Market News

Soybeans mostly lower, corn down, watching weather

Soybeans were mostly modestly lower, except for the lightly traded July 2021 contract. Near-term forecasts have much-needed rain in some areas against excessive rain in other parts of the region. That is expected to stabilize the USDA’s condition rating at least somewhat, while August is usually considered to be the critical month for soybean development. Still, carryout projections through the end of the 2021/22 marketing year continue to be historically tight and beans will need a trend-line yield or better to meet that goal. CONAB says 2021 soybean production was a global record 135.912 million tons, fractionally more than the last guess and 8.9% above the 2020 total. Brazil’s Ministry of Agriculture is projecting a 27.1% increase in grain production from 2020/21 to 2030/31 to 333.1 million tons, led by bigger soybean and second crop corn production as that nation tries to meet demand, including strong export demand from China. Mexico bought 122,200 tons of new crop bean meal ahead of the open, which had no effect on the soy complex. Bean meal and oil were lower, following the lead of soybeans. The new marketing year for soybean products starts October 1^st. The spread on the Argentina/Brazil FOB bean meal basis is reportedly record wide due to slower demand and low river levels on the Parana River slowing down nearby loadings for Argentina. Dry conditions on the Canadian Prairies are impacting canola production, likely trimming yields significantly in some areas.

Corn was lower on fund and technical selling. Corn is also waiting for that expected rain, with better coverage in the forecast for the Eastern Corn Belt than other areas. That includes an improved chance for rain early next week as the crop moves through key development phases. While the USDA’s national condition rating continues to be one of the lowest in a decade, it did manage to hold steady over the past week, while soybeans were down modestly and spring wheat continued to fade. Similar to soybeans, corn is expected to have historically tight ending stocks this and next marketing year, so the crop will need to at least come close to USDA expectations. The new marketing year for corn starts September 1^st. CONAB lowered its second crop estimate for Brazil even further, now pegged at 66.971 million tons, down 4.3% from June and 10.8% under 2020. Total production is expected to be 93.385 million tons, a decline of 3.1% on the month and 9% on the year, including first crop production of 24.909 million tons, 0.8% more than a month ago, but 3.0% under a year ago. The USDA’s next set of estimates for Brazil is out in the monthly supply and demand update on Monday, July 12^th. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production averaged 1.067 million barrels a day last week, up 9,000 on the week and 153,000 on the year, while stocks hit a six-week low at 21.149 million barrels, a decrease of 423,000 from the prior week, but an increase of 529,000 from this time last year.

The wheat complex was mixed. Minneapolis was mostly lower, the exception was nearby July, even with the continued concerns about dry weather in the spring wheat region. At this stage, sustained rainfall appears to be unlikely and the best precipitation could really do is stabilize what are already expected to be poor yields. Chicago was down and Kansas City was up, watching harvest activity, expecting some delays in parts of the winter wheat growing area. White winter wheat continues to largely suffer from the same conditions as the spring wheat crop. DTN says Japan bought 108,175 tons of food wheat from the U.S., Australia, and Canada and Thailand picked up 65,000 tons of feed wheat from an unspecified origin, while Saudi Arabia is tendering for 360,000 tons of wheat, the Philippines is in the market for 200,000 tons of feed/milling wheat, and Japan is looking for 80,000 tons of feed wheat. The USDA’s weekly export sales numbers are out Friday morning, delayed a day by Monday’s Independence Day observation. CONAB estimates Brazil’s 2021 wheat crop at 8.480 million tons, a jump of 22.2% on the month and 36% on the year. The USDA’s attaché in Pakistan projects 2021/22 wheat production at a record 27 million tons, compared to the official USDA guess of 26 million and the 2020/21 total of 25 million tons.