Corn continues to drift downward
Soybeans were mostly lower on spread adjustments. The trade is watching development weather, expecting moderate temperatures and at least scattered rainfall into next month. Still, parts of the region will need timely and consistent rain to preserve full yield potential. No new export sales were announced Wednesday morning, despite recent rumors China was back in the market. Tensions between the U.S. and China have risen recently, but China needs beans and the U.S. maintains a price advantage over Brazil. The USDA’s weekly numbers out Thursday morning should be strong, especially for new crop following the recent strong demand by China and unknown destinations. Soybean meal was lower and bean oil was higher on the adjustment of product spreads. Rabobank projects Brazil’s 2020/21 soybean crop at 127.3 million tons with a 3% increase in planted area, with planting getting underway starting in September.
Corn was lower on fund and technical selling. Corn is also watching the weather, generally expecting a very large crop this year with the USDA’s next production estimate out August 12th, along with the updated supply and demand projections. Recent weather might have cost part of the U.S. crop at few bushels in average yield, but that could be made up by better weather in other parts of the Corn Belt. No matter what, there’s still a way to go until harvest activity starts in the Midwest and Plains. The U.S. Energy Information Administration says ethanol production and stocks were up on the week but remain well below 2019 levels because of COVID-19 and poor producer margins. Production averaged 958,000 barrels a day, 50,000 more than last week but 73,000 less than last year, while stocks of 20.272 million barrels were 471,000 higher than the previous week but 4.196 million lower than a year ago. Blending demand and the amount of gasoline were also up on the week, down on the year. Ethanol futures were lower. Feed and export demand are also bearish concerns, with the current marketing year running through the end of August. The USDA’s attaché in Argentina sees 2020/21 corn production at 47.6 million tons, compared to 50 million in 2019/20, on expectations for reduced acreage due to economic uncertainties. Argentina’s corn exports next marketing year are expected to be 33 million tons, compared to 37 million this marketing year. China’s COFCO and Bunge Argentina have temporarily stopped operations in Argentina because of COVID-19 infections.
The wheat complex was higher on short covering and technical buying, along with mostly lower trade in the dollar index. Contracts bounced off the recent lows, watching winter and spring wheat harvest activity. The global supply outlook continues to be bearish, limiting the upside. According to comments from Strategie Grains, soft wheat production in individual European Union nations will be mixed, better in Germany and Poland than in France, with the total crop at less than 130 million tons, compared to 147 million in 2019. SovEcon has Russia’s wheat crop at 79.3 million tons, 400,000 less than the prior estimate. The USDA’s attaché for Argentina projects 2020/21 wheat production at 20 million tons, down from initial estimates because of smaller planted area, but still above the 19.3 million tons in 2019/20. Exports are expected to be 13.4 million tons, compared to 13.1 million a year ago, most of that within the Mercosur trading block.