Wheat, corn extend sell-off

Market News

Wheat, corn extend sell-off

Soybeans were modestly higher on commercial and technical buying. Contracts are oversold, crush margins are in positive territory, and soybean oil was higher following crude oil. Soybean meal was down on the adjustment of product spreads. U.S. planting made a solid advance in the past week, now just 1% behind the five-year average pace. China bought 132,000 tons of U.S. beans, half for this marketing year, half for next. The USDA says 181 million bushels of soybeans were crushed in April, down 12 million from March, but up 11 million from April 2021. Strategie Grains sees the 2022 European Union sunflower seed crop at 10.9 million tons, which would be up 5% on the year, potentially filling some of the market void left by the near-total absence of Ukraine following the invasion by Russia.

Corn was sharply lower on fund and technical selling. Planting is 86% complete, close to normal, but emergence is slow, with cooler temperatures this week in parts of the Corn Belt. Second crop harvest is getting underway in Brazil, with better conditions in southern growing areas than in central areas. Some Brazilian livestock feeders are reportedly buying corn from Paraguay due to high domestic prices and a projected increase in exports. Ukrainian grain firm UGA is projecting corn production at 26.1 million tons this year compared to 37.6 million last year following Russia’s invasion. The USDA says 414.731 million bushels of corn were used for ethanol production in April, down 9% on the month, but up 2% on the year, with DDGS production of 1,704,698 tons, a decline of 9% from the previous month and 4% from a year ago. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Thursday.

The wheat complex was sharply lower on fund and technical selling. The USDA’s winter wheat rating improved a little but remains near historically low levels and spring wheat planting is slower than average. Many forecasts have improved crop weather in parts of Europe and the trade is waiting to see what happens with Russia and Ukraine. Moscow continues to push for a lessening or removal of sanctions in exchange for allowing Ukraine access to export infrastructure. That remains unlikely, even with Russia claiming exports are being inhibited by those sanctions. Russia’s invasion has inhibited planting in addition to exports, with Ukrainian grain group UGA projecting 2022 wheat production at 19.2 million tons, compared to 33 million in 2021. The USDA’s next set of supply, demand, and production numbers is out Friday, June 10th at Noon Eastern/11 Central.