Market News

More weather support for corn, soybeans, wheat

Soybeans were higher on commercial and technical buying. Near-term forecasts generally remain hot and dry for some key northern and western growing areas. Conditions in central and eastern areas continue to be less-threating to beneficial. This growing season could be called “a tale of two crops” as most of the crop moves through key phases of development. Either way, soybeans will need a trend-line yield or better to meet demand expectations as the supply projections through next marketing year remain historically tight. The USDA says unknown destinations bought 132,000 tons of new crop U.S. soybeans. Weekly old crop sales were a net reduction following cancellations by Japan and unknown destinations, while new crop sales were decent, with Mexico and China leading the way. With just over a month remaining in the 2020/21 marketing year, exports are on track to meet expectations and well ahead of 2019/20. The International Grains Council estimates 2021/22 world production at 382 million tons, compared to 383 million last month and 363 million for 2020/21. The IGC did raise new crop carryover slightly on expectations for bigger beginning stocks. Soybean oil was sharply higher, following the lead of palm oil, and bean meal was firm on spillover from the rest of the complex.

Corn was modestly higher on commercial and technical buying. Corn is also watching the weather and the probable stress in some key U.S. growing areas. Like beans, corn will also need a trend-line yield or better to boost stocks and meet demand expectations. At this stage, that’s less and less likely. The USDA’s next set of production estimates is out August 12th. Old crop corn export sales were a marketing year low and a net reduction due to cancellations by China and unknown destinations, with new crop topping a half a million tons as Mexico, unknown, and Colombia all bought at least 125,000 tons. Brazil’s second crop will likely see further damage from another frost/freeze event this week. That crop got off to a poor start due to planting delays and since then has experienced hot, dry weather in central and southern growing areas and late season frost/freeze events, steadily pulling projections lower and lower. The International Grains Council sees 2021/22 global corn production at 1.202 billion tons, compared to 1.201 billion in June and 1.128 billion for 2020/21. Global new crop ending stocks were up on the month and expected to be a little bit larger than old crop, but well below the total for the 2019/20 marketing year due to increased trade and consumption. Ethanol futures were lower.

The wheat complex was higher on commercial and technical buying. Spring wheat yields continue to come in well below average due to drought conditions much of the growing region. Some spots on the ongoing spring wheat crop tour have reported yields as much as 15 bushels below the average and the final yield for North Dakota was the lowest on record for that tour at 29.1 bushels per acre. Abandonment is expected to far exceed the current USDA projection of 3%. Those conditions in the U.S. spring wheat region have also impacted Canada’s spring wheat crop and U.S. white winter wheat. There are also concerns about conditions in parts of Europe, Russia, and China. Russia’s government weather group now has production at 81 million tons, compared to 85.9 million a year ago due to hot, dry weather in some areas. The International Grains Council has 2021/22 world wheat production at 788 million tons, down 1 million on the month because of a lower outlook for North America, but that would be 15 million above the 2020/21 marketing year. The IGC did tighten the global balance sheet slightly on that lower crop estimate and a higher trade projection. The trade is also watching the U.S. winter wheat harvest pace and yield results. Export sales were up on the week and larger than average with China taking the top slot, but just about two months in, 2021/22 continues to trail the early 2020/21 pace.

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