Soybeans, corn, wheat extend rally
Soybeans were sharply higher on commercial and technical buying, with the most active months ending the week firm. Domestic demand continues to be strong and crush margins are in solidly positive territory. Those factors boosted soybean meal and oil prices. Beans are also watching development weather and any potential impact on yield. Just over a fifth of U.S. soybean acreage is in some stage of drought. Unknown destinations canceled on old crop U.S. beans, bringing the weekly total to a net negative, and there’s talk of more cancellations by China in favor of beans from Brazil. New crop sales were short of a quarter million tons, most of that purchased by unknown. The USDA’s attaché in China estimates 2021/22 soybean imports at 94 million tons, 1 million less than the last guess due to high prices, economic issues, and demand uncertainties because of COVID. 2022/23 imports are projected at 98 million tons, with domestic production of 18.4 million tons.
Corn was sharply higher on commercial and technical buying, finishing the week with solid gains. Most forecasts have moderate to heavy near-term rain in the Corn Belt ahead of a hotter, drier pattern in much of the region. Nearly 30% of U.S. corn acreage is in some form of drought. Old crop export sales were a marketing year low following a cancellation by unknown destinations. That more than offset new demand from Mexico and China. New crop sales were just over 111,0000 tons, with China the biggest buyer. The USDA’s attaché in China sees 2021/22 corn imports at 24 million tons, compared to the official guess of 23 million and the 2022/23 projection of 18 million tons. That expected year-to-year dip is tied to bigger beginning stocks and only a slight decline in production.
The wheat complex was sharply higher on commercial and technical buying, closing out the week in positive territory. Contracts remain heavily oversold, helping wheat shrug off the slow export demand. U.S. export sales were down sharply on the week as buyers continue to favor other origins over the U.S. There was an anticipated spike in demand tied to crop loss in India and Russia’s invasion of Ukraine, but that hasn’t materialized, partially because of the relative strength of the dollar and U.S. freight rates. Reports from Argentina have wheat planted area down more than 20% on the year due to drier than normal weather. The USDA’s attaché for China has 2021/22 wheat production at 136.946 million tons, falling to 135 million in 2022/23 with lower yields canceling out higher harvested area. Feed consumption is expected to rise in the new marketing year.