Market News

Wheat continues to gain, with corn, soybeans mixed

Soybeans were mostly lower on spread trade and profit taking. Beans continued to react to Russia’s invasion of Ukraine halting energy and vegetable oil exports, but couldn’t follow through on the periodic gains, with a lower move in soybean oil. Soybean meal did finish higher on commercial buying. The trade is also monitoring the near-term rain forecast for dry parts of Argentina and southern Brazil. It’s generally been a dry growing season, pulling production projections lower, and sparking export interest in U.S. beans, especially new crop. The USDA’s next round of crop estimates is out on the 9^th, with CONAB’s updated outlook for Brazil due on the 10^th. Weekly old crop U.S. soybean export sales were down 31% on the week, mainly to unknown destinations and Egypt, while new crop sales were solid at nearly 1.4 million tons, with China and unknown topping the list. and China bought 132,000 tons of U.S. beans, half old crop, half new crop. That brought the total for the last five business days to 1.801 million tons, 1.06 million of that new crop.

Corn was mixed on bull spreading by commercial traders. The big question for corn is how long Russia’s invasion of Ukraine will disrupt Black Sea port activity. Ukraine is a significant exporter of corn, including to China, with a substantial amount sitting unshipped at port facilities. Unknown destinations bought 337,000 tons of 2021/22 U.S. corn Thursday morning. If that turns out to be China, it will fulfill some of the recent trade rumors. Old crop sales last week failed to break 500,000 tons, Japan and Mexico were the big buyers with a cancellation by unknown, while new crop sales were mainly to Japan. The trade is also watching development conditions for Brazil’s second crop, with dry weather a concern in some central growing areas. Ethanol futures were unchanged.

The wheat complex was sharply higher on commercial and technical buying, including limit or expanded limit up moves in several contracts in Chicago, Kansas City, and Minneapolis. Ukraine’s ports are closed and sanctions are limiting Russia’s ability to do business with the few nations still willing to trade with Moscow. Russia and Ukraine combine for about a third of the world’s wheat exports. That’s generally expected to benefit the European Union and, possibly, India, with lesser amounts of business going to the U.S. Jordan reportedly canceled a wheat import tender due to a lack of offers. Last week’s U.S. sales were uninspiring, with the overall 2021/22 pace trailing 2020/21 heading into the final quarter of the marketing year. Ukraine says they have enough wheat on hand for one year. The conflict will likely also cause some winter wheat harvest and spring wheat planting delays in Ukraine. The European Union says it is considering allowing producers to plant on fallow ground to help make up part of the shortfall. Drought or near drought conditions are a big concern in most of the U.S. Plains, stretching from southern to northwestern areas, likely impacting yield and possibly limiting spring wheat planting in the northern and northwestern U.S. Plains into the Canadian Prairies.