Market News

Soybeans, bean meal extend losses

Soybeans were lower on fund and technical selling, along with the session’s gains in the dollar and losses in crude oil. There’s light to moderate rain in the forecast for parts of Argentina this week ahead of a return to a drier pattern. The crop will be much smaller than initial projections, the questions are by how much, and how hard will this hit Argentina’s economy. Argentina is the world’s largest exporter of soybean products most years. India’s soybean meal exports have reportedly accelerated to make up for some of the lack of Argentine meal. Brazil’s harvest is slower than average, but still moving forward, with probable record production likely making up for most of the losses in Argentina. The big issue right now for Brazil is storage logistics. The USDA’s next round of production projections is out March 8th, with CONAB’s updated outlook for Brazil scheduled for March 9th. Soybean meal futures were lower on follow through selling, while bean oil rallied following the January NOPA member crush numbers. The crush was much smaller than expected at 179.007 million bushels, with bean oil stocks falling sharply below year ago levels.

Corn was lower on fund and technical selling, with outside market bearishness also a factor. Corn is watching weather in South America, cutting production in Argentina, and delaying second crop planting in Brazil. Brazil’s second crop is the largest of the three, planted after soybeans are harvested. Export and ethanol demand are slow, but supplies are tight and the basis is strong. Mexico bought 213,370 tons of 2022/23 U.S. corn Wednesday morning, just a day after the early implementation of an import ban on some GMO corn and corn products, mostly for food use. Mexico is a major buyer of U.S. corn, most of that GMO for animal feed use and those purchases will reportedly continue until there’s a viable alternative. The USDA’s weekly sales numbers are out Thursday morning. The U.S. Energy Information Administration says ethanol production averaged 1.014 million barrels a day last week, up 14,000 on the week and 5,000 on the year, while stocks hit a 45-week high at 25.339 million barrels, which was an increase of 922,000 from the previous week, but a decrease of 144,000 from a year ago.

The wheat complex was lower on fund and technical selling, in addition the higher trade in the dollar. U.S. wheat supplies are showing signs of getting tighter, but any upside is limited by the slow export demand. Russia continues to hold most of the global market share, with Ukraine still a major exporter of grain despite reduced shipments due to slower inspections by Russia. The future of the Black Sea Grain Initiative is somewhat in doubt following recent comments by Moscow, but the expiration is still several weeks away. Ukraine’s expected to see another much smaller crop this year due to continued Russian aggression. Australia and Canada also continue to be major exporters. The trade is monitoring winter storms this week in the central and southern Plains, which could boost hard red winter conditions ahead of the crop emerging from dormancy. Still, this winter’s precipitation has missed some of the drier areas, with the possibility of much lower yields and higher rates of abandonment. Soft red winter wheat remains in comparatively better condition. India’s government is projecting a 4.1% increase in wheat production to 112.2 million tons, which would help to alleviate domestic food inflation. France’s AgriMer lowered its forecast for soft wheat imports inside and outside of the European Union, while raising its stocks projection.

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