Market News

Soybeans, corn see gains as wheat finishes mixed

Soybeans were higher on short covering and technical buying. Forecasts for South America are mixed, a little wetter over the near-term for parts of central and northern Brazil, and drier for portions of southern Brazil and most of Argentina. Continued oversold signals and strength in crude oil were also supportive. Slow export demand continues to be a bearish factor. Export inspections climbed back above a million tons, but under last week and last year while the overall pace remains slower than what’s needed to meet projections for the current marketing year. The top destinations were China and Italy. Trade data shows China imported 99.41 million tons of soybeans during 2023, including 69.95 million tons from Brazil, up 29% on the year for 70% of the market share, and 24.17 million tons from the U.S., down 13% for 24% of the market. Shipments from Argentina are expected to rise in 2024 because of a larger crop. Soybean meal was lower and bean oil was higher on the adjustment of product spreads, with bean oil seeing additional strength from the higher trade in crude oil.

Corn was firm on short covering and technical buying, along with oversold signals and the higher move in crude oil. Corn is watching South America, with recent rain in Brazil improving second crop prospects in some areas. Still, all expectations are for a smaller second crop this year due to a decline in planted area. CONAB’s updated outlook for Brazil is set for February 8th. Near-term demand for U.S. corn should be solid, but the export advantage starts slipping in the deferred months, around mid-summer, following a recent decline in price in Brazil. U.S. export inspections were lower than a week ago and a year ago while largely maintaining pace, with Mexico and Japan taking the top slots. Stateside, more moisture in the Midwest is expected to further improve levels on the lower Mississippi River. Globally, commodities and commerce in general continue to monitor shipping issues on the Red Sea and through the Panama Canal, which will be restricted to 24 vessels a day through April. That strength in crude oil was linked to an attack on a Russian fuel terminal, believed to have been by Ukraine.

The wheat complex was mixed after a two-sided session for the three U.S. pits. Most forecasts for this week have a solid precipitation outlook for many U.S. winter wheat growing areas. That should further improve conditions, especially in the Plains ahead of next week’s monthly USDA crop weather stories. Wheat was up modestly for big chunks of the session, but some contracts faltered after the dollar moved into slightly higher territory late in wheat’s session. The relative strength of the dollar continues to limit global demand for U.S. wheat, leaving Russia in the driver’s seat. That dominance of Russia and generally slow demand for other exporters has sent European wheat prices to near two-year lows, even with planting issues due to excessively wet weather in some nations in 2023. U.S. export inspections were up on the week, down on the year, with 2023/24 staying slower than 2022/23. The leading destinations were Indonesia and Mexico. The USDA’s next round of supply, demand, and production numbers is out February 8th.

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