Market News

Soybeans, corn stage rally

Soybeans were higher on short covering and technical buying. Planting and development weather generally looks favorable in most of the Midwest and Plains, but parts of the region are expected to enter a drier pattern in the coming days. The USDA says 66% of U.S. soybeans are planted, compared to the five-year average of 52%, and 36% has emerged, compared to 24% on average. Contracts are heavily oversold and there was help from the higher moves in meal and oil. Soybean meal was up on the sale of 225,000 tons of 2022/23 U.S. bean meal to the Philippines, the second announced sale in a week and a sign that the U.S. could be filling some of the void left by Argentina. Bean oil was supported by crude oil and demand expectations. Soybean export inspections were down on the week and the year, but the pace remains ahead of what’s needed to meet 2022/23 projections. Last week’s top destinations were Japan and Mexico. Brazil continues to control most of the export market, but their basis has moved higher in recent weeks, which could help U.S. soybean sales.

Corn was higher on short covering and technical buying. Corn was able to fund support around the recent lows, while watching weather as Memorial Day weekend and some critical phases in development approach. Things could get dry in portions of the Corn Belt, but parts of the Plains could see some much-needed rain. As of Sunday, 81% of U.S. corn is planted, compared to 75% on average, and 52% has emerged, compared to the usual rate of 45%. Ethanol demand expectations are bullish, but export demand remains slow. Livestock feed demand is also a question mark, with the cattle industry still showing some signs of contraction. Corn export inspections were above a week ago, but below a year ago, primarily to Japan and China. Analysts think there could be another export cut in USDA’s next set of supply and demand estimates out June 9th. There’s been no explicit confirmation, but anecdotally, the recent cancellations of U.S. corn by China can be linked to expectations for a record large second crop from Brazil.

The wheat complex was mostly higher. Hard red winter remains in very poor condition, with several states expecting their smallest crops in a number of years due to drought in the central and southern Plains. For winter wheat, 31% of the crop is in good to excellent shape, 3% above last week, with 61% headed, matching the five-year average. Spring wheat planting is slower than average but should be able to pick up steam this week. For spring wheat, 64% of the crop is planted and 32% has emerged, both behind their respective normal paces. The trade is monitoring dry conditions in some spring wheat growing areas of Canada and Russia, along with the much smaller crop being planted in Ukraine. U.S. export inspections were higher than the previous week and this time last year, with the pace on track to meet the USDA’s estimate for the 2022/23 marketing year. The main destinations were Mexico and China. The 2023/24 marketing year for wheat starts June 1st. Russia remains in charge of the export market due to a significant price advantage over competing origins. There are reports Russia is not allowing Ukraine to export grain through one of the previously agreed upon ports.

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