Corn and soybean futures chopped around this week as traders shifted their focus from problems with drought-hit crops in Argentina to expectations of a record-large Brazilian soybean harvest.
"It creates a conversation: Is the Brazilian bean crop big
enough to offset the losses in Argentina?" said Tom Fritz, a
partner with EFG Group in Chicago.
Early strength in the dollar index hung over the
grain markets, making U.S. grains less attractive globally,
although the dollar later turned lower. The greenback drew
support this week as investors upped their expectations for U.S.
interest rates. Similarly, crude oil futures fell on worries that
interest rate hikes could weigh on demand. Corn and soybeans
sometimes follow trends in crude oil futures given their
respective roles as feedstocks for ethanol and biodiesel fuel. Meanwhile, an escalation in fighting in eastern Ukraine and
renewed Russian criticism of a wartime shipping corridor from
Ukraine underpinned the wheat market. Negotiations will start in
a week on extending the corridor agreement, a senior Ukrainian
official said on Friday.
"You've got Black Sea anxiety. The anniversary of the
Russian invasion is next Friday," Fritz noted, adding that K.C.
hard red winter wheat futures drew additional support from dry
conditions in portions of the U.S. Plains winter wheat belt.
"If anybody wants to be long wheat, they want to be long
K.C.," Fritz said.
Traders await the U.S. Department of Agriculture's annual
Outlook Forum next week in which the government is expected to
release preliminary forecasts for 2023 plantings and production
of major U.S. crops.
U.S. markets and most government offices will be closed
on Monday in observance of the Presidents Day holiday.
(Reporting by Julie Ingwersen; additional reporting by Gus
Trompiz in Paris and Naveen Thukral in Singapore; Editing by
Rashmi Aich, Chizu Nomiyama, Leslie Adler and David Gregorio)
