Market News

Soybeans, wheat end 2022 on a strong note

Soybeans were higher on fund and technical buying, cementing solid week-to-week gains and keeping the January through August contracts above $15. Soybeans hit six-month highs and March bean meal established a fresh contract high on concerns about hot, dry weather lowering production in Argentina. Argentina is normally the world’s largest exporter of soybean products, so any significant loss of production could lead to increased demand for U.S. soybean meal and oil. Bean oil Friday was down on end of the year profit taking and product spread adjustments. Unknown destinations bought 186,000 tons of 2022/23 U.S. soybeans. Export sales for the week ending December 22^nd were modestly higher than the previous week, just over 705,000 tons, mainly to China and the Netherlands with a significant cancellation by unknown destinations. The USDA’s next set of supply and demand estimates is out January 12^th.

Corn was modestly lower on profit taking and technical selling, but still closed higher for the week. Corn is watching weather in Argentina with crop ratings and the planting pace both below a year ago. Conditions generally look better in most key growing areas of Brazil, but dry weather is an issue in parts of southern Brazil. Still, the biggest test for Brazil’s corn crop will be the performance of the second crop, which is planted after soybeans are harvested. Early harvest activity in Brazil is underway on a limited basis, with widespread activity starting around the end of January. CONAB’s next update for Brazil’s crops is out January 12^th. Weekly U.S. corn sales were up on the week, primarily to Mexico and unknown destinations. Commodity markets will be closed Monday.

The wheat complex was sharply higher on fund and technical buying, along with the lower dollar during the session, ensuring weekly gains for the three U.S. pits. The situation in the Black Sea region remains unstable, potentially impacting export trade. Russia is continuing to attack Ukraine and the Ukrainian government says Russia is also deliberately delaying inspections of outgoing vessels to slow down exports. There are also signs insurance for those vessels might be hard to come by in the new year because of the instability of the region. Russia continues to hold the lion’s share of the global wheat market thanks to the relative weakness of the ruble. Weekly U.S. wheat sales were higher, but below a half million tons, mostly to Japan and Mexico. Most forecasts have more dry weather in the southwestern U.S. Plains and winterkill is a possibility in parts of the region after the recent cold snap. However, the full effects of those bitter conditions and drought won’t be known until the crop emerges from dormancy. The Buenos Aires Grain Exchange says lower wheat production estimates might be on the horizon for Argentina because of lower-than-expected yields due to a late freeze and drought.