Market News

Sell-off continues for corn, soybeans, wheat

Soybeans were lower on commercial and technical selling. Now that Phase One of the trade deal with China is signed, beans are waiting for the purchases to start in earnest. Weekly export numbers were neutral to bullish. China was the big buyer last week, ahead of the signing, but unknown destinations canceled on more than China bought outright. The deal doesn’t fully go into effect for 30 days after the signing and by then, Brazilian supplies will be flooding the market. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. Meal had additional support from the marketing year high for export sales and the sale of 180,000 tons of 2019/20 U.S. bean meal to the Philippines.

Corn was lower on commercial and technical selling. Corn and corn by-products are also expected to benefit from the deal with China, with DDGS specifically a part of the Phase One trade agreement. A clause in the agreement states China will buy U.S. ag goods at market prices based on commercial considerations, leaving a lot about the purchases up in the air. Weekly export numbers were bearish, reflecting the high level of competition and slow international demand. Conditions look good in most of South America, aside from some long-term concerns about dry conditions in parts of Argentina and possible near-term planting delays in portions of Brazil. Ethanol futures were lower. Mexico’s Supreme Court ruled against a rule modification allowing for higher ethanol blending, up to 10%, which could have benefited U.S. ethanol producers and exporters.

The wheat complex was lower on commercial and technical selling. Weekly export sales were larger than expected, but U.S. wheat prices are higher than most competing origins, limiting demand. Also, contracts are overbought, the USDA expects a record global supply at the end of the marketing year, and while the department has revised some global production estimates recently, they raised other outlooks. The USMCA passed the Senate Thursday, it’s expected to be signed by President Trump soon, and still needs to be passed by Canada. The trade is also monitoring temperatures in the southern Plains, with recent warmer conditions possibly leading the crop to emerge from dormancy well ahead of schedule. Strategie Grains increased its outlook for European Union soft wheat exports to 30.5 million tons, expecting demand to pick up when supplies from other exporters are tighter. DTN says Taiwan bought 99,057 tons of U.S. milling wheat.