Soybeans buy back some losses on weather worries
Soybeans were higher on fund and technical buying, along with a more stable tone in the broader market. Most forecasts have hot, dry weather for some key U.S. growing areas into August, likely causing at least some degree of stress to developing crops. This is a big concern because of the historically tight ending stocks projections through the end of next marketing year, which starts September 1st and runs until August 31st, 2022. U.S. soybean condition ratings were mixed on the week, with the worst individual state ratings in Minnesota, North Dakota, and South Dakota. The USDA didn’t adjust its yield and production projections this month but is expected to make at least some changes in the next set of numbers out August 12th. Soybean meal and oil were higher, following beans, with additional support from Canadian canola, which is being hit hard by hot, dry conditions on the Prairies. China’s General Administration of Customs says June soybean imports were 10.72 million tons, down 4% on the year, with Brazil accounting for 10.48 million tons, compared to just 54,000 tons from the U.S. Year-to-date purchases are 48.96 million tons, 9% ahead of 2020. U.S. prices have moved closer to Brazil recently as their supply of exportable beans starts to run short.
Corn was higher on fund and technical buying. Corn is also watching the weather and probable stress in parts of the region, with most of the crop in key development phases. The drier conditions will be welcome though in areas that have recently received heavy rainfall. Corn will need a trend-line or better yield to meet demand expectations and limit price inflation for end users. Brazil’s second crop is expected to see further damage from a frost/freeze event. That crop has been beset by issues ranging from late planting due to a slow soybean harvest, dry conditions during the growing season, and now a handful of late season stretches with colder than normal temperatures. China’s General Administration of Customs reports June corn imports were 3.75 million tons, a jump of 305% on the year, including a record 2.2 million tons from the U.S., along with 1.4 million tons from Ukraine. During the first half of the year, Chinese corn imports were 15.3 million tons, 319% more than January to June 2020. U.S. corn has a big price advantage over China’s domestic supplies. Still, demand has slowed down with the uncertainties caused by the spread of African swine fever. Ethanol futures were unchanged. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday.
The wheat complex was mixed, with Chicago mostly firm, Kansas City up, and Minneapolis modestly lower. Minneapolis saw profit taking even as the spring wheat condition rating dropped again, with limited relief in the forecast for the U.S. and Canada. Just 11% of the U.S. crop is rated good to excellent, with a massive 63% of the crop in poor to very poor shape. The big question now for spring wheat is really the rate of abandonment. There are also concerns about dry, hot weather in parts of Russia. Parts of Ukraine have experienced similar conditions but are expected to see at least some near-term rainfall. While the U.S. winter wheat harvest is a little bit behind schedule, the pace is expected to pick up steam. There are quality concerns in some areas and the white winter crop has been hit hard by the same factors impacting spring wheat. China’s General Administration of Customs says June wheat imports were 750,000 tons, down 17% from June 2020, but year to date purchases are 5.37 million tons, an increase of 60% on the year. A flour mill from Taiwan reportedly bought 50,000 tons of U.S. milling wheat.