MARKET SUMMARY 12-27-2021
Nov 2022 soybeans closed at their highest level since August. Today’s close at 12.77-1/2 is offering farmers opportunities they likely were not expecting. General supply disruption concerns and worries about nitrogen availability suggest soybeans acres in the U.S. could be on the rise. Most analysts are suggesting an additional two to four million acres. At three million new acres, carryout could conceivably approach near 500 million bushels. Historically, a carry out this high would argue for soybeans to trade in the $10 area.
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CORN HIGHLIGHTS: Corn futures started the overnight firmer and continued where they left off last week with another day of solid gains. Drier weather concerns in northern Argentina and southern Brazil and upward momentum carried prices higher for the fourth consecutive session. Mar closed 9 cents higher at 6.14-3/4 and Dec 2022 at 5.57, adding 3-1/2 cents on the session.
Export inspections at 23.8 mb were termed neutral to negative. The year-to-date total is now at 474 mb. Export sales are expected to be 2.5 bb. Overbought conditions on charts seem to matter little to the trade as futures continue to push higher. This tells us, due to positive ethanol margins, cash is supporting prices and farmer selling is slow. It also tells us the market may be more focused on the Southern Hemisphere. Friday’s Cattle on Feed report as well Quarterly Hogs and Pigs were about as expected, both showing steady or small herds, not necessarily friendly for corn prices.
SOYBEAN HIGHLIGHTS: Soybean futures finished with sharp gains factoring in more technical strength, weather concerns in South America, and strong export inspections. Mar soybeans closed 30-3/4 cents firmer at 13.71-1/2, its highest close since mid-August. Nov added 12-1/4 cents to end the session at 12.77-1/2.
Soybean export inspections at 58 mb were termed supportive which brings total inspections to 1.063 bb. Total export sales are currently forecasted at 2.05 bb. While it is expected that export sales will be shifted to South America and that, according to many, the current pace of sales and shipments is not strong enough to meet the USDA’s current estimate, we wouldn’t give up on the idea of strong export activity for the U.S. We have argued that anything less than ideal weather in the Southern Hemisphere could quickly have end-users worldwide covering their needs. Bottom line, the bean market is in a precarious situation in which supplies are expected to increase, yet that one quantity of supply is not in hand.
WHEAT HIGHLIGHTS: Wheat futures, despite the strength seen in corn and soybeans, had moderate losses in today’s session. A technical correction along with a few bearish headlines caused the market to slip. Mar Chi lost 10-3/4 cents, closing at 8.04 and Jul down 5 at 8.00-3/4. Mar KC lost 14-1/2 cents, closing at 8.47 and Jul down 7-3/4 at 8.38-3/4.
Wheat inspections on today’s report totaled only 10 mb, with total inspections at 438 mb. This is down 18% from last year. One might argue that wheat was becoming overbought and was due for a technical correction – this may be in part what the market saw today. There were also recent reports that Russian troops are being removed from the Ukraine border. One might argue that this is bearish; as tensions ease between two of the world’s largest wheat exporters, prices are unlikely to be upheld by the idea of conflict. There is still talk, however, that Ukraine may restrict wheat exports and Russia’s wheat export tax is now over $94 per metric ton. In the Southern Hemisphere, the Buenos Aires Grain Exchange raised Argentina’s wheat production to 21.5 mmt. On another bearish note, Iraq was tendering for 500,000 metric tons of wheat but may have postponed that into next week. In the United States, the two-week forecast puts some rain into the southern Plains, but drought remains a concern overall.
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Author
Brandon Doherty