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Corn up on short covering

Soybeans were mixed on spread adjustments and a lack of follow through in deferred months. Nearby beans continued to move off last week’s lows, with additional support from higher palm oil heading into Wednesday’s session. Palm oil shot higher overnight, with DTN attributing the jump to increased demand ahead of Ramadan. Deferred months were down on those spread adjustments and the advancing harvest in Brazil, now more than 40% complete. INTL FC Stone estimates Brazil’s crop 124.2 million tons, up 200,000 from their last guess. That probable record crop for Brazil and lower prices in that country continue to take some of the U.S. export share, which might not be regained until late spring or summer, after Brazil has exhausted most of its supplies. China still needs to meet purchase targets outlined in the Phase One trade agreement and while Beijing is reportedly now offering tariff waivers, the results might not start to show up until next week’s export sales report. This week’s report is out Thursday morning. Argentina has confirmed it will raise export taxes on soybeans and, possibly, soybean products. The new tax on beans is expected to rise 3% to 33%. Soybean meal was mostly lower, already factoring in demand expectations, and bean oil was up on that overnight surge in palm oil; the adjustment of product spread was an addition factor for both.

Corn was modestly higher on short covering and technical buying. Corn is keeping an eye on the second crop planting pace in Brazil and development weather in Argentina. More than 60% of Brazil’s second crop has reportedly been planted, slower than average because of rain delays in some areas and parts of Argentina are dry. The trade is also monitoring conditions in the U.S. Corn Belt ahead of widespread planting with the USDA’s official prospective planting numbers out on the 31st. The USDA’s Ag Outlook Forum and several private sources are pointing towards an increase in acreage, but that will depend on the weather. There are continued echoes of the trying 2019 season as well, with some producers still needing to harvest the very tail end of last year’s crop. Ethanol futures were steady to lower. The U.S. Energy Information Administration says ethanol production last week averaged 1.079 million barrels a day, up 25,000 on the week, while stocks were a record 24.964 million barrels, an increase of 246,000. It’s anecdotal, but part of the supply build might be because of slow export demand. The USDA says China bought 110,000 tons of 2019/20 U.S. sorghum.

The wheat complex was lower on fund and technical selling. Wheat prices in Paris and Russia were lower heading into the U.S. session and the U.S. is trying to not price itself out of the export market again. The U.S. soft red winter supply is tight and there are continued concerns about excessively wet conditions in parts of that growing region. However, the USDA U.S. hard red winter conditions improved last week and warmer temperatures in the northern Plains could lead to early spring wheat planting. Still, some producers will need to harvest last year’s corn and spring wheat before that really gets underway. U.S. wheat exports could benefit from a backlog of grain in Canada caused by rail shipping delays. Commodities in general continue to monitor the spread of coronavirus and the potential impact on demand. There’s been more talk, but no confirmation, of Chinese interest in some types of U.S. wheat. The USDA’s attaché in Kazakhstan estimates 2020/21 wheat production at 12 million tons, up 500,000 from 2019/20. DTN says Ethiopia is tendering for 400,000 tons milling wheat, Jordan is in the market for 120,000 tons of milling wheat, and Tunisia is tendering for 117,000 tons of soft wheat.

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