Market News

More weather support for soybeans

Soybeans were higher on commercial and technical buying, closing out the last full week of August in solidly positive territory. Temperatures will moderate in the near-term, but most of the region could stay dry into September, potentially lowering yields. There is a chance for a return to higher temperatures early next month as well. A major crop tour is pointing to lower yields in parts of the region. Supply projections are already tight and will likely only get tighter. China bought 120,000 tons of new crop U.S. beans, continuing the recent uptick in demand. Soybean products were higher with bean oil in the lead on strong crush margins. Still, meal did outgain oil for the week due to the differing fundamental outlooks. The big difference is demand, with U.S. soybean meal able to fill some of the vacuum left by the smaller crop in Argentina, which is usually the world’s biggest exporter of soybean products.

Corn was mixed, also ending the week mixed, with nearby months up and deferred contracts down. Corn is watching late development weather with a major crop tour projecting lower yields in some key growing areas. The recent weather at this stage of development is a bigger factor for beans than corn, but hot, dry weather has likely had an impact on test weights and sped up maturity. The USDA’s updated yield and production numbers are out September 12^th. Export demand is a bearish factor, but corn for ethanol use demand remains solid, helped out by strong operating margins. The trade is also watching the tail end of Brazil’s second crop harvest and conditions ahead of new crop planting in South America. Conditions currently favor Brazil over Argentina. The Buenos Aires Grain Exchange says 96.9% of Argentina’s last crop is harvested, holding the production guess at 34 million tons.

The wheat complex was mixed, ending the week mixed as well. The trade is watching the tail end of the U.S. winter wheat harvest and the advancing spring wheat harvest. The weather positives – dry conditions in Argentina, Australia, and Canada, along with excessively wet conditions in Germany were largely disregarded. U.S. wheat is looking at the tightest domestic supply in years but is also facing the slowest export demand in decades. Russia remains in control of the export market, with private offers reportedly below Moscow’s official floor. If it weren’t for those private offers, U.S. soft red winter would be competitive on the global market. Wheat is also keeping an eye on the exploration of alternative routes for exports being explored by Ukraine and its allies post-Black Sea Grain Initiative. Moscow says it will consider returning to the pact, but only if specific demands are met. France’s AgriMer says 97% of that nation’s soft wheat crop is harvested.