Market News

Soybeans consolidate, still see big weekly gains

Soybeans was mixed, adjusting spreads, while still closing sharply higher for the week. The trade is waiting for more details on the talk that China will be back in the market for a large amount of U.S. soybeans this marketing year. Outside of a social media post Wednesday though, there are a lot of unknowns. Brazil has a significant price advantage over the U.S. and Chinese storage capacity as it currently stands would reportedly be inadequate to take in another 8 million tons of U.S. beans. President Trump and President Xi are expected to meet face-to-face in April. Trade data shows Brazil’s January soybean exports at 1.878 million tons, up sharply on the year. ANEC sees Brazil’s February soybean exports at 11.42 million tons. There was more rain in the near-term forecast for dry sections of Argentina and southern Brazil. However, that rain might also extend into other areas of Brazil that have already seen some heavy rain during harvest, which has led to quality concerns. Soybean meal futures were mixed, adjusting spreads, and bean oil was lower on profit taking.

Corn was lower on profit taking and technical selling but did end the week with modest gains. Corn is monitoring conditions in South America, especially rain chances in Argentina, along with the first crop harvest and second crop planting paces in Brazil. The USDA’s updated supply and demand numbers are out Tuesday the 10^th and CONAB’s next outlook for Brazil is set for Thursday the 12^th. Trade data from Brazil puts January corn exports at 4.247 million tons, a big increase from last year. ANEC projects February corn exports for Brazil at 793,364 tons. Corn is still looking at generally solid demand, but there are some caveats, including tight livestock numbers potentially lowering feed use and increasing export competition. On the fuel side of things, there have been reports of less expensive sorghum being used in ethanol production and the biofuel industry continues to push for year-round E15 availability. In any event, that generally solid demand is also blunted by a large available domestic supply.

The wheat complex was lower on fund and technical selling, adding to what would have already been a week-to-week decline. U.S. wheat is at a price disadvantage on the export market and world supplies are rising. The dollar was down Friday, but has seen a recent rally, pushing the price of U.S. goods higher on the global market and further limiting the ability for U.S. supplies to compete for export business. Drought and dry conditions are concerns in large parts of the U.S. Plains, with the trade also monitoring overwintering weather in Europe, Russia, and Ukraine. Russia’s Ag Ministry says 97% of Russia’s winter crops are in “normal” condition, compared to 87% this time last year.