Market News

Another down day for corn, soybeans, winter wheat

Soybeans were lower on fund and technical selling. No new export sales have been reported to China, but Mexico did buy U.S. soybeans Tuesday morning. Mexico purchased 120,000 tons, with 48,000 tons for 2018/19 and 72,000 tons for 2019/20. China has reportedly agreed to buy 10 million tons of U.S. beans, but actual purchase amounts have fallen short of expectations, at least to this point, with more negotiations scheduled for March. The big sticking points for the U.S. remain centered on tech and intellectual property issues. Most forecasts have good crop weather in Brazil and improved chances of rain for parts of Argentina. The USDA’s attaché in Brazil projects soybean production at 115.5 million tons, compared to 120.3 million in 2017/18, with lower yields because of hot, dry weather during key growing periods. 2018/19 exports are expected to be 70 million tons, down 16% on the year. The 2018/19 crush for Brazil is seen at 43 million tons, with slightly lower meal exports and slightly higher oil exports. Soybean meal and oil were lower on spillover from beans and the implications of a big South American crop.

Corn was lower on fund and technical selling, with May closing just above a multi-month low. There’s been more talk of China buying U.S. corn, ethanol, or even sorghum, but nothing has surfaced, and corn is waiting to see what role, if any, it plays in the potential trade deal. The USDA’s attaché in China says the 2018/19 quality of that nation’s crop is better than average, adding Beijing sold more than 100 million tons from state reserves from January 2018 to late October 2018. Corn is also watching weather in South America, with probable record production and increased export competition. Exports have been good, but Ukraine has cut into the U.S. market share and big crops from Argentina and Brazil would also likely impact sales. Stateside, early planting will likely be delayed by wet weather, which has also slowed down U.S. river movement. Ethanol futures were steady to weak. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. The industry continues to monitor margins, while waiting for details on year-round E15 use and possible policy changes at the EPA. The USDA’s attaché for Mexico pegs 2018/19 corn production at 25.75 million tons, down slightly from the official USDA guess because of lower harvested areas.

The wheat complex was mostly lower, with another round of new contract lows for the March winter wheat contracts. The lack of export demand continues to be the big bearish factor for Chicago and Kansas City, with a lot of business going to the Black Sea region. The current marketing year for wheat runs through the end of May. Additionally, the USDA says most of the U.S. winter wheat crop is in better shape than at this time last year thanks to improved soil moisture levels in many states, but there are some areas of concern. Minneapolis was up on an oversold bounce and concerns about spring planting. DTN says Taiwan bought 110,000 tons of U.S. feed wheat and Jordan purchased 60,000 tons of wheat from an “unknown origin”.