March corn futures finished today's session 1 1/2 cents higher at $6.79 while March soybeans were 10 3/4 cents lower at $15.21 1/4 and March wheat in Chicago was down 6 1/2 cents at $7.50 1/4.
Futures started out the week narrowly mixed but were in negative territory by mid-way through the day session. Initial support came from mixed weather and crop outlooks for South America. The ratings of the Argentine crops have improved from recent rainfall, but outlooks are calling for a return of warmer and drier conditions next week. Total South American production is expected to be well above last year though and this is what trade is focusing on. Harvest is progressing in Brazil and with it is elevated logistic issues as the country is still trying to move old crop corn and new crop soybeans at the same time. Building relation issues between the US and China after the US shot down a Chinese balloon over the weekend not likely to help US exports. The US is showing little sign of a slowing economy and continues to lean towards higher inflation. There are some questions being asked over formula used to determine inflation and how the actual rate may be much lower than trade currently sees. Brazil has announced it will be reinstating its 16% ethanol import tariff and will raise it to 18% in 2024. The US dollar rallied today which pressured all markets while support came from technical indicators.
Corn futures started the week under pressure as the United States continues to see pressure in the global market. The main points remain Ukraine and Brazil, but of which have exported more than trade expected. The most competition remains from Brazil where year to date exports are 128% of last year and the line up for corn remains record high for this time frame. Given current production forecasts the US will see even more competition next year, even with smaller crops forecast for Argentina and Ukraine. Analysts believe US corn demand is going to improve for the second half of the marketing year though and still reach USDA projections. While this is possible, the longer it takes the demand to build the less trade will believe it will happen. We did see two daily sales today with Mexico booking 200,000 metric tons split between this marketing year and next, and Japan taking 111,800 metric tons for this year. Corn losses were halted at the 81-day moving average which is firm support. Corn basis was mostly steady to weaker today on sluggish demand.
Soybeans suffered the greatest losses today as harvest pressure in Brazil is weighing on the entire global oilseed market. The soybean harvest got off to a slow start this year but has increased with a reported 8% of the harvest now complete. This is half of last year’s pace but very close to the 10% five-year average. This slower pace is not that surprising given the soybean yields that are being reported. China has not shown up for US soybeans in recent weeks and this is becoming a concern. Soybean demand remains well above projections for the year but this lends credit to beliefs demand is front-loaded. The cool, wet weather is Brazil has not only slowed harvest but raised rust cases. To date Brazil has reported 160 cases compared to just 88 last year. March soybeans founds support today at the 20-day moving average and lower Bollinger Band. Soybean basis was mostly weaker today as demand is starting to falter and country movement has increased.
March wheat in Chicago posted moderate losses today as a strong US dollar weighed on the entire complex. The United States continues to see considerable pressure in the global market from Russia as well. Russia is expected to increase its military action against Ukraine in the next few weeks, but this has failed to give the complex much support. We are hearing reports out of Russia that harsh winter conditions have impacted the wheat crop and production will be down. Scouts in the country have the crop from 84 to 86 million metric tons (mmt), well below the USDA estimate of 91 mmt on this year’s crop. This USDA number is also being questioned as sources in Russia still have the crop at 104 mmt. Russia has announced it will be raising export taxes which does indicate tightening production. Wheat losses today were limited by an ongoing need for rains in the US. The 20-day moving average also supported wheat while the upside was held in check by the upper Bollinger Band, creating a tight sideways trading pattern.
Export inspections for the week ending February 2nd favored soybeans and wheat over corn. Corn inspections came in at 18.9 million bu (mbu), 11.6% less than the previous week and well below the volume needed to reach yearly USDA projections. Soybean inspections were down 5.2% on the week but at 67.23 mbu were well above the needed amount. Wheat loadings were up 20.3% on the week at 19.7 mbu and also above the needed volume. Year to date inspections are down 32.7% on corn, up 0.6% on soybeans, and 2.1% lower on wheat.
A story that is getting more attention in the market is Asian Rust Fungus cases in Brazil. As of last week, Brazilian authorities had reported 160 cases of rust, well above the 88 cases from last year. The cool, wet weather in Brazil has made perfect conditions for rust to develop. These are not expected to impact soybean production in Brazil, and in fact, analysts in the country have raised their estimates to 154 mmt. Rust treatments will impact the country by raising the cost of production by 10% though, tightening cash flows.
News from the Coop
Try our mobile website m.acoop.com for smart phones.
Also droid.acoop.com for droid phones.
Let us know if you would like to receive the bids by e-mail!
We also send market quotes out by text message, let us know.
