Soybeans, corn, wheat rally

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Soybeans, corn, wheat rally

Soybeans were higher on commercial and technical buying. Contracts were mostly lower for much of the session before rallying on weather concerns for South America. Harvest delaying rain will continue in parts of Brazil, switching from southern to northern areas, while Argentina is expected to see a drier pattern during the early part of the month, with February in South America equivalent to August for U.S. production. Additionally, while a truck strike in Brazil apparently fizzled out earlier this week, a truck strike in Argentina is starting to disrupt movement into the key port of Rosario. Brazil’s soybean exports for January reportedly fell far short of expectations. Tuesday’s losses were basically technical with no change to the fundamentals. The USDA’s next set of supply and demand estimates is out next Tuesday, while quarterly stocks data is set for March 31st. Soybean meal was supported by commercial demand and concerns about the crop in Argentina, the largest soybean product exporter, while bean oil was mixed on spread adjustments, with nearby contracts up modestly and deferred months closing weak.

Corn was modestly higher on commercial and technical buying. Corn also rallied while monitoring demand and weather in South America, especially second crop corn planting delays in Brazil. Those delays should extend global reliance on U.S. corn into early spring, aided by the U.S. price advantage. The weekly export numbers out Thursday morning are expected to be bullish thanks to recent demand from China. The corn supply in China is reportedly at its highest level in months due in part to the recent U.S. purchases, as demand is strong and Chinese prices remain high. Mexico’s Ag Ministry expects corn imports to fall 9%, with the nation planning to ramp up domestic production to meet demand. Ethanol production was up on the week, while the supply hit a multi-month high. The U.S. Energy Information Administration says production averaged 936,000 barrels a day, up 3,000 on the week, but still down 145,000 on the year because of slower blending demand and tighter margins. The supply of 24.316 million barrels was up 714,000 from the previous and 842,000 above a year ago for the largest supply since mid-May 2020. Ethanol futures were unchanged.

The wheat complex was modestly higher on commercial and technical buying, along with weakness in the U.S. Dollar. U.S. winter wheat growing areas will see a cold snap this weekend that could cause some damage in areas without adequate snow cover. Still, wheat is notoriously hard to kill, the damage would depend on the length of the event, and conditions emerging from dormancy typically have a stronger link to yield potential. The USDA’s next set of monthly crop stories is out later this month and the weekly updates resume in April. The trade is also monitoring overwintering conditions in the European Union, Russia, and Ukraine, conditions ahead of spring wheat planting in the northern U.S. Plains and Canada, and harvest activity in Australia. Export demand is slow but should improve to some extent once Russia’s export tax goes into place. The first tax of 25 Euros per ton starts February 15th and doubles on March 1st, but there’s some talk Moscow is using the current system as a place holder ahead of a more complicated tariff regime.

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