Market News

Soybeans see profit taking, while wheat, corn move up

Soybeans were lower on profit taking and technical selling. Soybeans gave back part of Monday’s gains, watching weather in South America, with additional pressure from soybean products and crude oil. Most forecasts have improved rainfall chances in some of the drier areas of Brazil in the next couple of weeks. AgRural says 91% of Brazil’s bean crop is planted, compared to 95% a year ago. Unknown destinations bought 198,000 tons of 2023/24 U.S. soybeans, the fifth business day in a row with a sale to either China or unknown, which could turn out to be China when it’s time for delivery. Still, part of Tuesday’s decline could be linked to traders trying to make sure beans aren’t priced out of the export market. Even then, soybean prices in Brazil have been up recently due to tight domestic supplies. CONAB’s updated outlook for Brazil is scheduled for January 4^th, 2024 with the USDA’s next set of supply, demand, and production projections on January 12^th. That includes the USDA’s preliminary 2023 U.S. production totals. Argentina has suspended its export registry ahead of new economic policies being implemented by the recently inaugurated presidential administration. Soybean products were lower on fund liquidation. NOPA member soybean crush numbers for November are out Friday, with an average estimate of 191 million bushels, while soybean oil stocks should be at multi-year lows.

Corn was higher on short covering and technical buying. Near-term forecasts have more hot, dry weather in parts of northern and central Brazil ahead of a shift to a wetter pattern. Still, those soybean planting delays in Brazil will push some second crop planting past the ideal window and could lead to further cuts in planted area, which was already expected to be below a year ago. AgRural says 95% of Brazil’s first corn crop is planted, compared to 96% last year. Southern Brazil is getting a break from rain over the next few days and Argentina is in good shape. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. Ethanol margins have tightened due to seasonal demand factors but remain in positive territory. Export demand has improved, mostly due to Mexico. China’s record domestic production is probably part of the reason behind their slower demand for U.S. corn, in addition to Beijing turning to other sources, like Brazil, Russia, and Ukraine. Low levels on the Mississippi River and Panama Canal are also a factor for the U.S. export program.

The wheat complex was higher on commercial and technical buying, along with the mostly lower trade in the dollar during the session. Heavy rain has lowered soft winter wheat planted area in France, 5.1% lower than 2022/23, and there are quality concerns for some of Australia’s crop after widespread drought followed by late heavy rainfall in some areas. Both of those could open up some export opportunities for the U.S. in 2024. Russia continues to move a lot of wheat. No new U.S. sales were announced Tuesday, but that recent demand from China, with sales of more than a million tons, has had a big impact on the U.S. soft red winter supply, while also pushing prices out of competition for now. In comparison, demand for U.S. hard red winter remains slack, at best. A couple of reasons for the recent swings in wheat include the slow end of year news environment and the notable long positions held by traders, both of which can exacerbate movement due to volatility.