Market News
Wheat roars higher, corn follows
Soybeans were modestly higher on short covering and technical buying, ending a two-sided session in positive territory. China has reportedly eased COVID lockdowns in some major cities, which should help demand for soybeans and products. Domestic crush margins continue to be solid and near-term supplies remain tight. Export inspections were down on the week, but up on the year, primarily to China and Mexico. The USDA says 78% of U.S. soybeans are planted, compared to the five-year average of 79%, with 56% emerged, compared to 59% on average. Ahead of the USDA’s updated supply, demand, and production numbers Friday, Allendale Inc. expects no adjustment to the U.S. production guess, with tighter old and new crop U.S. ending stocks. Soybean meal and oil were mixed, with nearby months down and deferred contracts up, adjusting spreads.
Corn was higher on commercial and technical buying, along with spillover from wheat. The big bullish factors continue to be the strong cash basis and solid ethanol margins. Export demand has fallen back, but U.S. corn is now at a discount to Brazil and Argentina’s cash prices have gained ground, which should help. Export inspections were above last week and last year, with Mexico and China claiming the top spots. As of Sunday, 94% of U.S. corn is planted, compared to 92% typically in early June, with 78% emerged, compared to 81% on average, and 73% of the crop is called good to excellent, 1% above the first rating in 2021. Ahead of Friday’s USDA update, Allendale Inc. expects the department to leave the 2022 corn production estimate steady, while raising old and new crop domestic ending stocks. The trade is watching harvest activity in Brazil, with CONAB’s updated production projection out Wednesday. Corn also continues to monitor the export and planting implications of Russia’s invasion of Ukraine.
The wheat complex was sharply higher on commercial and technical buying. Russia stepped up attacks in Ukraine over the weekend, throwing hopes of an export corridor into question. Talks are ongoing between Russia and Turkey with formal negotiations set for Wednesday, but since one of Moscow’s requirements for that corridor are the relaxation or repeal of some sanctions, those recent attacks, including heavy damage to a major port, are throwing any progress into question. Turkey’s government says it would take as much as five weeks for Ukraine to resume shipping out of the Black Sea. Ukraine’s government is asking for more involvement from the U.S. and NATO. Hail, wind, and rain likely caused at least some damage to France’s wheat crop. In the U.S., for winter wheat, 79% of the crop has headed, compared to 84% normally this time of year, with 5% harvested, compared to 6% on average, and 30% of the crop is in good to excellent condition, 1% above a week ago. For spring wheat, 82% is planted, compared to the five-year average of 97%, and 55% has emerged, compared to 83% on average. Ahead of Friday’s USDA numbers, Allendale expects the USDA to lower the U.S. production guess and increase U.S. old and new crop ending stocks projections.
