Market News

Soybeans supported by expectations for U.S./China trade talks

Soybeans were higher on fund and technical buying. Beans have some renewed optimism about high-level U.S./China trade talks expected to happen in mid-May following a social media post by President Trump. The face-to-face meeting between President Trump and President Xi was originally expected to occur either late last month or early this month but was delayed by the military action in Iran and the Middle East. Iran is a key trading partner for China and Beijing continues to largely rely on Brazil for its soybean needs. Strong crush demand and margins are canceling out some of the concerns about exports. NOPA says member firms crushed 226.2 million bushels of soybeans in March, a little bit below the average pre-report guess, but still the second largest for the month on record. Soybean meal and oil futures both rallied after the NOPA numbers. A truck strike has reportedly impacted grain deliveries at two key ports in Argentina.

Corn was higher on fund and technical buying. Rain is delaying planting activity in parts of the Midwest but it should be long-term beneficial for soil moisture. Still, the potential for flash floods and severe weather in some areas could lead to replanting. In any event, there is a long way to go until planting is wrapped up. The trade is also watching harvest in Argentina and second crop development weather in Brazil. The USDA’s next round of supply and demand numbers is set for May 10^th, while CONAB’s updated outlook for Brazil will be out May 14^th. The U.S. Energy Information Administration says ethanol production averaged 1.12 million barrels per day, up 4,000 on the week and 108,000 on the year, with stocks of 26.699 million barrels, 646,000 more than the prior week, but 115,000 less than a year ago, while exports averaged 81,000 barrels per day, falling 122,000 from the week before and 56,000 from last year.

The wheat complex was higher on fund and technical buying. Near-term weather in most of the Plains looks dry, but there could be some relief next week. However, there’s still been at least some damage done to the U.S. hard red winter crop and there’s been notable chatter about a significant year-over-year increase in abandonment. In contrast, soft red winter conditions are generally good. The large available global supply limited the upside Wednesday, but global demand has been a little bit better than expected for much of this marketing year, which runs through the end of May. The USDA’s weekly U.S. sales numbers are out Thursday morning. Ukraine’s state weather group says winter crops are in “mostly good” shape. Russia’s Ag Ministry says grain exports by sea during March were sharply higher, but the overall pace continues to lag last year because of bad weather.