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Fresh demand clues push soybeans higher

Afternoon market recap: Corn also slightly firm on Monday, while wheat faces moderate cuts.

Ben Potter

February 5, 2024

6 Min Read
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Grain prices were mixed to start the week. A strong set of export inspection data helped soybeans move around 0.75% higher, while corn prices were also slightly firm. But the usual specter of large global stocks and strong overseas competition led to another round of technical selling for wheat, which led to moderate losses.

The central U.S. will receive little to no additional rain or snow between Tuesday and Friday, although the Northern Plains is the most likely to catch some extra moisture later this week, per the latest 72-hour cumulative precipitation map from NOAA. Later on, NOAA’s new 8-to-14-day outlook predicts mostly drier-than-normal conditions for the central U.S. between February 12 and February 18, with warmer-than-normal temperatures likely for the Northern Plains and upper Midwest next week.

On Wall St., the Dow eroded 211 points lower in afternoon trading to 38,442, which was largely triggered by rising Treasury yields and some poor corporate earnings reports. Energy futures were on the rise, with crude oil firming 0.75% this afternoon to stay above $72 per barrel. Diesel and gasoline each rose around 2.5% higher. The U.S. Dollar firmed moderately, making it to the highest level since early December.

On Friday, commodity funds were net sellers of all major grain contracts, including corn (-4,000), soybeans (-6,500), soymeal (-2,500), soyoil (-3,500) and CBOT wheat (-1,000).

Corn prices overcame modest overnight losses to finish Monday’s session slightly in the green on some light net technical buying that was partly spurred from spillover strength from soybeans and a flash sale to Mexico announced this morning. March and May futures each inched 0.25 cents higher to close at $4.43 and $4.5375, respectively.

Corn basis bids were steady to soft after dropping 5 to 8 cents across three Midwestern locations on Monday.

Private exporters reported to USDA the sale of 6.1 million bushels of corn for delivery to Mexico during the 2023/24 marketing year, which began September 1.

Corn export inspections were lackluster after trending moderately lower week-over-week to 24.6 million bushels in the week through February 1. That was also below the entire set of trade guesses, which ranged between 29.5 million and 47.2 million bushels. Mexico was by far the No. 1 destination, with 13.8 million bushels. Cumulative totals for the 2023/24 marketing year are still moderately above last year’s pace so far, with 641.2 million bushels.

Ahead of USDA’s February WASDE report, out later this week, analysts offered expectations for South American corn production. That includes Argentine estimates of 2.188 billion bushels (which would be modestly higher than January’s tally) and Brazilian estimates of 4.894 billion bushels (a monthly reduction of 2.1%, if realized).

“Market geeks revel in numbers, just like baseball fanatics. It may not be a coincidence that opening day for the Major Leagues is March 28, when USDA releases Prospective Plantings, its much-anticipated survey of farmers’ plans,” notes grain market analyst Bryce Knorr. “Indeed, acreage talk now is the market’s version of spring training.

Unlike those practice games, swings in daily futures prices are very much real trading for farmers looking to lock in some new crop protection.” Knorr walks through a few things he’s been paying close attention to in today’s Ag Marketing IQ blog – click here to learn more.

Biodiesel, ag financing, precision technology, markets, weather – the latest edition of This Week in Agribusiness has a little something for everybody. Click here to watch farm broadcaster Mike Pearson navigate a variety of topics.

Speculators increased their net short position for corn by 21,123 contracts to reach 292,204 in the week through January 30.

Preliminary volume estimates were for 250,461 contracts, moving slightly ahead of Friday’s final count of 241,478.

Soybean prices benefited from a round of technical buying partly spurred by a better-than-expected set of export inspection data from USDA this morning, which led to gains of around 0.75%. March futures rose 9 cents to $11.9750, with May futures up 8 cents to $12.0625.

The rest of the soy complex also found moderate gains. March soymeal futures moved around 1.25% higher, while March soyoil futures were up more than 1.5%.

Soybean basis bids were steady to mixed after trending as much as 15 cents higher at an Iowa river terminal and as much as 10 cents lower at an Illinois river terminal on Monday.

Soybean export inspections outperformed expectations last week after improving to 52.4 million bushels in the week through February 1. That was above the entire set of trade guesses, which ranged between 16.5 million and 33.1 million bushels. China was again the top destination, with 35.2 million bushels. Cumulative totals for the 2023/24 marketing year remain noticeably below last year’s pace so far, with 1.070 billion bushels.

Brazil’s AgRural consultancy estimates that the country’s 2023/24 soybean harvest is now 16% complete through February 1, which is up five points from the prior week.

Meantime, prior to USDA’s February WASDE report, analysts expect to see the agency modestly reduce its estimates for Brazilian soybean production, with an average trade guess of 5.627 billion bushels. For Argentina, analysts predict USDA will slightly raise its production estimates to 1.868 billion bushels.

Iran issued an international tender to purchase 120,000 metric tons of soymeal, which can be sourced from Argentina or Brazil, that closes on Wednesday. The grain is for shipment in March and April.

Speculators increased their net short position for soybeans by 30,486 contracts to reach 146,623 in the week through January 30.

Preliminary volume estimates were for 254,464 contracts, tracking moderately higher than Friday’s final count of 179,920.

Wheat prices continue to be weighed down by overseas competition and a strengthening U.S. Dollar. The ensuing round of technical selling left most contracts 1% to 1.5% lower on Monday. March Chicago SRW futures fell 8.5 cents to $5.9125, March Kansas City HRW futures lost 10.25 cents to $6.1475, and March MGEX spring wheat futures dropped 7.75 cents to $6.92.

Wheat export inspections were pedestrian last week after only reaching 9.8 million bushels. That was on the very low end of analyst estimates, which ranged between 9.2 million and 18.4 million bushels. Indonesia was the No. 1 destination, with 1.9 million bushels. Cumulative totals for the 2023/24 marketing year are still trending moderately below last year’s pace so far, with 414.2 million bushels.

Russian consultancy Sovecon estimates that the country’s wheat exports reached 132.3 million bushels in January, which would be a modest decline versus December volume, if realized. Russia is the world’s No. 1 wheat exporter.

Speculators trimmed their net short position for CBOT wheat by 3,667 contracts to reach 63,498 in the week through January 30.

Preliminary volume estimates were for 94,256 CBOT contracts, fading moderately below Friday’s final count of 121,256.

About the Author(s)

Ben Potter

Senior editor, Farm Futures

Senior Editor Ben Potter brings two decades of professional agricultural communications and journalism experience to Farm Futures. He began working in the industry in the highly specific world of southern row crop production. Since that time, he has expanded his knowledge to cover a broad range of topics relevant to agriculture, including agronomy, machinery, technology, business, marketing, politics and weather. He has won several writing awards from the American Agricultural Editors Association, most recently on two features about drones and farmers who operate distilleries as a side business. Ben is a graduate of the University of Missouri School of Journalism.

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