Wheat leads on Black Sea tensions

Market News

Wheat leads on Black Sea tensions

Soybeans ended the session modestly higher on commercial and technical buying, with some contracts hitting new highs early before peeling back. Rain forecasts over the next few days for South America are mixed, with most of Argentina and southern Brazil expected to see a return to hot, dry weather, further sapping yield potential. The trade is also monitoring harvest activity in northern and central Brazil, with rain delays in some areas. The International Grains Council sees global 2021/22 soybean production at 353 million tons, a drop of 15 million from January on lowered expectations for Argentina and Brazil. 2020/21 world soybean production was also 368 million tons. The declining production projections for South America continue to spark export demand for U.S. beans. Unknown destinations Thursday morning bought 120,000 of old crop, following up on China’s purchase of new crop. Combined old and new crop U.S. soybean export sales last week topped 100 million bushels, with China and unknown destinations leading the way for both. Soybean meal was mixed, mostly higher, adjusting spreads. Soybean oil closed narrowly mixed on spread trade and profit taking following a new contract high sparked by strength in Malaysian palm oil.

Corn was modestly higher on commercial and technical buying after a two-sided session. Corn continues to keep an eye on conditions in Argentina and southern Brazil, which have been a supportive factor. On the bear side of the ledger, export demand continues to be about neutral with minimal interest from China, ethanol margins are in the red for some producers, and there are concerns about domestic demand for poultry feeding because of avian influenza. The International Grains Council estimates 2021/22 world corn production at 1.203 billion tons, 4 million under a month ago, on diminishing outlooks for Argentina and Brazil. That’s expected to be well above 2020/21, but that will depend on Brazil’s key second crop and U.S. production. Planting of that second crop in Brazil is underway as the soybean harvest advances. The big question for the U.S. right now is acreage, with many expecting a decline in planted area because of better returns on beans and higher input costs. The USDA’s prospective planting report is out at the end of March. Export sales were up from the previous week, but lower than average, with Japan and Mexico topping the list. Ethanol futures were unchanged.

The wheat complex was higher on commercial and technical buying, with Chicago and Kansas City taking the lead. The tensions between Russia and Ukraine continue to linger as the situation remains volatile in the Black Sea region. Russia says it is removing troops from the disputed territory of Crimea but there are reports of build-ups by Russian troops along the border with Ukraine. There’s been no appreciable rise in export demand for U.S. wheat because of those tensions. Weekly sales were above the prior week, but below the four-week average, topped by routine purchases from Guatemala and Mexico. Drought has expanded in parts of the U.S. Plains and while some areas will see some near-term relief, the longer-term outlooks remain uncertain. That’s impacting winter wheat conditions and could have an effect on spring wheat planted area in the northern and northwestern U.S. Plains and Canada. Some winter wheat growing areas in the eastern Midwest, in contrast, have excessive soil moisture levels. The International Grains Council estimates 2021/22 world wheat production at 781 million tons, unchanged from January and up 7 million from 2020/21.