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Morning Market Review for January 20, 2022

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Soybeans firm overnight as China gears up purchasing. (Comments are updated by 7:30 a.m. Central Time.)

Farm Futures writers Jacqueline Holland and Ben Potter are on assignment at the Business Summit this week. Larry Shonkwiler, Senior Agricultural Economist at Advance Trading, Inc., provides guest commentary below.

Corn

Strength in energy and the oilseed complex encouraged fund buying in a big way yesterday as they added an estimated 20 K contracts to their position. Near-by futures ended the trading day 11 cents higher. 

The overnights have seen a modest pull-back but the downside is limited given the on-going tensions between Russia and Ukraine. The latter is expected to export a not-so-insignificant 1.3 billion bushels in the 21-22 marketing year and any trade disruption would have a noticeable impact on trade flows, particularly corn to China. And, the South American crop is far from being in the bin as 80% of Brazil’s 4.5 bbu crop is still in seed bags and Argentine weather is being closely monitored.   

With export sales delayed until Friday due to Monday’s Martin Luther King observance, the market will look to the weekly EIA ethanol report for some price direction with the trade expecting a slide increase in production and, a further build in inventories.

Beans

Strong day for the bean complex today led by beans and oil with meal not so far behind. Nearby beans settled up 30 cents, meal was up over $8 and oil closed up 1.68 cents.

General fund buying for many commodities helped to support Wednesday market.  Funds were estimated buyers of 12 K beans, 7 K meal and 10 K oil contracts for the day. The USDA’s Brazil attache lowered bean production estimate to 136.0 MMT, 3 lower than last week’s WASDE figure and about 3 million above the current trade consensus. Still, others would argue the production downside has not been reached and continued volatility is the one certainty to be expected. 

The overnights are mostly firmer with SBO leading the way; soybeans are marginally firmer and soybean meal is $1+ weaker. Much of the strength in SBO is coming from a new, all-time high reached today for Malaysian palm oil as China gears up its purchasing.  

Wheat

Déjà vu as the combination of political tensions in the Black Sea region and a continued dry/cold outlook for the U.S. Plains wheat producing regions and, just general inflation worries generated an estimated 15 K in fund buying yesterday.  Gains, depending upon the market, ranged from $.27 to $.33 per bushel. 

The overnights are seeing some limited retracement and we note French milling wheat futures are down $.03 per bushel as well. As with corn and the soybean complex, expect further volatility with a particular eye towards just how successful Western diplomacy is in dealing with the Black Sea region.

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Larry Shonkwiler is the Senior Agricultural Economist at Advance Trading, Inc. The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.

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