Market News

Corn, soybeans, wheat down ahead of USDA update

Soybeans were lower on speculative and technical selling. The USDA says harvest is slower than average nationally, with more delays expected in the next few days. After that, conditions generally look better, but beans in some areas might take a while to dry out. Outside of the United States, the big issues on beans continue to be China and another expected record crop in Brazil. ABIOVE currently estimates the crop at 119.5 million tons, with exports of 77 million in 2018 and 71.9 million in 2019. Brazil’s beans are more expensive than the U.S., even factoring in tariffs, because of their tight supply, and trade tensions between Washington D.C. and Beijing are keeping China from buying U.S. soybeans, at least directly. Third party purchases are likely. New supply, demand, and production numbers are out Thursday at Noon Eastern/11 AM Central and are expected to be bearish. The trade is also watching planting in Argentina and Paraguay. Soybean meal and oil were lower, following beans.

Corn was modestly lower on fund and technical selling, in light trading volume. The corn harvest remains ahead of average as of Sunday, with traders watching cooler temperatures around the region and snow in parts of the northern Midwest and Plains. Corn was also getting ready for the new supply, demand, and production estimates, expecting a neutral to bearish set of projections. Potential damage from recent weather and any demand increase because of year-round E15 use won’t be reflected in this set of numbers. The demand impact of year-round E15 use is debatable anyway. Ethanol futures were steady to firm. The U.S. Energy Information Administration’s weekly ethanol production and stocks report is scheduled for Thursday and weekly export sales numbers are out Friday. Outside markets were extremely bearish on concerns about rising interest rates. The USDA’s attaché in Brazil projects the combined first and second corn crops at 95 million tons, higher than last year with a “return to normal yields” and increased planted area for the second crop, the source of most of their exports. 2018/19 exports are seen at 30 million tons, also above a year ago.

The wheat complex was modestly lower on profit taking and technical selling. The winter wheat planting pace is still faster than average despite rain and precipitation in the Midwest and Plains will be beneficial in the long term. The trade is also watching spring wheat harvest activity in parts of Canada, along with planting and development conditions in Argentina, Australia, the Black Sea region, and Europe. Losses are probable, but could be offset by increases in other areas, leaving the fundamental outlook bearish. Japan has an open tender for 115,685 tons of wheat from the U.S. and/or Canada. According to Allendale, Russia’s Ag Ministry says it expects to export 30 million to 35 million tons of grain during the 2018/19 marketing year. The USDA’s attaché in Brazil sees wheat production at 5.2 million tons, limited because of dry weather and frost in southern Brazil, with imports down 500,000 tons at 7 million.