Soybeans resume downward trend
Soybeans were lower on fund and technical selling, pulling contracts to a lower weekly finish. Beans are monitoring harvest activity in Brazil and development conditions in Argentina, with more widespread rain in the near-term forecast. The USDA made minimal changes to Brazil’s outlook this month, with the potential for more aggressive adjustments in March, if not later. The latest estimate for Brazil is much more in line with CONAB, with Safras e Mercado projecting production at 149.076 million tons. The USDA’s next round of supply and demand estimates is March 8th and CONAB’s updated outlook for Brazil is set for the 12th. Soybean meal and oil were down on the bearish tone in the soy complex to end the week. Chinese demand is expected to dip over the next couple of weeks because of the Lunar New Year.
Corn was lower on fund and technical selling, adding to what would have already been weekly losses. Corn was unable to sustain an early bounce, continuing to monitor conditions in South America. Central Brazil is expected to see some much needed near term rain, but that region will need more over the next couple of months to help the second crop reach its potential. Forecasts have better rainfall coverage for Argentina in the coming week, along with cooler temperatures. Some yield potential has been lost, but this would at least stabilize conditions for now. Export demand for U.S. corn is solid, with the biggest current competition from Ukraine. Stateside, the trade is watching conditions ahead of planting.
The wheat complex was mixed, with the March contracts at the three U.S. pits ending the week modestly to sharply lower. The most active Chicago months were modestly higher and Kansas City was steady to firm on oversold signals and lower trade in the dollar. Minneapolis was mostly lower, adjusting spreads, and watching weather ahead of spring planting. The big bearish factor is slow export demand and while the dollar did lose a little bit of ground at the end of the week, it remains high compared to competing origins, especially Russia, and the recent drop in Paris milling wheat has made the European Union more competitive. Freight rates are also an issue for U.S. wheat.
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Author: John Perkins