Market News

Corn firm, but gains limited by crop expectations

Soybeans were steady to mostly modestly lower on fund and technical selling. Beans are watching development weather, which looks generally non-threatening, even if some areas do need rain. IHS Markit, formerly IEG Vantage, sees production at 4.355 billion bushels with an average yield of 52.5 bushels per acre, while Informa projects global production at around 371 million tons. China bought 192,000 tons of new crop U.S. beans Wednesday morning, with high level trade talks scheduled for the 15^th. China will have to increase purchases even further to meet Phase One trade obligations as tensions between the world’s two largest economies continue. China also continues to buy beans from Brazil, despite the U.S. advantage in price, as a hedge against those tensions. Agroconsult has 2020/21 production for Brazil at a record 132.6 million tons, compared to 124.7 million tons following an increase in planted area, with exports possibly topping 80 million tons on strong demand from China. Soybean meal was lower and bean oil was higher on the adjustment of product spreads. According to Allendale, Malaysian palm oil stocks at the end of July are expected to total 1.67 million tons, down nearly 12% on the year.

Corn was modestly higher on short covering and technical buying. Corn saw a bounce off the recent lows, but the gains were held in check by expectations for a large, if not record, crop, despite the weather issues in parts of the region. IHS Markit expects the 2020 U.S. crop to be 15.036 billion bushels with an average yield of 179.0 bushels per acre, while Informa sees the world crop at 1.159 million tons. The USDA’s next set of production and yield projections are out on the 12^th, as a part of the supply and demand update. Agroconsult estimates 2020/21 corn production in Brazil at a combined 110.3 million tons, if realized, that would be a record high, compared to 101.2 million in 2020/21. Ethanol futures were higher. The U.S. Energy Information Administration says ethanol production last week averaged 931,000 barrels a day, down 27,000 on the week and 109,000 below a year ago because of tighter margins and concerns about blending demand caused by COVID-19. Stocks of 20.346 million barrels were up 74,000 from the week before, but down 2.771 million from last year. The Renewable Fuels Association says ethanol export during June were 78.5 million gallons, 16% more than in May, with DDGS exports at 883,193 tons, an increase of 47% on the month.

The wheat complex was mixed, with Chicago and Kansas City mostly lower and Minneapolis steady to weak. The trade is watching U.S. harvest weather and world crop conditions while getting ready for next week’s USDA numbers. Export demand has been good, but the global supply fundamentals remain bearish and it is early in the 2020/21 marketing year. Informa estimates 2020 global production at 759 million tons and has the U.S. crop at a total of 1.843 billion bushels. Global conditions generally remain mixed, with better weather helping the crop in parts of Australia and Russia, but with concerns about conditions in Argentina, France, Germany, and Romania. The USDA’s attaché in India sees 2020/21 wheat production at 107.180 million tons, compared to 103.6 million in 2019/20, with tighter ending stocks on expectations for better export demand. The explosion the port in Beirut, Lebanon will have an impact on their domestic grain supply. DTN says Egypt has tendered for an unspecified amount of wheat, Japan is in the market for 130,295 tons of food wheat, and Jordan is tendering for 120,000 tons of milling wheat.