Market News

Soybeans up on China tariff waiver

Soybeans were modestly higher on short covering and technical buying, cementing a week to week gain. China has decided to waive tariffs on some U.S. soybeans, clearing the way for more imports. The amount of beans is unspecified, phase one of the trade deal remains unsigned, and new U.S. tariffs on Chinese goods are scheduled to go into effect on the 15th. For its part, China is, at least publicly, showing resistance to suggested forced technology transfer changes and intellectual property concerns, and has bristled at recent U.S. legislative action on human rights issues. Beans are also watching the tail end of the U.S. soybean harvest. Soybean meal was lower and bean oil was higher on the adjustment of product spreads, with oil picking up additional support from global vegetable oil strength. The Buenos Aires Grain Exchange says 49% of Argentina’s soybean crop is planted. Statistics Canada has that nation’s 2019 canola crop at 18.649 million tons, down 8.3% on the year and the smallest since 2015 following weather issues from planting to development to harvest. Canada’s soybean crop is pegged at 6.045 million tons, a drop of 18.5% from 2018 because of lower planted area and yields.

Corn was narrowly mixed, with the most active March down modestly from the week before. Mexico bought 245,872 tons of 2019/20 U.S. corn, but overall export demand remains slow, even as prices get more competitive. Argentina, Brazil, and Ukraine have all grabbed some of the export market share for U.S. corn and the USDA could lower its export projection next week. The department is also expected to reduce the corn for ethanol use estimate. The uncertainties about passage of the USMCA are also a bearish factor. The USDA is expected to report another round of mixed, slower than normal, harvest progress on Monday. The trade is watching planting and development conditions in South America, with non-threatening conditions in most of Brazil and about half of Argentina’s crop planted. Argentina’s new crop corn sales have been heavy ahead of an expected change to the nation’s export tax regulations. Ethanol futures were modestly higher. The 2020 Renewable Fuel Standard rule is expected to be sent to the White House for review soon. Statistics Canada estimates 2019 corn production in Canada at 13.404 million tons, 3.5% less than last year, with lower yields cancelling out higher planted area.

The wheat complex was mixed, with Chicago mostly firm, Kansas City and Minneapolis modestly lower, and all three pits losing ground from last week. Dry weather in parts of the Plains could be an issue for winter wheat in the coming months, but the USDA projects a record world supply, limiting some of the potential bullishness. Additionally, halfway through the marketing year, export sales have slowed down and bigger crops in some competing exporters have canceled out losses in others. Russia’s Ag Ministry has trimmed its production guess, but it’s still going to be a large crop with plenty available for export. The Buenos Aires Grain Exchange says 46% of Argentina’s wheat crop is harvested, projecting production at 18.5 million tons. Statistics Canada has 2019 production for all types of wheat at 32.348 million tons, up 0.5% from a year ago, with higher average yields and lower planted area. Spring wheat made up most of the total at 25.67 million tons, an increase of 7.2%, with durum at 4.977 million tons, a decrease of 13.4%, and winter wheat at 1.701 million tons, a drop of 32.4%. New supply, demand, and production estimates are out Tuesday, December 10th at Noon Eastern/11 Central. DTN says Thailand bought 55,000 tons of 2019/20 U.S. milling wheat, while the Philippines is tendering for 165,000 tons of feed wheat.

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