Market News

Soybeans down, following vegetable oils

Soybeans were sharply lower on commercial and technical selling. The USDA’s supply and demand numbers last week were neutral to bearish, palm oil was lower heading into the session, and bean oil was down. China and Bangladesh both bought U.S. soybeans. Bangladesh picked up 110,000 tons, half for 2020/21 and half for 2021/22, and that purchase of 132,000 tons for 2021/22 delivery by China was the first outright sale to Beijing since January 27^th. Weekly export inspections were down on the week and the year, with Indonesia and Mexico the top destinations. Even with the slowdowns in sales and inspections, soybeans remain on pace to meet or exceed USDA projections for the marketing year, which runs through the end of August. Producers in Argentina are reportedly resisting selling soybeans because of currency concerns and despite high international prices and strong demand. Soybean meal was up modestly and bean oil was down sharply on the adjustment of product spreads. Brazil has reportedly reduced the blending requirement for bean oil in biodiesel from 13% to 10% because of the high price of bean oil. The USDA’s attaché for Malaysia estimates 2020/21 crude palm oil production at 19.5 million tons, up from 2019/20, but below the official USDA guess, with production expected to rise to 20 million tons in 2020/21.

Corn was mostly lower on spread trade and profit taking. The trade was expecting the USDA to report good week to week planting progress in the weekly update. The USDA says 4% of the crop is planted, compared to the five-year average of 3%. Near-term forecasts for Brazil have light rain followed by a drier pattern, which could stress their second crop. That’s the bigger of their three crops and the source of most of their exports. Weekly export inspections were down on the week, but up on the year, and more than what’s needed to meet USDA projections. The leading destinations were China and Mexico. Ethanol futures were unchanged.

The wheat complex was lower on commercial and technical selling. U.S. winter wheat conditions were expected to be steady to higher, global crop conditions generally look good, and the world supply remains bearish. Minneapolis led the way down as most near-term forecasts have rain in dry spring wheat growing areas. The USDA says 53% of U.S. winter wheat is rated good to excellent, steady on the week and down 9% on the year, with 5% of the crop headed, compared to 7% on average. 11% of spring wheat is planted, compared to 6% on average. Weekly export inspections were bearish, with the 2020/21 pace slightly behind 2019/20. The current marketing year runs through the end of May. The big destinations for the week were the Philippines and China. China has reportedly increased the minimum price for wheat auctioned out of state reserves in an attempt to slowdown sales. Producers have been adding wheat to feed rations because of the high prices for corn and soybean meal. The USDA did raise the global feed wheat guess last week because of strong demand in China. The next set of supply and demand estimates is out May 12^th.