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Soybeans up, still waiting for trade deal with China
Soybeans were higher on short covering and technical buying. Beans were oversold and continued to buy back part of the last month’s losses, with at least some optimism attached to China. Still, it has been a week of mixed signals with uneven messaging from the Trump administration and while a survey showed increasing optimism by U.S. producers, nothing has been signed. Phase one of the trade deal was announced more than 50 days ago and new U.S. tariffs on China go into effect December 15th. China has purchased soybeans from Brazil recently and while there’s talk Chinese buyers have exhausted their tariff waivers for U.S. beans, U.S. soybeans are the cheapest on offer. The other trade issues popping up this week with France, Argentina, and Brazil are expected to have a minimal impact on ag export business. Beans are also monitoring crop conditions in South America, with good weather in Brazil and a chance for rain in parts of Argentina. According to DTN, 84% of Brazil’s bean crop is planted and 45% of Argentina’s soybeans are planted, both slightly slower than average. Soybean meal and oil followed beans higher. Morocco bought 20,000 tons of 2019/20 U.S. soybean oil.
Corn was lower on fund and technical selling. Japan’s Upper House has passed the limited trade deal with the U.S., which lowers the import duty on U.S. corn to nearly zero. Japan is the second biggest buyer of U.S. corn. It’s also a positive for U.S. corn products, including DDGS and ethanol, and sorghum. The trade now waits for advancement of the USMCA. About a billion and a half bushels of U.S. corn remains unharvested, and while some areas are expected to make progress this week or even wrap up, some of the crop in northern areas might not be harvested until spring. Corn is also watching weather in Argentina and Brazil, with a survey of analysts projecting a 3.5% increase in planted area for Brazil. Brazil has reportedly stopped offering corn for export, but Ukraine remains a major player, with DTN reports a South Korean feed company bought 65,000 tons of corn from Ukraine this week. Ethanol futures were steady to lower. The U.S. Energy Information Administration says ethanol production last week averaged 1.06 million barrels a day, up 1,000 on the week, while stocks grew 362,000 barrels to 20.639 million, but that’s still 2.391 million barrels below a year ago.
The wheat complex was higher on short covering and technical buying. The U.S./Japan agreement is also expected to be a positive for wheat exports and Japan currently has an open tender for food wheat from the U.S. and/or Canada. Global demand for U.S. wheat is slowing down, but about halfway through 2019/10, sales and inspections remain ahead of last marketing year. The USDA’s weekly export sales report is out Thursday morning and new supply, demand, and production numbers are out on the 10th at Noon Eastern/11 Central. Drier near-term weather in Argentina is expected to speed up harvest activity. Statistics Canada will have new production estimates on Friday. Ahead of the report, all wheat production is expected to be 32.6 million tons, slightly more than the previous projection. DTN says Egypt bought 295,000 tons of milling wheat from Russia, with offers slightly cheaper than supplies from Ukraine. U.S. wheat is also higher prices than supplies from the European Union.
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