Over the past couple of weeks, nearby Chicago soybean futures have been hitting highs not seen since last August or September. Chicago maize futures have been climbing as well, said the analysts.
Drought in Argentina continues to support markets. Following cuts to forecasted soybean production across consultancies, on Tuesday this week, the US Department of Agriculture (USDA) attaché post in Buenos Aires lowered the Argentinian soybean production forecast to 36Mt, 9.5Mt below the official USDA estimate, and more in line with Argentinian agricultural consultancies.
Rain has been falling in Argentina, though more is needed considering the level of drought:
“Dry weather and high temperatures in the last months of 2022 have damaged the Marketing Year (MY) 2022/23 Argentine soybean crop, particularly affecting first crop soybeans within a 125km radius of Rosario, Santa Fe Province. Recent rains will buy time for second crop soybeans, but better-than average weather through February is needed for a substantial recovery,” noted the USDA attaché’s report.
In Brazil, the soybean harvest has started but it has slowed down following recent rainfall.
“Soybean markets are currently in the physically tightest period of the year, with depleted US stocks, and yet to be harvested South American supplies. However, as we move through the next seven months, both of these issues are set to ease, and, so too, the current bullish market drivers,” reported the CRM Agri team in their weekly oilseeds market report.
Looking to the rapeseed market and that UK consultancy sees that the last week has recorded a brief recovery and push higher in rapeseed, bouncing off an 11-month low. But they expect volatility in that sector to persist.
Smaller wheat crop forecast for Ukraine
Wheat market attention is starting to now focus on harvest-23 prospects, with a smaller crop in Ukraine expected and Russia’s 2023 wheat crop outlook also received a crop downgrade of 1Mt to 81.5Mt from Rusagrotrans. That organization warned about winter wheat losses to an ‘ice crust’, a phenomenon which depressed the country’s production markedly two years ago.
Official data on the condition of winter wheat in major US growing states showed some early signs of improvement, as per CRM Agri's analysis.
Markets are hoping demand will pick up form China after a week-long Lunar New Year holiday. Despite higher COVID-19 cases, with easing restrictions, there is expected to be a rebound in demand from China after more subdued purchasing over the past two years, reads AHDB's report. "This is an added support into the market, especially considering South American weather concerns."