Market News

Wheat helps pull soybeans, corn lower

Soybeans are lower on profit taking and technical selling, along with spillover from wheat and the outside markets. 57% of the crop is good to excellent, down 3% on the week, but with some rain in the near-term forecast. China and unknown destinations bought more new crop U.S. beans, 198,000 and 132,000 tons, respectively, the ninth business day in a row with a sale. The running total is 2,173,200 tons, all, except for 200 tons, new crop, and all purchased by China or unknown destinations. Those sales to unknown could turn out to be China when it’s time for delivery. There was chatter during the session more sales could be announced this week. The U.S. has recently reclaimed a big chunk of the export market thanks to a surge in Brazil’s FOB prices. Brazil’s new crop planting starts next month. Soybean meal was higher and bean oil was lower, adjusting product spreads. Argentina, the world’s biggest exporter of soybean products, continues to struggle with low water levels on the Parana River, delaying goods moving to port. Argentina’s national water institute says those issues could last through October or possible December.

Corn was lower on profit taking and technical selling, in addition to the bearish activity in wheat and the broader market. Corn was also watching the weather, with a solid chance of rain in the near-term forecast for dry parts of the Midwest and Plains. Corn, and for that matter beans, will need a trend-line yield or better to fully meet demand expectations and limit further price inflation for end users. The USDA’s next projection is out September 10^th. 62% of corn is called good to excellent, 2% lower, with crop tours ongoing in some areas. Similar to a major tour last week, a major tour this week is finding mixed yield results, generally in-line with the geographic breakdown that’s been discussed for months. Ethanol futures were unchanged. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday. DTN says a South Korean feed mill bought 138,000 tons of optional origin feed corn, “likely” from South America. U.S. corn prices are competitive, especially when compared to China’s domestic prices, but demand heading into the end of the current marketing year has been slow. Ukraine is picking up some of the slack and the market is watching Brazil’s second crop harvest, waiting to see just how much of a vacuum that smaller than expected crop will leave.

The wheat complex was sharply lower on profit taking and technical selling, along with a higher move in the dollar. Wheat corrected, with no real changes to the largely neutral fundamental outlook, and Paris milling wheat was lower ahead of the U.S. session. The U.S. spring wheat harvest is ahead of average and the winter wheat harvest has officially wrapped up. There’s a significant portion of the spring wheat crop in the U.S. and Canada that can likely be entirely written off. There are also crop concerns in portions of Russia and Europe. SovEcon estimates Russia’s wheat crop at 76.2 million tons, 200,000 less than the last reported guess. The trade is also monitoring conditions in Australia, expecting a big crop for the second consecutive year. There are several open export tenders, but it remains to be seen how much of that will go to the U.S.