Grain futures were mixed on Wednesday, as some Brazilian farming companies announced their plans of switching production from corn to soybeans, which may end in a global glut. Soybeans and wheat declined, while corn gained.
On the Chicago Board of Trade, soybeans futures for settlement in January hit a session low at $13.1175 per bushel by 14:30 GMT. Daily high stood at $13.2638 per bushel. The oilseed added 1.3% last week after gaining 3.1% in the preceding one.
Corn has lost 42% this year and the Brazil switch is threatening to spill the crash in corn prices over soybeans. Brazil is expected to grow more of the higher-valued oilseed, which will help the country to overtake the US leadership of a global soybeans producer and will probably result in a global glut.
Brazilian soybeans farmers plan to sow a second crop in the off-season rather than switching to corn, as they usually do. This seems enough to cause a record surplus of soybeans on a global level.
Few farming companies, including Vanguarda Agro SA (VAGR3) planned to make the switch for the May-to June harvest for the first time instead of losing even more money in the off-season on corn. Vanguarda Agro SA recorded the biggest third-quarter loss in a year.
Farmers in the biggest producing Brazilian state, Mato Grosso, which accounts for about a tenth of the worlds soybeans, decided to replant 1 million hectares with soybeans out of 3 million previously sowed with corn for the May-to-June harvest.
Carlos Favaro, head of growers group Aprosoja, said, cited by Bloomberg: “That would add as much as 3 million metric tons, more than Japan’s annual imports, to the record 88 million the U.S. Department of Agriculture expects for the full growing season”.
DTN reported that episodes of scattered showers will favor developing corn and soybeans during the five-to-seven-day period. Hot conditions will mainly occur Tuesday with a milder trend the balance of the week. In central Argentina, the La Pampa-southwest Buenos Aires shows a tendency for hot temperatures which suggests less than ideal soil moisture. Otherwise favorable soil moisture is in place for earlier-planted crops at this time. Rains for central and north areas later in the period may again delay the corn planting effort.
Meanwhile, corn for delivery in March traded at $4.3338 per bushel at 14:41 GMT, up 0.27% on the day. Futures held in range between day’s high of $4.3388 and $4.2662 per bushel.
Elsewhere on the grains market, wheat futures for settlement in March traded at $6.6450 per bushel by 14:43 GMT, losing 0.55% on daily basis. Prices jumped to a session high of $6.7212, while day’s low was touched at $6.6138 per bushel. The grain gained nearly 3% last week after it added 0.8% in the previous five-day period.
DTN reported that winter wheat in the Southern Plains is likely well established through the region at this time. A turn to cold and potentially stormy weather during the outlook period bears watching but it does not appear to be a significant risk to the wheat crop.
The Trade Ministry of Iraq announced today that it is seeking to purchase 50 000 metric tons of wheat from the US, Canada or Australia.
Meanwhile, Egypt, the world largest grain importer, bought 60 000 tons of Romanian wheat yesterday.
The USDA reported on December 2nd, that US wheat inspected for export in the week ended November 28th rose 23% from a week earlier to reach 15.5 million bushels.