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January 21, 2022

A lack of fresh buying interest weighed on today’s trade. Much of this was a simple correction from yesterday’s rally, especially on soybeans. Soybeans rallied to a point where values would be considered overbought, limiting additional interest. Mixed opinions on South American weather and crop sizes added to the weakness in today’s trade, as did a general removal of managed money from all markets. Sparse fresh news was also a factor in today’s movement, although weekly export sales were favorable. We also had daily sales of 132,000 metric tons of soybeans to China and 247,200 metric tons of corn to an unknown. 

Grain and soybean export sales for the week ending January 13th were all at the top end of estimates. Corn sales totaled 43 million bu (mbu), well above last week’s volume. Soybean bookings totaled 24.7 mbu, a 9% increase on the week. Wheat sales came in at 14 mbu, a sizable 44% increase from the previous week. The US also have new crop sales of 4.1 mbu on corn, 2.6 mbu of wheat, and a sizable 19.4 mbu of soybeans. 

Beef and pork sales for the week were also increases from the week before. Beef sales came in at 12,800 metric tons with over one-third going to China, followed closely by Japan. Pork sales for the week totaled 38,700 metric tons with nearly all going to Japan and Mexico. 

Even with harvest taking place, Brazilian soybean values have rallied in recent weeks. Soybeans in Brazil are now being offered at an average of 10 cents per bushel premium to US soybeans. This is highly unusual, especially for this time of the marketing year. Brazilian officials claim their soybeans are higher in oil content which is why they are at a premium. Import tariffs and freight advantages are also factors in final pricing figures. 

The spread between US and Chinese corn is also becoming more of a market topic. Chinese corn is currently trading near $11.00 per bushel, well above the US offers. For the past several month China’s domestic corn have held a $3.50 to $3.75 cent premium to the US which would normally lead to imports. China has been an active buyer of Ukraine corn and Australian feed wheat though, which is tempering their corn sourcing from the US regardless of this spread. 

Weather reports out of South America are giving mixed signals. Widespread rains have moved through the driest regions of Southern Brazil, Paraguay, and Argentina in the past week, and more precipitation is being forecast. While this may provide temporary relief for crops, there remain concerns on the heat that is continuing. Many locations in this region of South America are expected to see temps near 100 degrees for the next few days which will speed up evaporation of the rains being received. 

We have to remember that while production has been lost from recent weather, it is very difficult to determine how much. This is especially the case on the Safrinha crop in Brazil as hardly any of that crop has been seeded. Argentine corn planting is also later than normal on nearly two-thirds of their corn crop which will also reduce the impact of current weather conditions. 

Firms are starting to release their projections on what we may see for planted acres this coming spring. One firm is predicting that for the 2nd time in history US soybean plantings will be greater than corn. Their belief is US soybean acres will total 92.4 million this year, a 6% increase from last year. The same group is forecasting US corn acres of 90.4 million, a 3 million decline on the year. This outlook is based on high input costs on corn though, and several other factors will also impact actual plantings, including demand, crop rotations, and weather.