Market News

Wheat up, with end of winter crop harvest in sight

Soybeans were modestly higher on short covering and technical buying. The trade is waiting for next week’s face to face negotiations with China and to see what happens with tariff waiver requests by Chinese buyers. All U.S. and Chinese tariffs remain in place for now and even with a waiver, U.S. beans are still at a competitive disadvantage to Brazilian supplies. Even then, Chinese purchases have tailed off because of poor crush margins linked to lower feed demand because of the spread of African Swine Fever. About 200 million bushels of 2018/19 U.S. beans previously purchased by China remain unshipped, with just over a month left in the current marketing year. Unknown destinations bought 100,000 tons of old crop U.S. beans. The USDA’s weekly export sales report is out Thursday morning at 8:30 Eastern/7:30 Central. Stateside, the trade has an eye on weather heading into the pollination phase. Soybean meal was mostly firm, consolidating, and bean oil was up on spillover from beans.

Corn was modestly lower on profit taking and technical selling. Corn is watching the weather heading into August, with most of the crop at or near key development phases. Temperatures are expected to be warm and while rain forecasts are mixed, precipitation is in the near-term forecast for some of the drier areas of the Corn Belt. The next USDA supply, demand, and production report August 12^th will include resurveyed acres and prevent plant totals. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production was down an average of 27,000 barrels on the week at 1.039 million barrels a day, while stocks were up 324,000 barrels at 23.689 million, the highest in months, but DTN says most of the build was at export facilities on the coasts. U.S. ethanol is a potential purchase target for China, along with U.S. corn, DDGS, and sorghum. Bigger crops in Argentina, Brazil, and Ukraine have limited export competition for U.S. corn, which could also face increased competition from U.S. sorghum, which is less expensive and in very good shape for this time of year.

The wheat complex was higher on commercial and technical buying. Early yields from a major spring crop tour are coming in above a year ago, with the survey wrapping up Friday. The tour has also found disease issues and some empty fields because of the planting delays. The winter wheat harvest should be complete soon, assuming weather cooperates, having already concluded in some of the major states. Yields have generally been strong, canceling out some of the disease and protein content concerns. SovEcon lowered its look for Russia’s wheat crop from 76.6 million tons to 73.7 million, while reducing the total grain outlook to 117.2 million tons. APK-Inform raised its projection for Ukraine’s grain crop to a record 71.789 million tons, compared to 70.418 million last marketing year, with exports of 49.943 million tons, compared to 47.653 million a year ago. The trade is also watching weather in Europe with the potential for record high temperatures and dry conditions, damaging crops. DTN says Egypt bought 300,000 tons of milling wheat from Romania, Russia, and Ukraine, while the Philippines is tendering for 220,000 tons of feed wheat and Japan is in the market for a total of 125,802 tons of milling wheat.