Market News

Soybeans bounce back late on dry weather concerns

Soybeans were higher on short covering and technical buying, rallying after a lower start to the session. Most forecasts have some scattered rain late this week, but outlooks into mid-month are generally dry. While the USDA and many private firms are projecting a record yield this year, those conditions could trim the numbers at least a little bit. Still, those are just projections, with harvest yet to get underway for most producers. The trade is also watching the start of planting in South America, with CONAB’s updated outlook for Brazil out Thursday, September 12^th. Ahead of the open, unknown destinations bought 189,700 tons of U.S. soybeans and China picked up 126,000 tons, with both for delivery this marketing year. Soybean meal was lower and bean oil was higher, unwinding product spreads.

Corn was lower on profit taking and technical selling. The mostly dry late development conditions could have an impact on this year’s yields. Many private estimates are just below the USDA’s last guess, with the next one out on the 12^th in the monthly supply, demand, and product update. Globally, corn is keeping an eye on the start of planting in South America. The corn basis has moved higher recently, making U.S. supplies less competitive on the global market, so the strong corn for ethanol use will continue to be a key component of demand. The U.S. Energy Information Administration says ethanol production last week averaged 1.061 million barrels a day, the lowest in two months, down 10,000 on the week, but up 49,000 on the year. Stocks were reported at 23.354 million barrels, a decrease of 218,000 from the previous week, but 1.733 million above a year ago. Ethanol exports averaged 91,000 barrels a day, 54,000 less than the week before, but 9,000 above last year. There’s ongoing talk India will need to import corn.

The wheat complex was mixed, with Chicago and Kansas City down and Minneapolis up. Wheat is monitoring late spring wheat harvest activity and early winter wheat planting. Dry weather in parts of the southwestern U.S. Plains could limit hard red winter acreage and dry weather’s an increasing concern in parts of the eastern Midwest, which could cut back on soft red winter planted area. For spring wheat, yields are starting to decline in parts of the northern U.S. Plains, coming closer to the numbers out of parts of the Canadian Prairies. Export demand has improved, which could continue due to smaller than expected crops for some key export competitors. That includes France, Germany, Russia, and Ukraine, with some early questions about production in Argentina. Still, for now, Russia remains in control of the global market due to a price advantage. There’s been more talk about India importing wheat due to high domestic prices, but no reported action. The USDA’s weekly sales numbers are out Friday, delayed a day by Labor Day. Drought in the Black Sea region could have an impact on winter wheat planted area for Russia and Ukraine, but there are some conflicting projections ahead of widespread activity and the ongoing war continues to be a wildcard.