Market News

Soybeans, corn, wheat up ahead of USDA update

Soybeans were higher on short covering and technical buying. The trade expects the USDA to raise its yield guess slightly in Thursday’s supply, demand, and production report. That estimate change further once harvest starts, but for now, analysts expect a record crop. The USDA’s crop rating remains above a year ago and while that’s not a one-to-one correlation for yield and crop size, it’s at least a partial indicator and is psychologically bearish. U.S. ending stocks are expected to be up from August on that increase in yield. Demand continues to be a question mark. Export demand for U.S. soybeans has improved, especially from China, but U.S. premiums are up and China is still buying from Brazil as well. The USDA’s weekly export sales numbers are also out Thursday. Soybean meal was higher and bean oil was lower, adjusting product spreads.

Corn was modestly higher on short covering and technical buying. It was an up and down day for corn, which was also preparing for a modest yield adjustment Thursday. Contrary to beans, the yield is expected to be slightly lower, but the production guess should stay above 15 billion bushels, unless there are unexpected drastic changes to acreage estimates, which is unlikely for September. Domestic ending stocks could be lowered while still holding above 2 billion bushels. Harvest delays are likely in some southern growing areas due to Francine moving inland. Corn is also monitoring planting conditions in Argentina and Brazil. CONAB will update its outlook for Brazil Thursday. The U.S. Energy Information Administration says ethanol production last week averaged 1.08 million barrels a day, up 19,000 on the week and 41,000 on the year, with stocks of 23.714 million barrels, an increase of 360,000 from the week before and 2.543 million from a year ago. Ethanol exports averaged 177,000 a day, 86,000 more than the prior week and 109,000 above last year.

The wheat complex was higher on short covering and technical buying. Winter wheat planting conditions are dry in parts of the southern U.S. Plains and Black Sea region. U.S. wheat ending stocks could be down on the month due to better export demand. The trade will also be watching any global changes closely following widespread crop weather issues in France, Germany, Russia, and Ukraine. There could also be some adjustments for Canada, but it’s likely too early for changes in Argentina and Australia. The domestic wheat production update will wait until the Small Grains Summary at the end of the month. The USDA’s attaché in Kazakhstan slashed its wheat production estimate 1.6 million tons to 14.2 million tons due to heavy rainfall during harvest.