Market News

Soybeans, corn see profit taking, still up on week

Soybeans were lower on profit taking and technical selling, but did end the week with decent gains. There was cooler temperatures and a chance of rain in the forecast for dry parts of Argentina, while some of Brazil could see better harvest weather. The USDA’s updated supply, demand, and production numbers are out Tuesday, February 11^th, while CONAB’s new projections for Brazil will be released Thursday, February 13^th. Even if the USDA does make some downward adjustments to South American production, it’s still expected to be a record large crop for the continent. U.S. soybeans are at a significant premium to South American beans, which is stifling export demand. Soybean meal was lower and bean oil was higher on the adjustment of product spreads. China’s initial round of retaliatory tariffs is scheduled to go into effect Monday, February 10^th and while it doesn’t include key U.S. ag products, including soybeans, later rounds might have an expanded scope.

Corn was lower on profit taking and technical selling, even as it managed to hold onto part of the up move earlier in the week. Corn was monitoring development weather in Argentina and the second crop corn planting pace in Brazil. That second crop is the largest of Brazil’s three crops, the source of most of their exports, and is dependent on the soybean harvest. Even if Brazil’s soybean harvest is able to pick up steam, some of that corn could be planted after the optimal window. Any big production changes for Brazil by the USDA will probably wait until March, but the outlook for Argentina could be trimmed this month. Losses were somewhat limited by the solid export, feed, and fuel use.

The wheat complex was mostly lower, while still closing higher on the week. Wheat saw a correction ahead of more cold temperatures in parts of the Plains and Midwest, including some areas with little to no snow cover. There were already concerns about winterkill in parts of the U.S. winter wheat growing region after the bitterly cold conditions earlier in the year. The trade’s also monitoring development weather in Europe, India, Russia, and Ukraine. Slower sales out of the Black Sea region could boost export demand. However, that’s also subject to a few other factors, including the relative value of the dollar, the speed of shipments out of Argentina and Australia, and possible tariffs. Mexico is a key buyer of U.S. wheat, in addition to corn, soybeans, and soybean products. Canada purchases a large amount of U.S. baked goods containing wheat, but the U.S. imports some spring and durum wheat from our northern neighbor.