Market News

Short covering supports grains and oilseeds

Soybeans were higher on short covering and technical buying. The trade is waiting for more fresh news on talks with and demand from China. No date has been announced for the resumption of trade discussions between the U.S. and China. Crop weather looks non-threatening for most of South America. The USDA’s attaché for Canada pegs 2018/19 soybean production at 7.267 million tons, down about a half a million from 2017/18, with exports of 5.3 million tons, compared to 4.925 million last marketing year thanks to stronger demand from China. 2019/20 soybeans are projected at 7 million tons with exports of 4.78 million. Canola production is seen at 20.344 million tons, compared to 21.328 million in 2017/18, with exports of 10.55 million, also below the previous marketing year. 2019/20 canola production is expected to be 20.5 million tons with exports of 11.1 million. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. The National Oilseed Processors Association says member firms crushed 154.498 million bushels of soybeans in February, less than what many analysts had been expecting. The USDA says the 2018 U.S. soybean crush total was 63 million tons, up 9% from 2017, with oil production of 24.1 billion pounds, also 9% higher.

Corn was higher on short covering and technical buying. Corn is also waiting to see what happens with China and watching weather in South America. The trade is watching the potential for planting delays in the Midwest and Plains. Most forecasts do have a warmer, drier pattern for much of the region through the end of the month, but remnants the cold, wet winter could still imped progress. The USDA’s prospective planting and quarterly stocks numbers are out on the 29th. Ethanol futures were higher. According to the USDA, corn for alcohol use in 2018 totaled 5.67 billion bushels, down 1% from 2017, with use for fuel alcohol at 5.55 billion bushels, up 1% on the year. DDGS production was 23.7 million tons, 2% higher.

The wheat complex was higher on short covering and technical buying. Contracts saw another oversold bounce and while there are some world weather issues, including dry conditions in parts of the European Union, North Africa, and the Black Sea region, the fundamentals remain negative. The trade is also keeping an eye on the export paces of Russia and Ukraine for signs supplies might be tighter than reported. According to Allendale, Ukraine increased its 2019 wheat estimate by 700,000 tons to 28.3 million and Germany’s 2019 crop is now pegged at 24.2 million tons, a jump of 19.4% on the year. New USDA supply and demand numbers are out April 9th. South Korea bought 33,700 tons of U.S. milling wheat and 30,800 tons from Australia, while Turkey picked up 290,000 tons of milling wheat from an “unknown origin”.