Market News

Soybeans sink on China questions

Soybeans were sharply lower on fund and technical selling. China did buy old and new crop U.S. beans ahead of the recent trade talks, but nothing since, even with a pledge to buy more U.S. ag goods. President Trump has announced new 10% tariffs on $300 billion in Chinese goods will go into effect September 1^st, but also indicated negotiations will continue. With the 25% tariff on $250 billion in Chinese goods still in place, there would then be tariffs on nearly everything the U.S. buys from China. The trade is also watching U.S. weather ahead of and during key development phases. Soybean meal was sharply lower on the new tariff threat and bean oil was weak, following the rest of the soy complex. Allendale says Brazilian firm Datagro Consultoria projects 2019/20 soybean production at a record 125 million tons. According to the USDA, June’s soybean crush was 158 million bushels, down 7 million from May and 12 million less than June 2018.

Corn was lower on fund and technical selling. Weekly export sales and the weekly ethanol numbers were both bearish, with the current marketing year running through the end of August. Temperatures are mostly non-threatening, maybe even a little on the cool side in some areas, but parts of the Midwest do need rain. There are a number of unknowns about the 2019 U.S. corn crop and it is uncertain what kind of answers will be in the new supply, demand, and production numbers out on the 12^th. The report will also include at least some of the results from the USDA’s acreage resurvey and initial prevent plant numbers. Export competition has been a big part of the recent bearishness and that is likely to continue. According to Allendale, Brazilian firm Datagro Consultoria has Brazil’s 2019/20 corn crop at a record 104.28 million tons. The USDA’s attaché in the European Union projects 2018/19 corn production at just over 64 million tons, with 2019/20 at 64.5 million. Ethanol futures were mixed. The USDA says corn for ethanol use in June was 457 million bushels, a decrease of 1% on both the month and the year.

The wheat complex was lower on fund and technical selling. Wheat exports are ahead of last marketing year’s pace, but that was a low bar, and physical shipments have slowed. The dollar index has trended higher recently, making U.S. goods more expensive, and a lot of the bigger sales are going to other exporters because of lower prices. The winter wheat harvest is moving along quickly, probably wrapping up before mid-month. The spring wheat condition rating declined last week and while the crop is in better than average shape, there are a lot of uncertainties about spring wheat after the slow start to planting. The trade is also watching the weather in Australia, Canada, the European Union, and the Black Sea region. Wheat harvest is reportedly underway in parts of France, Germany, and the United Kingdom. The USDA’s attaché for the European Union has 2019/20 wheat production at 149.5 million tons. The USDA says the second quarter 2019 wheat flour grind was 225 million bushels, up 1% from the first quarter, but down 1% from the second quarter of 2018.