Soybeans drop on profit taking, broader market
Soybeans were lower on profit taking and technical selling. Beans started higher and then gave back some of the recent gains, with spillover from the broader market. The Dow Jones Industrial Average and crude oil were both sharply lower on concerns about increasing COVID-19 cases in parts of the U.S. and OPEC deciding to raise production, respectively. Weather outlooks for many northern and western growing areas remain hot and dry and beans will need a big crop to meet demand projections, with historically tight carryout estimates for this and next marketing year. The USDA says 60% of U.S. soybeans are rated good to excellent, up 1% on the week, with 63% of the crop blooming, compared to the five-year average of 57%, and 23% of the crop at the pod setting stage, compared to 21% on average. Export inspections were down on the week and the year, but 2020/21 remains on pace to meet USDA expectations, with about a month and a half left in the marketing year. The top destinations were Japan and Mexico. China reportedly made a routine purchase of soybeans from Argentina last week but continues to focus on Brazilian beans due to high U.S. prices. Brazil’s prices have also moved higher recently because of the strong export demand, especially from China. Soybean meal was lower and bean oil fell sharply on the lower moves in beans and the broader market.
Corn was mixed, with nearby contracts steady to firm and deferred months down modestly. Corn is also watching the weather, with conditions during key development phases expected to cause at least some stress in some areas and limit the crop’s yield potential. As of Sunday, 65% of U.S. corn is called good to excellent, steady, with 56% of the crop silking, compared to 52% on average, and 8% at the dough making stage, compared to 7% usually in mid-July. Corn will need a trend-line yield or better to meet demand expectations both this and next marketing year. The USDA’s next production estimate is out August 12th, along with the monthly supply and demand update. Export inspections were lower than last week and under a year ago, but still over a million tons and on pace to meet USDA projections. The main destinations were China and Mexico. China’s General Administration of Customs says June corn imports were 3.75 million tons, with year-to-date purchases at 15.3 million tons. In Brazil, second crop harvest is ongoing with some frost damage likely on late planted corn. Ethanol futures were unchanged.
The wheat complex was modestly higher on fund and technical buying. Minneapolis is overbought, but continuing to focus on the weather, which is hitting the spring wheat region hard, from the U.S. into Canada. For spring wheat, 11% of the crop is in good to excellent condition, down 5%, with the poor to very poor category at 63%, up 8%, and 92% of the crop headed, matching the five-year average. Chicago and Kansas City were up, monitoring the winter wheat harvest, with some areas reporting quality concerns. For winter wheat, 73% of the crop is harvested, compared to the typical rate of 74%. Hot, dry weather in parts of Russia and flooding in France and Germany are also concerns for wheat. Kazakhstan will reportedly place an export limit on feed wheat starting August 15th, lasting for six months. A month and a half into the 2021/22 marketing year, export inspections continue to trail 2020/21. The Philippines and Mexico were the leading destinations for U.S. wheat last week. DTN says the Philippines bought 50,000 tons of feed wheat from the Black Sea region.