Soybeans, corn face weekly losses on improved LatAm weather outlook
Chicago soybean and corn futures lost more ground on Friday, with both markets set to end the week lower on forecasts of rains in drought-hit South American growing regions.
Wheat is on track for a third week of decline on improved supply outlook.
“We were looking at a bigger drop in South American soybean production but with recent weather outlook it might not be as bad as expected earlier,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney.
The most-active soybean contract on the Chicago Board of Trade (CBOT) fell 0.9% to $13.65 a bushel, as of 0509 GMT, taking the weekly decline to more than 3%.
Corn has lost 3.4% this week and wheat is down more than 2%.
Weather forecasts show parched areas of Argentina, the world’s top exporter of processed soy and No. 2 producer of corn, may receive significant rainfall from late this week, traders said.
The U.S. Department of Agriculture (USDA), in a crop report on Wednesday, reduced its soybean and corn production forecasts in Brazil and Argentina. Some private analysts have cut their outlooks more steeply.
Brazil is poised to reap just above 134 million tonnes of soybeans this season, 7% below the previous November forecast by agribusiness consultancy Agroconsult, as a drought may cause the country’s average yields to reach a six-year low.
According to a presentation on Thursday, the projection also represents a 2% drop from the 137.1 million tonnes produced in 2021.
On the technical front, the CBOT soybeans March contract may test a support at $13.56-1/4 per bushel, a break below which could cause a fall into $13.38-1/2 to $13.46-1/2 range, according to Wang Tao, a Reuters analyst for commodities technicals.
The focus is also turning to demand.
China’s soybean imports in 2021 fell from the previous year, the first annual drop since 2018, customs data showed, on weakening demand from its massive livestock sector.
China, the world’s top buyer of soybeans, brought in 96.52 million tonnes of the oilseed in the 12 months of 2021, down 3.8% from 100.33 million tonnes in 2020, data from the General Administration of Customs showed, as falling hog margins and increased wheat feeding curbed demand.
For the wheat market, the International Grains Council on Thursday raised its forecast for 2021/22 global production, partly driven by an improved outlook for the crop in Australia.
In its monthly update, the inter-governmental body increased its 2021/22 world wheat crop outlook by 4 million tonnes to 781 million tonnes.
The USDA also pegged U.S. winter wheat acreage, U.S. end-of-season stocks and world wheat stocks above average analyst estimates.
U.S. soybean processors likely crushed a near-record volume of soybeans in December amid ample crushing supplies and good processing margins, according to analysts polled ahead of a monthly National Oilseed Processors Association (NOPA) report due on Tuesday.
Commodity funds were net sellers of CBOT wheat, corn, soybean, soymeal and soyoil futures contracts on Thursday, traders said.
Source: Reuters (Reporting by Naveen Thukral; Editing by Rashmi Aich and Subhranshu Sahu)