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Soybeans, corn mixed ahead of USDA reports

Soybeans were mostly modestly lower on profit taking and technical selling. Contracts are overbought, waiting for phase one of the China deal to be signed and watching South America. Phase one is still expected to be signed on the 15th, while beans continue to wait for an appreciable spike in sales to China. There’s a small window for business until South American supplies start hitting the export market in earnest. Parts of Argentina and Brazil are dry, but most forecasts do have timely rainfall in some areas and Brazil’s soybean harvest is already underway. The USDA’s next supply, demand, and production report is out Friday, including the 2019 U.S. production totals. Most analysts expect the soybean crop, average yield, and harvested area estimates to be below November’s projections. Brazil’s equivalent of the USDA is also updating estimates this week. Soybean meal was lower and soybean oil was higher on the adjustment of product spreads.

Corn was narrowly mixed. Corn is also watching weather in South America and getting ready for Friday’s USDA numbers. Ahead of the report, analysts expect the corn production, yield, and harvested acreage estimates to be lower than in November’s update. Some of this year’s corn crop remains in the field, especially in parts of the northern U.S. Plains and upper Midwest and might not be harvested until spring. In Brazil, drought is expected hit Rio Grande do Sul’s first crop hard, pulling production from 6 million to 4.8 million tons, according to INTL FC Stone. Brazil’s first crop is now projected at 25.75 million tons. The second crop is the larger of the two and the source of most of their exports. Increased exports from Brazil, Argentina, and Ukraine have limited U.S. sales this marketing year. China is reportedly not going to change its low tariff import quota for corn, leaving the cap at 7.2 million tons. Low tariff rice imports will be limited to 5.32 million tons, if the quota remains unchanged. Still, China’s imports of corn generally fall well below that mark. The U.S. Senate is expected to approve the USMCA later this week. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks report is out Wednesday. The Renewable Fuels Association says U.S. ethanol exports during November were 107.3 million gallons, down 5% on the year, but with a big jump in sales to Brazil, even with that nation’s tariff rate quota. DDGS exports were 911,569 tons, 20% more than in October, with a six-month high in sales to Mexico. China is also reportedly interested in U.S. ethanol, DDGS, and sorghum as a part of the ag product purchase package.

The wheat complex was mostly lower, the exception was March Chicago, on fund and technical selling. Beijing is rumored to be considering U.S. wheat as a part of the ag purchase package, but China will reportedly also leave its low tariff import quota for wheat unchanged at 9.64 million tons. That said – like corn, China’s wheat imports are usually negligible. The USDA’s 2020 winter wheat planted area total is also out Friday, along with quarterly grain stocks. Planted area could be around 30 million acres, with sowing restricted by wet weather in some key U.S. growing areas. Double crop acres were limited by slow corn and soybean harvest activity. The USDA says winter wheat conditions vary widely, but any losses should be blunted by the projected record world supply. The trade is also watching conditions in the Black Sea region, with Russia reportedly at low risk for winterkill. DTN says Japan is tendering for 106,125 tons of food wheat.

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