Market News

Down day for grains and oilseeds

Soybeans were sharply lower on fund and technical selling in low trading volume. Still no official confirmation of new demand from China ahead of more face to face trade talks later this month. Negotiations are reportedly ongoing via video conferencing. Data from the U.S. Census Bureau indicates strained relations with major trading partners pushed the U.S. trade deficit higher in December. South American crop weather generally looks favorable for development and harvest, with soybeans in Argentina and Brazil currently cheaper than U.S. beans. The trade also has an eye out for potential U.S. corn and spring wheat planting delays, which would likely lead to an increase in soybean acreage. Soybean meal was down sharply and bean oil was modestly lower, following the lead of beans.

Corn was modestly lower on fund and technical selling, also experiencing low trade volume. Corn is also waiting to see what happens with China, while watching weather in South America. Planting delays are expected in parts of the Midwest and Plains and while it’s still a little too early to be too concerned, extended delays would likely lead to at least some shift in acreage. The USDA’s prospective planting numbers are out on the 29th, along with quarterly grain stocks. The trade is also waiting for USMCA passage and trade talks with the European Union. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol supplies hit a near one year high at 24.261 million barrels, up 552,000 on the week, while production averaged 1.024 million barrels a day, down 4,000. The industry continues to wait for signs of new demand from China and more details on year-round E15 implementation, along with possible policy changes at the EPA. Several U.S. governmental bodies reported ethanol exports for 2018 were new record high at more than 1.7 billion gallons.

The wheat complex was lower on fund and technical selling, along with the firm dollar, also in low trading volume. Chicago and Kansas City led the way down as export demand continues to be very slow, with about a quarter left in the 2018/19 marketing year for wheat. New USDA supply and demand estimates are out Friday at Noon Eastern/11 Central. Minneapolis held up relatively well on early uncertainties about spring planting in the northern Plains. Large parts of the region saw record or near record snow fall and even while it is a little early to get too concerned about acreage loss, cool temperatures through mid-month could keep those states wetter than normal. In sell-buy-sell activity, Japan bought 8,770 tons of U.S. feed wheat. Japan also has an open tender for milling wheat from the U.S., Australia, and/or Canada. Egypt rejected a cargo of wheat from Romania, citing quality concerns. Russia’s Ag Ministry projects 2019 wheat production at 75 million to 78 million tons, possibly as high as 80 million with ideal conditions.