Soybeans gain as corn, wheat wilt
Soybeans were solidly higher on commercial and technical buying. The USDA left U.S. ending stocks unchanged at a still tight 120 million bushels, only rising to 140 million next marketing year. It’s not that the numbers were overwhelmingly bullish, but they also weren’t bearish either and there’s some sentiment the USDA is currently underreporting old crop ending stocks. The USDA did lower the production guess for Argentina by 500,000 tons to 47 million, while leaving Brazil unchanged at 136 million and holding China’s imports steady at 100 million tons. For 2021/22, Argentina’s crop at seen at 52 million tons and Brazil is expected to produce 144 million tons, with imports by China expected to rise to 103 million tons. 2021/22 soybean exports for Argentina are expected to be steady with 2020/21, with Brazil likely to be higher, if production meets expectations. CONAB estimates Brazil’s 2020/21 soybean crop at 135.409 million tons, down slightly from April, but record large and up 8.5% from 2019/20. The trade is also watching crop condition concerns in parts of the U.S. Production is projected at 4.405 billion bushels. China’s Ag Ministry estimates 2021/22 soybean production at 18.65 million tons, with imports of 102 million and consumption of 117.2 million tons. Soybean meal and oil were supported by commercial buying and demand expectations, with bean oil picking up additional strength from a rally in global vegetable oils ahead of the U.S. open.
Corn was lower on profit taking and technical selling. Old crop ending stocks were close to pre-report estimates, with new crop stocks only expected to be a little larger at the end of next marketing year. The new marketing year for corn, and soybeans, starts September 1st and runs through the end of August 2022. This year’s U.S. crop is seen at 14.99 billion bushels, which would be up from 2020, but that will depend on “normal” growing weather throughout the season. The USDA and CONAB both lowered their guesses for Brazil’s crop Wednesday because of hot, dry weather in central and southern growing areas, with that pattern expected to continue for at least the next week. CONAB has total production at 106.414 million tons, compared to 108.966 million last month, due to a cut of more than 2.8 million tons from the critical second crop, down to 79.799 million tons. The USDA has Brazil’s crop at a total of 102 million tons, a drop of 7 million on the month, leaving Argentina unchanged at 47 million tons, and raising Ukraine to 30.3 million tons. Imports by China are seen at 26 million tons, up 2 million. In 2021/22, Argentina is expected to produce 51 million tons, Brazil’s crop is seen at 118 million, and Ukraine could produce 37.5 million tons, with exports also expected to rise for those nations. Imports by China are expected to hold at 26 million tons next marketing year. Mexico bought a total of 100,000 tons of U.S. corn Wednesday morning, with 30,000 tons for 2020/21 and 70,000 tons for 2021/22. China’s Ag Ministry estimates 2021/22 corn production at 271.81 million tons, with imports at 20 million tons. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol production last week averaged 979,000 barrels, up 27,000 on the week and 362,000 on the year, but stocks dropped 1.047 million from the previous week and 4.797 million barrels from a year ago to 19.393 million barrels, the tightest domestic supply since late 2016.
The wheat complex was mostly lower. Chicago and Kansas City were down on the larger than expected winter wheat crop estimate and higher ending stocks, along with forecasts for rain in parts of the central and southern U.S. Plains, which would likely help improve the USDA’s winter wheat crop condition rating. The USDA’s winter crop production guess was a little larger than expected, with a projected year to year improvement in yield and higher planted area. Increased hard and soft red winter production is expected to cancel out a decline in soft winter. Minneapolis was mixed, watching weather in spring wheat growing areas, with uncertainties about rainfall totals in the northern and northwestern U.S. Plains and Canadian Prairies. Globally, the USDA lowered old crop production and ending stocks slightly but sees both of those growing in the 2021/22 marketing year. The rise in production is expected to outpace the increase in ending stocks however because of higher feed wheat demand and rising export trade. The USDA expects marketing year to marketing year increases in exports for Argentina, the European Union, Russia, and Ukraine, against declines for Australia and Canada. CONAB has Brazil’s 2021/22 wheat crop at 6.640 million tons, which would be up 6.5% from 2020/21.