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GRAIN MARKETS: Soybeans charge higher as rains soaks Argentina

Wheat settles at two-month high.

Soybeans charged higher on Tuesday, the first day back from a three-day weekend, with the leading March contract setting a six-month high following reports that recent rain in Argentina has soaked fields and threatened yields in one of the world's leading producers.

Winter wheat moved higher in reaction to the lower dollar and support from last week's U.S. Department of Agriculture crop report, which put winter wheat acreage at the smallest in more than 100 years. Corn was up 7 cents/bu. as it largely followed soybeans, soybean meal and wheat.

The crops got some help from the lower dollar, which sank following weekend comments by President-elect Donald Trump that the strong dollar is hurting exports.

Equity markets were lower when the crops closed, encountering pressure from lower shares of pharmaceutical companies. Trump recently complained about the high prices for prescription drugs. Crude oil was a little higher, and gold was up $19/oz.

Export highlights (according to USDA and Reuters) included:

- Unknown destinations bought 4.05 million bu. of 2016-17 U.S. corn.

- Weekly export inspections were 35 million bu. for corn versus 34.6 million bu. a week ago, 51.8 million bu. for soybeans versus 53.9 million bu. a week ago and 12.7 million bu. for wheat versus 9.7 million bu. a week ago.

- Taiwan seeks to buy 93,605 metric tons of various classes of U.S. milling wheat for shipment in March and April. The tender deadline is Jan. 20.

- Morocco bought 359,998 mt of U.S. soft wheat for arrival by April 30, and results are awaited on its tender to buy 327,273 mt of U.S. durum that's for arrival by Dec. 31.

- Ethiopia seeks to buy 720,000 mt of optional-origin milling wheat, with offers due by Feb. 3. Shipment will be within three months of when letters of credit are opened, which could be March to May.

Corn closed about 7 cents higher and the highest in nearly three months, and now March is a few cents under chart resistance at the 200-day moving average of $3.70/bu.

A lower dollar, the export sale to unknown destinations and Argentina's rain issues supported corn.

Last week, USDA trimmed the 2016 corn crop to 2.225 billion bu. from December's number, which was expected. Feed use was trimmed, while corn for ethanol was increased by 25 million bu. USDA put the corn crops for Argentina and Brazil unchanged from its December estimate at 86.5 million and 36.5 million mt, respectively.

The dollar value of corn at China's Dalian market for March was weak at $5.47/bu. European corn for March was higher at $4.59. The prices reflect conversions from local currencies and metric tons.

The Chicago Board of Trade (CBOT) estimated Tuesday's corn volume at 471,135, compared with Friday's actual volume of 306,445. Open interest in Friday's firm market increased by 20,927, with March down 4,645 and May up 6,001.

March corn closed 7 cents higher at $3.655/bu., and May was up 7.25 cents to $3.7275/bu.

What to look for: The corn harvest starts next month in Argentina and Brazil, which may draw export business away from the U.S.

Soybeans had another big day as support from rain in Argentina contributed to gains from last week's report in which USDA lowered its 2016 crop estimate.

Soybean meal also had strong gains, up 4.5%. Argentina is the world's top exporter of soybean meal, and a smaller soybean crop could hurt those exports.

Weekly export inspections were a little better than expected, at 51.8 million, with China the leading destination.

On Thursday, USDA's 2016 crop estimate of 4.31 billion bu. was down from its December tally, which surprised traders, who had expected an increase.

The National Oilseed Processors Assn.'s monthly crush of 160.176 million bu. was up from a year ago but down from trade forecasts.

China's soybeans at the Dalian market closed lower, with the actively traded May contract at the equivalent of $16.85/bu.

CBOT estimated Tuesday's volume at 389,606, compared with Friday's actual volume of 265,703. Friday's open interest increased by 12,661 contracts in the higher market, with March up 2,254 and May up 4,983.

March soybeans closed 23 cents higher at $10.6925/bu., and May rose 22.5 cents to $10.78. New-crop November was up 1.5 cents to $10.20/bu.

What to look for: Attention is on South American harvests, with Brazil's under way now and Argentina's coming in about another month.

The winter wheat markets closed higher, while spring wheat was lower. Kansas City, Mo., hard red winter wheat is the highest since June following USDA's larger-than-expected cut to winter wheat acres last week.

The gains were helped by the lower dollar, which should aid export sales. However, Egypt continues to buy Black Sea and Eastern European origins, which are lower priced when cost and freight are considered.

CBOT estimated Tuesday's soft red winter wheat volume at 175,183, compared with Friday's actual volume of 127,544. Friday's open interest increased by 6,656 in the higher markets, with March up 910 and May up 1,787.

Chicago, Ill., March soft red winter wheat closed 7.5 cents higher at $4.335/bu., and May was up 8.5 cents to $4.4825/bu. Kansas City March hard red winter wheat rose 2.75 cents to $4.6375/bu., and May rose 2.75 cents to $4.6375. Spring wheat for March dropped 16.25 cents to $5.6625/bu., and May dropped 7 cents to $5.5875.

What to look for: More rain was expected in Texas wheat areas Tuesday after last week's stretch of rain and freezing rain. The next few days will be drier for the central and southern Plains, and the 6- to 10-day outlook also is dry.

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