Market News

Soybeans, corn down on recent rain in South America

Soybeans were modestly lower on commercial and technical selling. Beans continue to watch weather in South America as most near-term forecasts have mixed precipitation, with a generally better chance for widespread coverage next week. Planting has mostly moved closer to normal, but those early season delays are expected to push harvest activity back, extending global reliance on U.S. soybeans. While Brazil hasn’t seen a drought buster, most of the dry weather continues to be in parts of Argentina. The Buenos Aires Grain Exchange says 39% of Argentina’s soybean crop is planted, compared to 40% on average. New USDA supply, demand, and production numbers are out on the 10^th. The USDA says 197 million bushels of soybeans were crushed during October, compared to 171 million in September and 187 million for October 2019, for crude soybean oil production of 2,282,471 pounds and soybean meal production of 4,335,054 tons, with 4,289,031 tons of that for feed use. Soybean meal was mostly lower on commercial spread trade and bean oil was down on the generally bearish tone in the soy complex and the lower move in crush oil. Palm oil futures were higher heading into the U.S. session.

Corn was modestly lower on commercial and technical selling. Corn is also monitoring planting and development conditions in Argentina and Brazil. The Buenos Aires Grain Exchange says 32% of Argentina’s corn crop is planted, compared to 41% on average. The big unknown for corn is Brazil’s second crop, the source of most of their exports, which is planted after soybeans are harvested. U.S. corn continues to be the best value on the global market. China’s General Administration of Customs says corn purchases during October were 1.14 million tons, up 6% from September and well above the October 2019 total, 89% of that was from the U.S. with year to date purchases at 7.81 million tons, exceeding Beijing’s tariff rate quota. China’s sorghum imports in October were 525,043 tons, down 7% on the month, but also up sharply on the year thanks to the increased feed demand. Overall, while export and feed demand are solid, there are the continued concerns about corn for ethanol use. The USDA says October corn for ethanol use was 432.713 million bushels, up 7% from September, but down 1% from October, with DDGS production of 1,801,395 tons, an increase of 4% on the month and a decrease of 4% on the year. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. Ethanol futures were unchanged.

The wheat complex was mostly lower on commercial and technical selling, the exception being lightly traded December Minneapolis. Australia’s government raised its wheat production estimate to 31.17 million tons, just short of 2016’s record of 31.8 million. Exports could be as large as 22 million tons, considerably larger than the past three growing seasons, which were hit hard by drought. New estimates for Statistics Canada are out Thursday. 46% of U.S. winter wheat is good to excellent, up 3% on the week and down 6% from a year ago, but there generally isn’t a strong correlation between the condition of a crop heading into dormancy and a crop coming out of dormancy. The trade is also watching conditions in Russia and Ukraine ahead of dormancy. IKAR says 22% of Russia’s winter grain crops are in poor shape, with loss potential for 9% of the planted area, compared to about 5% normally, projecting wheat production at 78 million tons, compared to SovEcon’s range of 79.2 million to 82.8 million tons and the 2020 total of 85.3 million tons. China’s General Administration of Customs says October wheat imports were 617,618 tons, 40% less than the previous month, but more than double the year before, with year to date purchases of 6.48 million tons. DTN says Egypt is tendering for an unspecified amount of wheat and Turkey is in the market for 400,000 tons of milling wheat.