Wheat gains, watching Black Sea region

Market News

Wheat gains, watching Black Sea region

Soybeans were lower on fund and technical selling, along with profit taking in soybean oil. Parts of Argentina and southern Brazil got rain over the weekend, but more will be needed in some areas and damage has been done. That rain generally favored Argentina over southern Brazil but did still miss some of the drier areas of Argentina. Safras e Mercado and AgRural both say 5% of Brazil’s soybean crop is harvested. China bought 132,000 tons of U.S. beans, with half for 2021/22 delivery and half for 2022/23. That’s the second business day in a row with a Chinese purchase of 132,000 tons of U.S. beans. Friday’s buy was all for delivery during the current marketing year, which runs through the end of August. The purchases will likely be delivered this summer when U.S. beans have a price advantage over Brazil. Export inspections last week were down on the week and the year, mainly to China and Italy, with the 2021/22 pace continuing to trail 2020/21. Soybean meal was mixed, mostly lower, on bull spreading.

Corn was modestly higher on fund and technical buying, in addition to the higher move in wheat. Corn is also assessing weekend rainfall totals in South America, with a drier pattern expected to resume next week. The big question for South American corn production is the performance of Brazil’s second crop, the largest of the three and the source of most of their exports, which is planted after soybeans are harvested. Unknown destinations bought 150,000 tons of 2021/22 U.S. corn, following up on Friday’s purchase of 247,800 tons, for a two-business-day total of 397,800 tons. That’s expected to be either China or Mexico. The USDA says last week’s export inspections were below the previous week and a year ago, primarily to China and Japan, with this marketing year trailing last marketing year. Potential disruption to Ukraine’s corn shipping is also a possibility. Ethanol futures were unchanged.

The wheat complex was sharply higher on fund and technical buying. There’s more support from the tensions between Russia and Ukraine, potentially disrupting export business and shipping out of the Black Sea region. Russia is the biggest exporter of wheat and Ukraine is the third largest. U.S. export inspections were up on the week, down on the year, with the Philippines and Nigeria topping the list. 2021/22 inspections trail 2020/21, with the current marketing year running through the end of May. The trade is also monitoring drought conditions in the U.S. Plains, stretching from southern and southwestern areas to northern and northwestern portions of the region. That’s not only an issue for winter wheat but will likely impact spring wheat planting.