Market News

Corn ekes out a gain while wheat hits new lows

Soybeans were modestly lower on fund and technical selling. Weather continues to look mostly favorable in South America, with rain in the near-term forecast for many areas. The USDA’s new estimates for South American soybean production are out Friday, with CONAB’s updated outlook for Brazil on the 12^th. No significant adjustments are expected for the U.S. in this round of numbers, so most of the spotlight will fall on what the USDA decides to do with Brazil’s soybean, and corn, production guesses. The crop will be smaller than last year and will be below initial projections due to widespread weather issues, the question is just how aggressive the USDA will be this month with the numbers tabulated prior to Brazil’s harvest hitting the halfway mark. Soybean meal was mixed on bull spreading, while soybean oil was up on six-month highs in palm oil due to declining production projections for southeast Asia.

Corn was modestly higher on short covering and technical buying. Corn is monitoring conditions in South America and weather in the U.S. ahead of widespread planting. The USDA’s Prospective Planting report is out on the 28^th, along with quarterly grain stocks. Contracts were able to find some new buying interest after some early mixed activity. Demand for ethanol use remains solid, even with production at a four-week low last week. The U.S. Energy Information Administration says production averaged 1.057 million barrels a day, down 21,000 on the week, but up 47,000 on the year, while stocks were a 50-week high at 26.051 million barrels, an increase of 29,000 from the previous week and 731,000 from a year ago. Exports are good, but there’s more competition from Ukraine. There’s been talk, but no confirmation, of China buying corn from both the U.S. and Ukraine this week.

The wheat complex was lower on fund and technical selling, with new lows for May Chicago and French milling wheat. The big bearish factors continue to be slow export demand and large global supplies. Ukraine and Russia continue to have a price advantage on the world market, impacting trade for both the U.S. and exporters in the European Union. The European Commission says that since the start of the marketing year last July 1^st, soft wheat exports by the E.U. are 21 million tons, compared to 21.9 million a year ago. On the demand front, Egypt, the world’s biggest buyer of wheat, got a much-needed cash injection from the International Monetary Fund, and Algeria reportedly bought a significant amount of wheat from Russia. The USDA’s weekly U.S. sales numbers are out Thursday morning. There is much needed rain in the forecast for parts of the U.S. Plains over the next few days. Some states did see a decline in condition ratings over the past week, but the hard red winter crop is in much better shape than a year ago. The trade also has an eye on the potential for rain in the northern U.S. Plains and Canada ahead of spring wheat planting.