Market News

New export sales to China prop up soybeans, corn

Soybeans were higher on short covering and technical buying. Beans continued their oversold bounce, with a little help from the sale of 389,000 tons of new crop to China. This month, China has bought 908,000 tons of U.S. soybeans, good, but less than what the trade has generally been expecting because of the U.S. price advantage over Brazil and the obligations of the Phase One trade deal. That said – part of the slow demand is likely because of political tension, which has ramped up after recent rhetoric by both Washington D.C. and Beijing. China is rumored to have bought more U.S. soybeans this week, so more sales could surface Thursday and Friday. The USDA’s weekly numbers are out Thursday morning. The trade continues to watch weather in the Midwest and Plains, especially the forecasts for improved rainfall in some areas over the next few days. Soybean meal and oil were up, following beans. The National Oilseed Processors Association says member firms crushed 167.263 million bushels of soybeans during June, above most pre-report expectations.

Corn was steady to mostly fractionally higher. Corn is also watching the weather, expecting generally good rainfall coverage over the next few days. Some stress is likely in parts of the region, but some of the crop will be spared further reductions in yield during key development phases. China bought 132,000 tons of new crop U.S. corn, bringing the month to date total for announced purchases to 3,663,000 tons, most of that over the past week, as Beijing tries to meet the WTO’s low-tariff import quota on corn, along with Phase One trade deal obligations. Most of the purchases are for new crop delivery and if those do end up getting shipped and not canceled, it puts U.S. corn on a historic pace for sales to China. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production last week averaged 931,000 barrels a day, up 17,000 on the week, but down 135,000 on the year. Stocks totaled 20.608 million barrels a decline of 12,000 from the previous week and 2.757 million from this time last year. The Renewable Fuels Association says the ethanol industry has lost more than $3.4 billion in revenue to COVID-19 and total losses could top $9 billion by next year.

The wheat complex was higher on fund and technical buying. Chicago and Kansas City took the lead on U.S. and European winter wheat yield results, especially the lower yields reported by some key export competitors. SovEcon has Russia’s crop at 79.7 million tons, down 1.1 million from the previous guess because of low yields in southern growing areas, while APK-Inform pegs Ukraine’s crop at 25.3 million tons, up 800,000 on the month. APK-Inform has Ukraine’s 2020/21 wheat exports at 17.3 million tons. Minneapolis was up, following the winter wheat pits and while rain has helped some of the developing spring crop, it has missed parts of the northern and northwestern U.S. Plains growing area. There was also talk about China buying U.S. wheat, but nothing has surfaced yet this week. Japan has a routine tender including U.S. wheat, a total of 125,957 tons from the U.S., Australia, and Canada, while Egypt bought 114,000 tons of wheat from Russia. Egypt has also reportedly reached its’ domestic wheat purchase target of 3.5 million tons. Customs data from the United Kingdom has May wheat exports at 95,210 tons, compared to 44,759 in April. China’s National Bureau of Statistics says 2020 wheat production was 131.68 million tons, up 0.6% from 2019. The USDA’s next set of supply and demand estimates is out August 12^th.