Market News

Corn, wheat give back some gains

Soybeans were mixed on spread adjustments, with nearby contracts down and deferred months up, consolidating after the recent gains. Beans continue to wait for more details on phase one of the trade deal with China. The deal is unsigned and new tariff waivers might not be issued until after it is signed. China is still buying U.S. beans, but is also rumored to still be buying from Brazil as well. Some estimates have Chinese/Brazilian trade dropping by billions of dollars if/when the U.S./China deal is finalized. The trade is also watching development conditions in South America, with parts of Argentina and Brazil both needing rainfall. Soybean meal was higher and bean oil was lower on the adjustment of product spreads.

Corn was modestly lower on profit taking and technical selling, breaking the recent winning streak. Corn is also waiting for more information on China and for a USMCA vote, which could happen this week, at least in the U.S. House of Representatives. There’s a lot of business in front of Congress ahead of the winter recess, but the push behind the USMCA could help get that vote done, even if the Senate doesn’t vote until 2020. There’s still some corn left in the field, but amount and quality are unknowns. What would normally be the final 2019 totals will likely be adjusted downward later because of the slow harvest and ending stocks will likely be lowered. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol product last week averaged 1.064 million barrels a day, down 8,000 on the week, with stocks of 21.798 million barrels, a decrease of 17,000 on the week and 2.075 million on the year.

The wheat complex was weak to lower on profit taking and technical selling. Wheat also saw a correction after the recent rally, while also waiting for more on China and the USMCA. The trade is also watching late planting conditions in the European Union and Ukraine, where weather has impacted planting, along with U.S. winter wheat development conditions. There are also domestic uncertainties about how many winter wheat acres were actually planted this year. Halfway through the 2019/20 marketing year, the USDA is projecting a record global supply, limiting bullishness. DTN says Japan and Taiwan are tendering for U.S. wheat, Syria is in the market for wheat from Russia and Ethiopia is also tendering for wheat. Russia is reportedly planning to invest in a Syrian port to facilitate trade. Weekly export sales are due Thursday morning and new USDA supply, demand, and production numbers are out January 10^th.