Market News

Soybeans eke out firm finish

Soybeans were firm on short covering and technical buying. Contracts are oversold but it was an up and down day, still waiting for signs of better demand from China. China has returned from Lunar New Year celebrations, but the full impact of coronavirus on demand remains to be seen. Purchases haven’t met expectations since Phase One of the trade agreement was signed on January 16^th, but for all the rhetoric from D.C., an immediate surge in purchases was probably unrealistic. Beijing has reportedly purchased soybeans from Brazil recently. That’s a positive general sign for Chinese soybean demand but doesn’t do a lot for U.S. producers right now. AgResource raised its outlook for Brazil’s crop at 123.5 million tons and INTL FC Stone has the crop at 124 million tons, but there are some expectations it’ll be larger than those record projections. Soybean meal was lower and bean oil was higher on the adjustment of product spreads. According to Statistics Canada, canola stocks in Canada at the end of 2019 were 5.959 million tons, an increase of 20.6% from the end of 2018, at least partially because of lower demand from China. Canadian soybean supplies were 3.874 million tons, down 9.4% on the year.

Corn was modestly lower on profit taking and technical selling. Corn is watching conditions in South America, with rain in the forecast this week for parts of Argentina and Brazil. That’ll delay first crop harvest activity and second crop planting in Brazil but is expected to be long-term beneficial. Brazil, Argentina, and Ukraine have all played a larger role on the global corn market over the last couple of years. INTL FC Stone’s estimate for Brazil’s second crop is 71.9 million tons, with planting reportedly less than 10% complete, behind last year, but in-line with the average pace. New USDA supply, demand, and production estimates are out on the 11^th and could include another downward revision for export demand. Ethanol futures were steady to lower. The U.S. Energy Information Administration says ethanol production averaged 1.081 million barrels a day last week, up 52,000, while stocks totaled 23.474 million barrels, down 770,000. The Renewable Fuels Association says the volume of ethanol exports during 2019 was the second highest on record at 1.47 billion gallons, including 146.5 million in December. Monthly DDGS sales were 767,682 tons, with the annual total at 10.79 million tons. According to Statistics Canada, Canada’s corn supply at the end of last year was 10.686 million tons, a decrease of 8.1% from the year before, with lower production and a smaller beginning stocks total contributing to the decline.

The wheat complex was modestly higher on short covering and technical buying. Recent precipitation has generally been good for the U.S. hard red winter region ahead of the crop emerging from dormancy, but some soft red winter areas are too wet and flooding could be an issue. Statistics Canada reports wheat stocks at the end of 2019 totaled 24.982 million tons, down 0.5% from 2018, with a lower carryover, and commercial stocks dropped 9.6% because of slower export demand. Without durum, stocks were 20.467 million tons, an increase of 4.3% from the year before. Similar to what happened in the U.S. last year, harvest activity was delayed by weather in parts of Canada and what remained unharvested at the end of 2019 will be included in future reports, according to Stats Canada. Export demand continues to be better than expected, for now, with the weekly USDA numbers out Thursday morning. DTN says Japan is tendering for 120,000 tons of feed wheat in a sell-buy-sell tender.