Soybeans, corn hit new highs on weather, supply concerns
Soybeans were sharply higher on commercial and technical buying, notching another round of new highs for the move. Unknown destinations bought 507,000 tons of U.S. beans Monday morning, with 249,000 tons for 2021/22 and 258,000 tons for 2022/23, after also purchasing old and new crop U.S. beans Friday. Those could turn out to be China when it’s time for delivery. The recent spike in U.S. soybean sales can be linked to lower South American production estimates. Hot, dry weather in Argentina and southern Brazil have led to those lower projections, while there are rain-related harvest delays in parts of central and northern Brazil, also impacting quality. Weekly U.S. export inspections were down on the week and the year, but was still more than 1.2 million tons, with China and Egypt claiming the top spots. The 2021/22 pace continues to trail 2020/21. Soybean meal hit new highs on commercial buying and concerns about availability from Argentina, while soybean oil was very narrowly mixed, mostly firm, adjusting spreads. Malaysian palm oil was lower ahead of the U.S. session on profit taking after hitting a record high, along with spillover from other vegetable oils.
Corn was sharply higher on commercial and technical buying, pulling December to a new high. Corn is watching South America, with forecasts for hot, dry weather in parts of Argentina and southern Brazil. There was some scattered rain over the weekend, but not enough to offer much of an improvement. That’s in addition to the harvest delays in central and northern Brazil, which could delay second crop corn planting. Brazil’s second crop is the largest of the three and source of most of their exports. The USDA’s attaché in Brazil has the crop at 113 million tons, down 4 million from their prior projection and 2 million less than the official USDA guess, with exports at 42 million tons, compared to the January USDA estimate of 43 million. The attaché does anticipate an increase in planted area for Brazil’s second crop to make up for the first crop’s shortfall. The USDA’s updated production projections are out Wednesday, while CONAB’s new numbers for Brazil are out Thursday. Stateside, the trade is watching for any signals on a shift in acreage. Weekly corn inspections were up modestly on the week, down sharply on the year, and continue to trail last marketing year’s pace. The leading destinations last week were Japan and Mexico. There’s been talk but no confirmation of new demand from China. China’s corn prices were down Monday as trade resumed after the break for the Lunar New year but continue to command a big premium to U.S. corn. Ethanol futures were unchanged.
The wheat complex was modestly higher on commercial and technical buying. The trade continues to monitor tensions in the Black Sea region, which could impact export business. As of Monday afternoon, there was no conflict between Russia and Ukraine and while the possibility remains, diplomatic efforts to avert conflict are ongoing. Russia’s wheat prices declined last week, but Moscow’s export tax was unchanged, continuing to limit sales, and a cap on exports is still set to go in place on the 15th. Near-term forecasts for the southern U.S. Plains are generally dry and while recent precipitation has helped recharge soil moisture, more will be needed. The northern and northwestern Plains are expected to generally remain dry, which would not only impact winter wheat, but cut spring wheat acres in the U.S. and Canada. Winter wheat growing areas in the eastern Midwest also saw some snow last week, which is starting to melt in parts of the region, adding to concerns about excessive soil moisture. The USDA’s attaché in Brazil has 2021/22 wheat production at 7.7 million tons, compared to the USDA’s January guess of 7.8 million and the 2020/21 total of 6.25 million tons. Imports are expected to be 7 million tons, compared to 6.395 million last marketing year. Weekly wheat export inspections were just under 420,000 tons, with South Korea and Mexico the two largest destinations. Statistics Canada’s crop stocks numbers are out Tuesday.