Market News

Soybeans up on weather, demand from China

Soybeans were modestly higher on short covering and technical buying. Near-term weather continues to be stressful in many key growing areas, but relief might be on the way for part of the region. Still, the rainfall after Hurricane Laura might miss some of the drier growing areas, furthering the damage, even if temperatures do decline. China bought 400,000 tons of new crop U.S. beans, bringing this week’s announced sales total to 746,500 tons, mostly to China, all new crop. The new marketing year starts September 1st. Political tensions between the U.S. and China have not gone away, but both sides say they are committed to making the Phase One Agreement work. China’s General Administration of Customs says the nation bought 8.18 million tons of beans from Brazil during July, citing a price advantage. Total imports by China last month were 10.09 million tons, less than 40,000 of that from the U.S. Brazil revised production totals for the past seven growing seasons, raising total production by 14.4 million tons, including 3.57 million for the 2019/20 crop. Soybean meal was lower and bean oil was higher on the adjustment of product spreads.

Corn was steady to fractionally lower on spread trade and profit taking. Corn is also watching the weather, trying to get the full scope of damage from dry conditions and the derecho. The damage is hard to quantify, but the national condition rating has declined, including big drops in some key states, and it’s estimated that hundreds of millions of bushels have been lost to weather. The European Union has slashed its tariff on corn, sorghum, and rye imports following the rally in U.S. corn prices. Ethanol production and stocks were both up modestly on the week. The U.S. Energy Information Administration says production averaged 931,000 barrels a day, up 4,000 on the week, but down 107,000 on the year. Stocks were pegged at 20.409 million barrels, an increase of 139,000 from the previous week, but a decrease of 2.573 million from the year before. Ethanol futures were steady.

The wheat complex was modestly higher on short covering and technical buying. The rumored demand from China for U.S. wheat hasn’t shown up in the USDA’s daily announcements and prices are above some export competitors, but the dollar moved lower after a higher start, supporting the complex. The USDA’s weekly export sales numbers are out Thursday morning. Forecasts have more spring wheat harvest delaying rain in the northern Plains, while the trade is also monitoring the tail end of the winter wheat harvest and conditions ahead of new crop winter wheat planting. Drought or near drought conditions in parts of the central and southern Plains could limit acreage, potentially driving wheat planting to another more than hundred year low. Globally, weather woes are trimming some production outlooks, but it still looks like the world is on pace for a very large, if not record crop, and record large supplies. DTN says Turkey bought 390,000 tons of wheat and 110,000 tons of durum from an unknown origin, while Saudi Arabia purchased 530,000 tons of milling wheat from Russia.

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