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Soybeans continue downward drift

Soybeans were modestly lower on follow-through fund and technical selling. Beans continue to watch China for demand signals, with additional pressure from a lower move in world vegetable oil prices. Palm oil futures were down heading into Tuesday’s session, with their biggest drop in more than a decade. It remains to be seen just how much of an impact, if any, coronavirus really has on Chinese demand or their economy and African swine fever continues to spread, limiting feed demand, at least to some extent. Also, U.S. beans would need a tariff waiver from Beijing to fully complete with South American supplies. Conditions look good in most of Argentina and Brazil, with harvest picking up steam in parts of Brazil. AgRural says Brazil’s forward sales have been strong and while shipments are down on the year, they’re generally in-line with 2018. Depending on conditions, the USDA could raise South American production and export estimates in the next round of supply and demand projections February 11th. Soybean meal and oil were weak, following beans.

Corn was higher on short covering and technical buying. Contracts were oversold and due for a bounce after the recent losses but remain wary about Chinese demand not meeting expectations following Phase One of the trade agreement. Export demand is showing signs of improving, with sales of more than 650,000 tons over the last four business days. Tuesday’s purchase was 124,355 tons of 2019/20 U.S. corn by Mexico. However, overall, 2019/20 sales remain behind 2018/19 by a wide margin. The USMCA is expected to be signed Wednesday and weekly export numbers are out Thursday. Corn is also watching South America, especially second crop planting conditions in Brazil. Ethanol futures were higher. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. Paraguay’s Chamber of Exporters says that nation exported 3,099,331 tons of corn in 2019, compared to 1,392,658 in 2018, with 47% of the total headed to Brazil. According to Ukraine’s Ag Ministry, corn exports this marketing year are 15.1 million tons, with total grain sales at 35 million tons, 29% ahead of a year ago.

The wheat complex was modestly lower on fund and technical selling. There was more talk of China buying wheat recently from non-U.S. origins, but no confirmation. Along with the recent chatter about a purchase from Australia, Beijing has also been rumored to have bought wheat from Canada and France. Still, there’s strong chance China will increase purchases of U.S. wheat, especially higher protein varieties. Another round of precipitation in the southern Plains should be beneficial for hard red winter wheat, while parts of the Midwest are too wet, potentially harming soft red winter. The most recent round of state stories from the USDA shows mixed conditions for winter wheat, depending on location. National Collateral Management Services in India projects 2020 wheat production at 109 million tons, up 6.3% from 2019. DTN says Syria is tendering for 200,000 tons of soft wheat from Russia. Ukraine’s Ag Ministry says marketing year to date wheat exports are 15.6 million tons, up 4.2 million from this time last year.

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