Market News

Upward trajectory continues for corn, soybeans, wheat

Soybeans were modestly higher on short covering and technical buying, following through on Monday’s gains. Beans are still bullish on the phase one trade deal with China, but also still waiting for more details. The deal remains unsigned and no new export sales have been reported since last week’s progress, with no timeline for the expected purchases. Reports to have Beijing extending more retaliatory tariff waivers to buyers, but only after phase one is signed. China is reportedly working on a soybean meal export deal with Brazil. Soybean meal and oil were up on spillover from beans and Argentina’s higher export taxes, which were also a supportive factor for beans. Oil had additional support from the biodiesel tax credit getting through the U.S. House of Representatives.

Corn was modestly higher on short covering and technical buying, bouncing back after a slow start to the session, finishing in the black for the fourth session in a row. Corn is also waiting for more on China, expecting a vote on the USMCA later this week, and watching for the impact of Argentina’s export tax increase. That increase in export taxes is also expected to limit planting in 2020/21, especially for crops with higher input costs. The trade is also watching the tail end of this year’s harvest, with more delays in parts of the northern Plains and Midwest. The 2019 production figures out in January will likely be adjusted later because of the slow harvest pace. Crop conditions for most of Brazil look good but some areas could use precipitation and dry parts of Argentina are expected to see more rain later this week. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. Corn is an announced part of phase one of the trade deal with China, ethanol is expected to be part of the package as well, and Beijing could also buy U.S. sorghum and DDGS.

The wheat complex was modestly higher on short covering and technical buying, recovering after early profit taking. U.S. wheat is a part of the China deal and the trade is also watching weather issues in the European Union and the Black Sea region that limited planting, along with U.S. winter wheat development conditions. Parts of the southern U.S. Plains are dry, but that would be alleviated by timely snowfall and while winterkill is a concern in some areas, wheat is resilient. Argentina’s higher export tax is expected to lead to more business for the U.S., which was already expected to pick up some of the shortfall because of a smaller crop in Argentina. DTN says Japan is tendering for 148,805 tons of U.S. food wheat, while Syria, Taiwan, and Ethiopia also have open wheat tenders. The USDA’s weekly export sales report is out Thursday morning and new supply, demand, and production estimates are scheduled for January 10^th, assuming the federal budget is signed by the President before week’s end and a shutdown is averted.