Market News

Soybeans higher on China expectations

Soybeans were higher on fund and technical buying. A team from China will reportedly be in the U.S. later this week to sign phase one of the trade deal. China also announced approval of two new varieties of GMO soybeans. It remains to be seen when the much talked about large scale purchases of U.S. ag goods will start. Last week’s export sales numbers covered the first week since the tacit agreement on phase one of the trade deal, but were viewed as disappointing, even with China as the big weekly buyer. Overall, conditions in South America look good, but parts of Brazil need rain. Still, it looks like Brazil is on track for a record crop and recent rainfall has helped in Argentina. Harvest is already underway in parts of Mato Grosso, Brazil, about two weeks earlier than normal. Soybean meal and oil were higher, following beans. Oil picked up additional support from Monday’s new three-year high in palm oil futures on strong global demand, especially from China.

Corn was modestly lower on fund and technical selling. Corn is also expected to benefit from phase one of the trade deal with China being signed and is also watching weather in South America. Export inspections were bearish and global demand remains slow because of South America and Ukraine. Ukraine’s Ag Ministry has grain exports at 30 million tons, including more than 4 million tons of corn, up more than 30% on the year, led by corn and wheat. Last week contained Christmas, but it is looking like the recent marketing year high for corn inspections might have been an aberration. China is reportedly interested in U.S. corn, DDGS, ethanol, and sorghum. Any hope of getting the last of the 2019 crop out of the field in the northern Plains might be dashed by another winter storm in the region. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Friday. Last week, the EIA reported a more than six-month high in ethanol production, along with tighter supplies.

The wheat complex was mostly higher, with Kansas City and Minneapolis up and Chicago mostly firm. The USDA’s numbers on January 10th will be the first real look at winter wheat planted area after a period of relative uncertainty. Planting was delayed in many areas by wet weather, which was also affecting the corn and soybean harvest, impacting double cropping. Recent precipitation should be beneficial for the developing winter crop, but a lot is up in the air until it comes out of dormancy in spring. Wheat is monitoring weather in parts of the European Union and Black Sea region. Wheat is also expected to benefit from the signing of phase one of the U.S./China trade deal. Weekly export inspections were above what’s needed to meet USDA projections for the current marketing year. DTN says Jordan, Ethiopia, and Syria all have open wheat import tenders.