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Wheat leads on trade deals, export taxes, weather
Soybeans were sharply higher on commercial and technical buying. Beans are encouraged by the agreement on phase one trade deal with China but want more details about purchases. Also, the deal isn’t yet signed and while the December 15th tariffs were delayed, some U.S. tariffs remain in place, just at lower rates. The USDA says China was the top destination for U.S. beans last week and the overall pace remains ahead of what’s needed to meet USDA projections for the current marketing year. Argentina’s new government has raised its export taxes on soybeans and soybean products to 30%, trying to reduce their national debt. Farmers have objected to not only the higher duty, but also the move being made by decree instead of negotiation. That move to higher tariffs also supported soybean products. Argentina is the biggest exporter of soybean products and third leading exporter of soybeans, after Brazil and the U.S. 61% of Argentina’s soybean crop is planted. The National Oilseed Processors Association’s member soybean crush for November totaled 164.909 million bushels, down almost 6% and below all pre-report expectations.
Corn was higher on commercial and technical buying. Corn is also waiting for details on the China deal and if it will include DDGS and ethanol as rumored, along with corn. Still, China is not a big importer of corn, so any purchases would likely be a good faith measure and there haven’t been any real specifics about just how much China will buy or when it will buy. Argentina has raised the export taxes on corn and sorghum to 12%. Argentina is the third biggest exporter of corn and this is also expected to limit planted area in the 2020/21 crop year. Weekly corn export inspections were bearish, sorghum inspections were bullish. Ethanol futures were higher. Corn is also watching the tail end of harvest activity, especially in the very delayed portions of the northern U.S. Plains, ahead of the January 10th USDA supply, demand, and production numbers. Crop conditions look good for most of Brazil, while Argentina could see more rain later this week.
The wheat complex was sharply higher on commercial and technical buying. Wheat purchases will also be a part of the China deal, also without specifics on amounts and timing, and Argentina has raised the export tax on wheat to 12%, while suspending export registrations during implementation. Commodities in general are also waiting for advancement of the USCMA. Mexico has been expressing concerns about labor inspection provisions in the bill, which might go to Congress Thursday. Weather is an additional concern, with wet conditions in parts of the European Union and dry weather in areas of Ukraine limiting planted area. APK-Inform says Ukraine’s winter wheat planted area was down 10% on the year and the lowest since 2014. A little more than halfway through the 2019/20 marketing year, U.S. wheat inspections are ahead of the 2018/19 pace, but only barely. DTN says there are several open wheat tenders, including one for U.S. wheat by Taiwan, two for Russian wheat from Syria, and two 75,000-ton tenders by Ethiopia. South Korea reportedly bought 35,000 tons of wheat from Australia.
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