Market News

Wheat mostly higher after China SRW purchase

Soybeans were modestly lower on fund and technical selling, with notching a three-month low. Harvest is moving faster than normal and the USDA’s crop condition rating was up slightly on the week. Some near-term harvest delays are probable ahead of what’s expected to be a drier pattern. There’s a lot of chatter in the trade about yields, but nothing official with the USDA’s next yield and production report out on the 12th. A major private firm did increase its yield and production expectations, contrary to a lot of other expectations. China bought 220,000 tons of 2023/24 U.S. soybeans Tuesday morning, bringing the week to date total for announced sales to 352,000 tons. Soybean meal was mixed on bear spreading, while bean oil was lower on profit taking and the losses in beans. Soybean planting in Brazil is reportedly ahead of average.

Corn was modestly lower on fund and technical selling. The corn harvest is ahead of average and while some key states are behind, they could catch up in the next couple of weeks. A major private firm raised its corn yield and production estimate this week, taking some in the trade by surprise. Still, there’s a long way to go until harvest is complete and if rainfall this week is heavier than expected, it could cause some damage in addition to increasing dry down costs, temporarily. Corn for ethanol use remains a bright spot for the market, helped out by strong producer margins. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. Dry weather in Argentina is reportedly slowing down the initial stages of corn planting.

The wheat complex was mostly modestly higher with Chicago mixed on bull spreading and Kansas City and Minneapolis up on short covering. The complex is oversold and China bought 265,000 tons of 2023/24 U.S. soft red winter wheat ahead of the open. China is the world’s largest producer of wheat but is also a significant importer due to relatively high domestic prices. While buying U.S. wheat is not uncommon for Beijing, this could a hedge in case Australia’s crop sees significant losses from El Nino. Russia’s still the world’s biggest exporter of wheat, but there are some signs that dominance is slipping, and grain is moving out of Ukraine, albeit at a slower pace. Stateside, rain in some areas will further delay winter wheat planting but will also recharge soil moisture ahead of dormancy and aid emergence. The trade is also keeping an eye on conditions in Argentina.

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