Market News

Corn up, expecting bullish USDA numbers

Soybeans were mostly modestly lower on spread trade and profit taking. Beans saw a slight correction after the recent rally, getting ready for Friday’s USDA numbers. Ahead of the report, on average, the USDA is expected to put production at 4.286 billion bushels with an average yield of 51.6 bushels per acre, down from August, but above the 2019 totals. Old crop U.S. ending stocks could be a little bit tighter, while new crop supplies might be down sharply, but that depends on what tack the USDA takes for demand and production. The USDA will also be updating global supply and demand outlooks. China bought 195,000 tons of U.S. soybeans, the fifth business day in a row with an announced sale, with a running total of 1.865 million tons. AgRural estimates 2020/21 soybean production for Brazil at 131.3 million tons, compared to 129.3 million a month ago, with 48% of the 2020/21 crop sold and 2% of 2021/22 sold. The Rosario Grain Exchange sees Argentina’s new crop at 50 million tons, compared to 50.7 million for 2019/20. Soybean meal and oil were both mostly lower on spread trade and profit taking.

Corn was modestly higher on short covering and technical buying. Corn was also getting ready for the USDA numbers, expecting lower yield and production estimates. On average, analysts see the projected production total at 14.833 billion bushels with an average yield of 177.7 bushels per acre, solidly above last year, but down from August following drought or near drought conditions and a derecho in some key U.S. growing areas. The trade also has an eye out for any damage from this week’s frost and freeze event in northern portions of the Corn Belt. The average guess for old crop corn stocks is for an increase, while new crop is expected to show a decrease. On the demand side of the ledger, the rise in demand from China is expected to be a factor as their livestock industry re-expands and weather issues lower domestic production. According to reports, the head of Brazil’s CONAB suggests that nation should temporarily eliminate import tariffs on corn and soybeans from outside of the Mercosur trading bloc to limit domestic price inflation. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol production last week averaged 941,000 barrels a day, up 19,000 on the week, but down 82,000 on the year, with the supply at 19.993 million barrels, a decline of 889,000 from the previous week and 2.506 million from a year ago.

The wheat complex was mixed, with Chicago and Kansas City up and Minneapolis mostly weak. A quarter into the marketing year, export demand has been better than expected, with the USDA’s weekly sales numbers also out Friday at 8:30 AM Eastern/7:30 Central. The supply and demand numbers are scheduled for Noon Eastern/11 Central, with the average of analysts’ estimates showing a slight increase for domestic stocks and a modest decrease for the global supply. The trade is watching U.S. winter wheat planting weather and spring wheat harvest conditions. Globally, the areas the trade is watching are Argentina, Australia, Russia, and Ukraine. DTN says Jordan bought 60,000 tons of milling wheat out of the initial tender of 120,000 tons, while Tunisia is in the market for 42,000 tons of milling wheat and 25,000 tons of durum and Saudi Arabia is tendering for 715,000 tons of milling wheat.