Market News

Soybeans, corn hit by weather, trade tensions

Soybeans were lower on commercial and technical selling, in addition to spillover from the outside markets for much of the session. The USDA reported last week bean acres topped corn for only the second time on record and near-term weather forecasts are generally non-threatening for much of the Midwest. The USDA reports 27% of U.S. soybeans are blooming, compared to 17% a year ago and the five-year average of 13%, while 71% are in good to excellent condition, down 2% on the week. China’s tariffs on U.S. goods officially go into effect Friday, including the 25% tariff on U.S. soybeans. Soybean meal and oil were lower on spillover from beans and the fundamental implications of another large U.S. crop. The USDA says the domestic soybean crush during May was 172 million bushels, compared to 172 million in April and 158 million bushels in May 2017. Markets will be closed Wednesday for July 4th. The International Grains Council projects 2017/18 world soybean production at 337 million tons, with 2018/19 now seen at 358 million, up 2 million from the IGC’s prior estimate.

Corn was lower on commercial and technical selling. Corn was also digesting last week’s USDA numbers and watching crop development weather. Hot temperatures and flooding this past week weekend might have caused damage in some areas. Corn is also continuing to keep an eye on the impact of trade tensions with some major U.S. partners. As of Sunday, 17% of U.S. corn is silking, compared to 9% last year and 8% on average, with 76% of the crop rated good to excellent, down 1% from a week ago. Ethanol futures were lower. The USDA says that during May, corn consumption for alcohol was 524.632 million bushels, up 5% on the month and 3% on the year. Most of that was for fuel alcohol, 470.404 million bushels, an increase of 6% from the previous month and 4% above last year. DDG production was 1.969 million tons, 7% more than the month before and 3% higher than a year ago. According to AgRural, 9.5% of Brazil’s second corn crop is harvested, compared to 16.2% a year and the five-year average of 13.3%. The International Grains Council has 2017/18 global corn production at 1.043 billion tons, with 2018/19 now pegged at 1.052 billion, compared to the IGC’s previous projection of 1.055 billion. Russia’s Ag Ministry says 2017/18 corn exports totaled 5.78 million tons, almost 15% more than in 2016/17.

The wheat complex was lower on commercial and technical selling, along with the higher U.S. Dollar Index. The trade’s watching harvest activity in the U.S. and the Black Sea region, along with spring wheat development conditions. Yields in much of the southern U.S. Plains and southern Russia have been poor, but the overall fundamental outlook remains bearish, at least for now. The trade’s also monitoring weather for Australia’s recently planted crop. For winter wheat, 51% of the crop is harvested, compared to 51% this time last year and the usual pace of 49%, with 37% of the crop in good to excellent shape, unchanged on the week. For spring wheat, 58% has headed, compared to 56% a year ago and 48% on average, with 77% of the crop in good to excellent condition, a 1% decline. The USDA’s next set of supply, demand, and production numbers are out on the 12th. That next set of numbers will take current and impending tariffs into account. Algeria is tendering for an unspecified amount of milling wheat. The International Grains Council now sees 2018/19 world wheat production at 737 million tons, compared to the IGC’s late May estimate of 742 million and the anticipated 2017/18 total of 758 million tons. Russia’s Ag Ministry says 2017/18 wheat exports were 40.2 million tons, up nearly 50% from 2016/17 partially because of the weak ruble and higher production.