Market News

Demand issues pressure soybeans, corn

Soybeans were modestly lower on fund and technical selling. It was an up and down day, waiting to see what’s next with China. China has reportedly stopped buying U.S. ag goods and might place tariffs on purchases made after August 3rd, while President Trump wants to place a 10% tariff on $300 billion of imported Chinese goods. With the existing tariffs in place, that’d cover nearly everything the U.S. purchases from China and China’s tariffs also remain in place. Several million tons of U.S. soybeans previously purchased by China remain unshipped with less than a month left in the marketing year. Crop development remains slow and the U.S. condition rating is the lowest in years, but demand concerns are limiting any significant upside. Allendale expects the USDA to estimate production at 3.867 billion bushels with an average yield of 48 bushels per acre, planted area of 81.212 million acres and harvested area of 80.546 million. Allendale doesn’t anticipate changes to the South American numbers, while U.S. and world new crop ending stocks are expected to increase. Soybean meal was up and bean oil was down on the adjustment of product spreads.

Corn was modestly lower on fund and technical selling. The USDA’s corn condition rating is also the lowest in several years and large parts of the Midwest need rain. Near-term forecasts mostly show scattered precipitation, not enough to fully improve conditions. The U.S. Census Bureau says corn exports for June were 3.07 million tons, down 57% on the year, the lowest volume for the month since 2013 and the smallest total for any month since November 2017. Marketing year to date sales were 5% behind the 2017/18 pace. Allendale says Brazil’s corn exports were a record for any month at 6.3 million tons. DTN says South Korea rejected all offers on a 55,000-ton corn tender, citing price. The USDA’s new supply, demand, and production numbers are out on the 12th and will include at least a preliminary look at prevent plant acres and the USDA’s planted area resurvey. The latest guess from Allendale is 13.173 billion bushels with an average yield of 166 bushels per acre, planted area of 86.292 million acres and harvested area of 79.354 million. No changes are expected for South America, while the new crop domestic and global balance sheets should be tighter. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol numbers are out Wednesday.

The wheat complex was lower on fund and technical selling, with Chicago and Kansas City leading the way down. 82% of the winter wheat harvest is complete, with more than half of the top states wrapped up or very close to it. The spring wheat harvest is just getting underway and while it is slower than average, the crop’s in better than normal shape. Ahead of the next set of USDA numbers, Allendale expects the USDA to put all wheat production at 1.916 billion bushels, with winter at 1.281 billion and “other” spring at 578 million bushels. 2019/20 U.S. and world ending stocks are expected to be a little tighter. Exports have been a bright spot for the complex, but it is still early in the 2019/20 marketing year and while there are weather concerns for some key export competitors, the world supply remains ample. Also, U.S. sales are constrained by freight prices. DTN says Egypt purchased a total of 415,000 tons of wheat from Romania, Russia, and Ukraine, while South Korea bought 31,700 tons of wheat from Canada.

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