Market News

Another round of weather support for grains, oilseeds

Soybeans were sharply higher on fund and technical buying. The USDA didn’t make any changes to the U.S. crop outlook for beans Tuesday – but that is probable in July or August. Still, even if there are tens of millions of acres left to be planted and below trendline yields are also probable, it’s increasingly likely there will be at least some increase in U.S. bean acreage, when compared to March’s prospective planting report. The trade expects more near-term planting delays, along with cooler temperatures, and USDA did tighten the old and new crop global balance sheets. CONAB has Brazil’s 2018/19 soybean crop at 114.843 million tons, up slightly from the previous month’s guess, but down more than 4.4 million from 2017/18. Soybean meal and oil were higher, following beans. The USDA’s weekly export sales report is out Thursday at 8:30 Eastern/7:30 Central. China continues to be a bearish factor, with the continued spread of Africa Swine Fever and less than friendly rhetoric from both sides in the ongoing trade dispute.

Corn was narrowly mixed on spread adjustments. Corn consolidated after the bullish reaction to the lower USDA crop numbers, which could fall further in coming months. The USDA’s reduction of 3 million acres for planted and harvested area was conservative, but the 10 bushel per acre yield reduction was the largest May to June decline on record. Most forecasts have more planting delaying rain this month and cooler than normal temperatures in some key U.S. growing areas. In addition to the focus on prevent plant, there are increasing concerns about outright abandonment. Ethanol futures were mixed. The U.S. Energy Information Administration says ethanol production last week averaged 1.096 million barrels a day, up 52,000 on the week following the confirmation of year-round E15 availability. Stocks dropped 751,000 barrels to 21.082 million. CONAB has Brazil’s 2018/19 corn crop at 97.01 million tons, compared to 95.254 million in May and the 2017/18 total of 80.709 million tons.

The wheat complex was mixed, mostly higher. Chicago and Kansas City were up on probable near-term harvest delays for the southern Plains, in addition to protein content and disease concerns for both hard and soft red winter wheat. Minneapolis was down on expectations for spring wheat planting to wrap up soon. New crop progress and condition numbers are out next Monday afternoon and the USDA’s updated supply, demand, and production numbers are out July 11^th. There’s some early sentiment that the USDA’s feed wheat use estimate will continue to rise. SovEcon lowered its outlook for Russia’s wheat crop by 400,000 tons to 82.2 million because of dry weather in some areas, with harvest underway in Stavropol. Wheat is also watching dry weather in Australia, Canada, and Ukraine. Egypt’s recent purchase of 120,000 tons of milling wheat was half from Romania, half from Russia. DTN says Jordan has an open tender for 120,000 tons of milling wheat.