Market News

Corn gains ground as soybeans sell off

Soybeans were sharply lower on profit taking and technical selling. Temperatures are moderating in parts of the Midwest and some areas are expected to see rain over the next week. The big month for beans may be August, but the crop still needs a solid set-up to reach its production potential, which has already been reduced by lower-than-expected planted area. Export demand continues to be slow, while domestic crush margins are bullish. The USDA’s weekly export sales numbers are out Friday, delayed by Tuesday’s holiday. ANEC projects Brazil’s soybean exports for June at 9.44 million tons, with soybean meal at 2.25 million tons. Brazil has filled part of the soybean product export vacuum left by Argentina’s drought-stricken crop. The USDA’s attaché in China has 2022/23 soybean imports at 98 million tons, in-line with the official department projection, with 2023/24 imports at 95.5 million tons, 1.5 million less than the last official estimate. Soybean meal was mixed on bear spreading and bean oil was down sharply on profit taking.

Corn was higher on short covering and technical buying. Corn is watching the weather and the likelihood rain will miss some of the drier parts of the region, adding to the crop’s stress. While drought conditions did improve overall, there was expansion in some areas over the past week. The Renewable Fuels Association says ethanol exports for May were 113.2 million gallons, 10% less than in April, mainly to Canada, the European Union, and the United Kingdom, while DDGS exports in May were 958,385 tons, a nine-month high and 23% more than the previous month, with Mexico topping the list. The U.S. Energy Information Administration says average daily ethanol production was the highest in more than six months at 1.06 million barrels a day, an increase of 8,000 on the week and 16,000 on the year, with stocks of 22.26 million barrels, a drop of 719,000 from the prior week and 1.23 million on the year. 20% of Brazil’s second corn crop is harvested, with CONAB’s updated outlook scheduled for the 13^th. ANEC sees Brazil’s corn exports for June at 6.34 million tons. The USDA’s attaché for China expects 2023/24 corn imports to be 20 million tons, 3 million less than the official estimate, but up 2 million from the 2022/23 total.

The wheat complex was mixed. Spring wheat development weather looks generally cool and dry in the northern Plains, while more winter wheat harvest delays are likely in the central and southern Plains. Dry weather is also an issue for spring wheat in parts of Canada and Russia. The ongoing war in Ukraine by Russia and the ramifications of that war on trade continue to linger in the background. For now, Russia continues to dominate the export market due to a price advantage. Agritel estimates Russia’s 2023 wheat crop at 85.7 million tons, up 2.5 million from their last guess. Sovecon has Russia’s 2023/24 wheat exports at 47.2 million tons, compared to the prior projection of 45.7 million. A French grain group expects France’s soft wheat yields to be better than average. The USDA attaché for China has 2023/24 production at 140 million tons, up from 2023/24 and with similar quality, despite heavy late season rainfall. The USDA’s updated supply, demand, and production numbers are out on the 12^th.