Market News

Soybeans up, corn down, more position squaring

Soybeans were modestly higher on short covering and technical buying. The USDA confirmed more sales to China and unknown destinations, but the trade is more focused on Friday’s reports. The January 11th numbers delayed by the shutdown are out Friday as well. Allendale expects the UDSA to lower 2018 U.S. production and yield numbers, with quarterly stocks and U.S. and world ending stocks above a year ago. The big thing for beans will likely be any adjustments to South America’s crop numbers. Several private firms, including private firms in Brazil, have lowered their outlooks for that nation’s crop because of hot, dry weather in central and southern growing areas. Paraguay’s production guess could also be lowered, while Argentina might hold steady or close to it, but will probably be well above last year’s drought-stricken crop. Wednesday, China bought 586,000 tons of U.S. beans, 523,000 for 2018/19 and 63,000 for 2019/20, with unknown picking up 182,000 tons, putting the combined week to date total at around 4.3 million tons. Trade negotiations between the U.S. and China are scheduled to resume next week. Soybean meal was lower and bean oil was higher on the adjustment of product spreads.

Corn was modestly lower on fund and technical selling. Corn is also getting ready for the USDA numbers out Friday and will also likely focus on updated estimates for South America, especially Brazil’s second crop, the larger of the two and the source of most of their exports. Allendale has 2018 corn production down slightly from the USDA’s last guess, in November, with tighter quarterly supplies and U.S. and world ending stocks. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production last week averaged 967,000 barrels a day, down 45,000 on the week, for the lowest weekly average since early October 2017. Stocks tightened by 33,000 barrels at 23.947 million. The industry continues to watch margins and wait for details on year-round E15 use, along with potential policy changes at the EPA.

The wheat complex was mixed, with Chicago and Kansas City adjusting old crop/new crop spreads and Minneapolis down on technical selling. Even with competitive prices, export demand for U.S. wheat continues to be slow, at least for now. Part of that will depend on Ukraine and Russia and whether or not they can keep up the pace of sales. The USDA’s winter wheat acreage estimate Friday could be the lowest in a century and might be even lower than what many analysts are expecting because of conditions during planting. Allendale has 2019/20 winter wheat acreage just above 32 million acres, with 2018/19 quarterly stocks down from last year. 2018/19 U.S. and world ending stocks are also expected to be below a year ago. The numbers are out Friday at Noon Eastern/11 Central. Jordan is tendering for 120,000 tons of wheat, while Japan is in the market for 131,165 tons from the U.S., Canada, and/or Australia and has an open sell-buy-sell tender for 7,200 tons of feed wheat.