forecasts favoring Argentina over southern Brazil. Parts of southern Brazil are also expected to see high temperatures, causing some stress to developing beans. The USDA’s attaché in Brazil lowered its 2021/22 production guess to 136 million tons, below the official estimate and CONAB, cutting exports to 88 million tons and lowering domestic crush to 46 million tons. Just under 2% of Brazil’s crop is harvested, slightly slower than average. That smaller crop in Brazil could lead to some improvement in export demand for U.S. beans, but that’s still a ways off. Mexico has recently stepped-up purchases of U.S. beans, with the USDA’s weekly numbers out Friday. Palm oil was up sharply ahead of the U.S. session on supply concerns. Indonesia is reportedly considering capping exports to limit domestic price inflation. That strength in palm oil supported soybean oil, while bean meal was up on commercial buying and the bullish tone in the soy complex.
Corn was higher on commercial and technical buying. Most medium-term forecasts for South America have improved conditions in Argentina against mostly dry, hot weather for southern Brazil. Refinitiv cut its outlook for Brazil’s corn crop to 113 million tons, a decline of 2% from the previous projection, but still slightly above the most recent estimate from CONAB. CONAB’s next estimate is out February 10th and could include an updated outlook for their critical second crop. Corn is also monitoring fertilizer prices in the U.S. ahead of planting, which could trim acreage. There was also spillover from a sharply higher move in crude oil, which tied into the gains in bean oil as well. Ethanol futures were unchanged. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Thursday.
The wheat complex was sharply higher on commercial and technical buying. Contracts remain oversold and drought continues to be an issue in large parts of the U.S. Plains, stretching from southern to northern and northwestern areas. Additionally, parts of the eastern Midwest are excessively wet, with the next set of USDA crop progress and weather stories out in less than a week. The trade is also monitoring simmering political tensions between Russia and Ukraine, two of the world’s leading wheat exporters. A Russian invasion of Ukraine would likely disrupt business significantly and halt most, if not all, shipping out of the Black Sea. That’d splitting some attention from the overwintering conditions in the Black Sea region and Europe, in addition to harvest results from Australia. The Buenos Aires Grain Exchange says Argentina’s wheat crop was record large at 21.8 million tons, 14.7% above the previous all-time high set in 2018/19. The USDA’s next set of global production projections is out in the month supply and demand update on February 9th.
