Market News

Down week continues for soybeans

Soybeans were lower on fund and technical selling, with the most active contracts posting sharp week to week losses. The USDA says China was the leading buyer of U.S. beans last week, but it was a routine amount and unknown destinations canceled on more than bought. China’s Lunar New Year celebrations are underway and the spread of coronavirus is creating additional demand uncertainties. In any event, China might have the needed supplies in hand for a couple of months and South America’s soybeans will start to flood the market soon. There are some areas of concern for weather in Argentina and Brazil, but both countries appear to be on pace for large crops, including record production for Brazil. The Buenos Aires Grain Exchange says 66% of Argentina’s soybean crop is in good to excellent shape, with the remaining 34% called fair. The latest estimate from the International Grains Council has the 2019/20 crop at 342 million tons, down 17 million from 2018/19, but that’s on a smaller U.S. crop. The IGC is also projecting a tighter global supply because of that U.S. shortfall and strong demand. Soybean meal and oil followed beans lower. Oil had additional pressure from the correction in the global vegetable oils market. The losses in meal came despite the new marketing year high for export sales.

Corn was modestly lower on fund and technical selling, cementing a lower weekly finish. Weekly corn exports topped a million tons, but the overall pace remains behind last marketing year because of competition from Ukraine and South America. Friday morning, unknown destinations bought 142,428 tons of U.S. corn, putting the two-day sales total at more than 420,000 tons. Corn is also watching conditions in South America, including recent heavy rainfall that’s delayed the soybean harvest in Brazil, pushing back second crop corn planting. According to the Buenos Aires Grain Exchange, 95% of Argentina’s corn crop is planted, with 59% of the crop in good to excellent condition. The USDA’s attaché for Argentina sees 2019/20 production at 48 million tons, 2 million less than the current official guess, on lower acreage and a slightly lower yield. Exports this marketing year are seen at 33.5 million tons, compared to 32.879 million last marketing year. The International Grains Council has 2019/20 world corn production at 1.111 billion tons, up 8 million from the earlier guess, but down 18 million from 2018/19. The USDA’s attaché for South Africa has 2019/20 corn planting up 10% from 2018/19, even with a late start because of hot, dry weather early in the season. Total production for South Africa is seen at 13.34 million tons, compared to 11.807 million in 2018/19. If the estimates hold, the Pretoria office says exports could top a million tons. Ethanol futures were lower.

The wheat complex was lower on fund and technical selling. Wheat, especially Chicago wheat, is very overbought after the recent price strength and due for a correction. Still, March Chicago was up modestly for the week, while Kansas City and Minneapolis March contracts were lower. That follows a correction by milling wheat futures in France, one of the original sparks for the U.S. rally. The International Grains Council sees 2019/20 global wheat production at 761 million tons, compared to 762 million in December and 733 million for 2018/19. The USDA’s attaché in Argentina projects 2019/20 wheat production at 19.3 million tons, 300,000 more than the official USDA estimate, but down 200,000 from 2018/19, if realized. Exports ae see at 13 million tons, compared to 12.188 million in the previous marketing year. Stateside, the recent precipitation is expected to help hard red winter wheat, but some soft red winter growing areas are now too wet. The USDA’s next set of state crop stories is out Tuesday the 28^th. Weekly export sales were good and shipments were above what’s needed to meet UDSA projections for 2019/20, but the overall supply outlook is bearish with new supply, demand, and production numbers out February 11^th. DTN says Jordan is tendering for 120,000 tons of milling wheat.