Soybeans up on export demand, supply concerns

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Soybeans up on export demand, supply concerns

Soybeans were sharply higher on commercial and technical buying. China bought 129,000 tons U.S. beans Monday morning, 66,000 for 2021/22 and 63,000 for 2022/23, which might be linked to lower production estimates out of Brazil. The most recent, from AgRural, has the crop at 128.5 million tons, below most other major estimates, with the lowest expected yield in six years. Safras e Mercado says 11.3% of Brazil’s 2021/22 soybean crop has been harvested, compared to 5% a week ago and 5.5% on average. Argentina, southern Brazil, and Paraguay are expected to see more hot, dry weather this week. The Rosario Grain Exchange says about 50% of Argentina’s key growing areas are experiencing some form of drought conditions. Soybean meal was higher and bean oil was lower, adjusting product spreads. Export inspections were up modestly on the week, but well below a year ago, with China and Germany topping the list.

Corn was mixed, adjusting old crop/new crop spreads. Corn is watching weather in South America, along with soybean harvest activity in Brazil ahead of second crop corn planting. That is the largest of Brazil’s three crops and the source of most of their exports. The much smaller than a year ago second crop for Brazil supported the U.S. export pace and prices. The USDA’s next set of supply and demand estimates is out February 9th, with new CONAB projections for Brazil on the 10th. Stateside, the trade is looking at narrowing ethanol margins and acreage signals, with the USDA’s prospective planting report out March 31st. Ethanol futures were unchanged. U.S. export inspections are on pace to meet USDA expectations, even with last week’s movement falling below the previous week and last year’s respective paces. The main destinations were Japan and China. Russia’s Ag Ministry says corn exports since the start of the marketing year on July 1st, 2021 are 1.2 million tons, 26% slower than the year ago pace.

The wheat complex was sharply lower on fund and technical selling. Large parts of the U.S. Plains will see precipitation this week, but not enough to end the drought. That’s impacting winter wheat during dormancy and could have an effect on spring wheat planting in the U.S. and Canada. The trade is waiting for new political developments in the Black Sea region. Any significant ramp up in tension or shift to outright conflict in the region between Russia and Ukraine would limit, or even stop, shipping out of one of the world’s key ports. If that does happen, the European Union, especially France, would likely be able to fill the gap for wheat, with some contribution from the U.S. Weekly U.S. inspections were below last week and last year, with Japan and Colombia leading the way. Russia’s Ag Ministry says wheat exports since the start of the marketing year on July 1st, 2021 are 21.1 million tons, 25.4% behind last marketing year, largely due to Russia’s export tariff. Moscow’s cap on sales begins February 15th and runs through the end of the current marketing year. DTN says Egypt bought 420,000 tons of wheat last week from Romania, Russia, and Ukraine.