Market News

Soybeans, corn supported by weather concerns

Soybeans were modestly higher on fund and technical buying, with the most active months ending the week firm. Unknown destinations bought 120,000 tons of old crop U.S. beans and U.S. soybean prices currently have an advantage over Brazil. That sale could be to China, but we won’t know the destination until it’s inspected for shipment. The trade is monitoring the potential for renewed trade tensions with China because of allegations over COVID-19 disclosure, or lack thereof, which has recently led President Trump to threaten new tariffs. U.S. and Chinese trade negotiators have reportedly continued discussions, even with that threat. In any event, China is not yet on pace to meet purchase targets under Phase One of the trade agreement. The trade is also keeping an eye on potential U.S. weather issues. Planting is ahead of average and colder than normal conditions expected in many areas into early next week could cause some damage. Soybean meal was supported by expectations for improved feed demand and bean oil was up on a higher move in crude oil. ABIOVE sees Brazilian soybean exports this marketing year at 77 million tons, compared to the previous estimate of 75.3 million.

Corn was modestly higher on fund and technical buying, finishing the week narrowly mixed. Parts of the Midwest have recently experienced colder than normal temperatures and more could see frost or a freeze early into the coming week. Emergence was already slower than normal because of below normal temperatures and this round of weather could lead to yield loss or even replanting, depending on the damage. The trade expects a bearish set of USDA supply and demand estimates on the 12^th, especially for old crop corn because of COVID-19 related concerns for feed and fuel use. Fuel use did tick up last week and some feed demand is coming back, but neither are at pre-coronavirus levels and might not be for some time. Ethanol futures were higher. The USDA attaché in Canada estimates 2020/21 corn production at 13.8 million tons, compared to 13.375 million in 2019/20. Corn is watching development weather and crop conditions in Argentina and Brazil.

The wheat complex was mostly modestly higher, with the three U.S. pits closing mixed on the week. Chicago was mostly firm Friday on spread trade, favoring deferred contracts over nearby months, while Kansas City and Minneapolis were supported by weather concerns. The global supply outlook remains bearish with more beneficial rain expected in Europe and the Black Sea region, potentially alleviating some production concerns. That global fundamental outlook should be borne out again next Tuesday. Still, the supply outlook is expected to be less bearish because of global governments stockpiling wheat to ensure food supply in the face of the pandemic. The USDA’s attaché in Kazakhstan estimates 2020/21 wheat production at 13.5 million tons, compared to 11.4 million in 2019/20, which was hit by drought. 2020/21 wheat exports are expected to be up modestly at 6.7 million tons. The office in Canada sees 2020/21 wheat production at 33.8 million tons, compared to 32.3 million in 2019/20, with exports of 24 million tons, compared to 22.2 million in the previous marketing year.