Market News

Soybeans rally, but remain wary

Soybeans were higher on commercial and technical buying. Contracts bought back most of Monday’s drop, while watching the slow tail end of the U.S. harvest, with a few hundred million bushels of beans remaining unharvested. The trade is waiting for the G20 later this week and any potential advance in talks with China. Rhetoric from both sides, including talk of new U.S. tariffs on imports from China and higher rates for tariffs already in place, could keep progress at this round of meetings limited. In any event, speculation continues to be rampant ahead of the event. Soybean meal and oil were higher on spillover from beans. According to wire reports, China’s soybean imports are expected to decline because of the spread of African Swine Fever. China bought 6.9 million tons of soybeans in October – 6.5 million of that from Brazil – but imports could start to fall by December, unless Beijing is able to curb the spread of ASF. Allendale says Brazil’s soybean planting is at 89%, compared to the five-year average of 79%, and 39% of Argentina’s beans are planted, matching the typical pace.

Corn was narrowly mixed after spending most of the session following the lead of beans. Corn is also watching the lagging tail end of this year’s harvest, also with a few hundred million bushels of corn left in the field. Weekly export inspections were bullish and the first notice day for December contracts is Friday. According to several reports, the USMCA, the Trump administration’s version of NAFTA, could be signed at the G20 meeting in Argentina. A resolution with China would generally be welcome for U.S. ag, but it’d be a bigger deal for ethanol or sorghum than corn. The USDA’s attaché in Japan says a free trade agreement between Tokyo and the European Union is expected to have a “limited impact” on corn trade between Japan and the U.S. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks report is out Wednesday. The industry continues to await the implementation of year-round E15 use and the announcement of the 2019 biofuel mandate, along with any potential changes to biofuel waiver policy. Allendale reports Brazil’s first corn crop is 92% planted, slightly ahead of normal, and 58% of Argentina’s crop is planted, compared to 46% on average.

The wheat complex was lower on profit taking and technical selling, along with the higher U.S. Dollar index. Late winter wheat planting and emergence remain slow, but, overall, the crop is in good shape for this time of year. Cold temperatures in parts of the Plains and Midwest are expected to hamper development and slow emergence even further, while planting delays in some areas won’t be resolved until soybeans are fully harvested. The USDA’s next official wheat production estimate is due in January, but an acreage update could happen in the next set of supply and demand numbers December 10th. The trade is also watching the Black Sea region for developments in tensions between Ukraine and Russia and any possible increase in export demand for U.S. wheat, while preparing for the upcoming first notice day on December contracts. Jordan issued a tender for 120,000 tons of optional origin wheat, while Algeria, Bangladesh, and Iraq also have open wheat tenders. The USDA’s weekly export sales report is out Thursday morning.