Soybeans Lose Ground After Monday’s Gains
Jan 08, 2013
Soybean prices were lower overnight after technically-led buying on Monday helped lift prices out of their steep slide. Wheat was modestly higher in the overnight session while corn was mostly unchanged.
Soybeans continue to come under pressure as South America’s growing conditions continue to point to favorable weather. Analysts still mostly seem to expect higher production by Brazil at 83 MMT versus USDA’s December forecast of 81 MMT.
In wheat, India’s government announced their wheat stocks were substantially higher than the target level of reserves. India's wheat stocks at government warehouses on Jan 1 were 34.4 MMT, more than four times the official target of 8.2 MMT, which has led to active participation by India in the global wheat trade as of late. In Ukraine, the winter grain crops are projected to be 92% in good or satisfactory condition versus 60 percent a year earlier. Analyst UKAgroConsult projected Ukraine’s 2013 grain production at 51.85 MMT, up from 45.15 MMT in 2012.
For corn, Monday saw some renewed export activity as USDA announced an export sale of 102,200 metric tons of corn for delivery to unknown destinations during the 2012/2013 marketing year. Corn has fallen 70 cents since early December weighed down by lack of export business and a slow pace of ethanol production. One wild card remains domestic feed and residual use, which USDA will provide a glimpse of in Friday’s Quarterly Stocks Report. Current projections by USDA call for a 9% drop in feed use for the current marketing year, but wide-scale liquidation and downsizing of the livestock sector doesn’t seem apparent. The latest hogs & pigs number shows a herd size that is virtually unchanged in the last year, while broiler production and dairy cow numbers remains on par with last year. Only feeder cattle show any sizable reduction, posting a 6% loss from last year based on the latest USDA data. So, if feed use is going to be curtailed it is going to have to come through alternative feed substitution.