Market News

Soybeans, corn weak on profit taking

Soybeans were modestly lower on profit taking and technical selling but managing to largely shrug off the outside market bearishness during the CBOT session and close near the upper end of the day’s range. The trade is waiting for China to follow through on rumors and actually start buying U.S. soybeans outright again. Nothing new has surfaced, but DTN says lower export basis levels in Argentina and Brazil could indicate fresh demand for U.S. beans from Beijing. It remains to be seen how the arrest of a Huawei executive will impact negotiations. Beans are also watching development conditions in South America. The USDA’s attaché in Argentina says heavy rainfall in August and September affected winter crops but isn’t expected to have an impact on soybean acreage. Conditions in Brazil look good with that country apparently on pace for another record crop, with AgRural reporting planting at 89% complete. According to long term outlooks, Brazil will continue efforts to increase arable land over the next few decades. Stateside, there might still be several thousand, if not a few million, bushels of beans may still in the field. Soybean meal and oil futures were lower. Statistics Canada says 2018 soybean production was 7.267 million tons, down 5.8% from 2018. Canola production was 20.343 million tons, a decrease of 4.6%.

Corn was modestly lower on profit taking and technical selling, also holding up relatively during the drop in the broader markets. The USMCA trade pact still has to be ratified by the legislative bodies of the U.S., Mexico, and Canada and could face unique hurdles to passage in all three. The U.S. Congress would also have to repeal NAFTA prior to the USMCA going into effect. Mexico bought 198,120 tons of U.S. corn, with 106,680 tons for delivery this marketing year and 91,440 tons for next marketing year, which starts September 1st, 2019. Ethanol futures were lower. The U.S. Energy Information Administration says production last week averaged 1.069 million barrels a day, up 21,000 on the week and the highest since late August, while stocks were pegged at 23.030 million barrels, up 100,000. Ethanol, sorghum, and DDGS are also expected to benefit from the recent trade discussions. The U.S. Census Bureau says ethanol exports during October were 175 million gallons, up 75% from October 2017, because of greater demand from Brazil, Canada, and India. According to Statistics Canada, 2018 corn production was 13.885 million tons, 1.5% lower than last year. Delays continue for the tail end of this year’s U.S. harvest, with the USDA’s final 2018 totals out in January.

The wheat complex was modestly lower on fund and technical selling. The European Union and Canada have raised production estimates and U.S. export sales remain slow halfway through the 2018/19 marketing year. The European Commission pegs soft wheat production at 129.2 million tons, up 1.8 million from their previous guess, and Stats Canada has total wheat production at 31.769 million tons, an increase of 6.0% on the year. Coceral has the E.U. soft wheat crop at 128.6 million tons, down 1.3% from their September guess. New USDA supply and demand numbers are out next week. Despite the issues with opening credit to unload recent shipments, Egypt bought another 350,000 tons of wheat, 290,000 tons from Russia and 60,000 tons from Ukraine. No new developments have been reported in tensions between Russia and Ukraine, but the expected seasonal freeze of the Sea of Azov is expected to shift more Russian shipping to the Black Sea. The USDA’s weekly export sales report is out Friday morning.