Market News

Soybeans, wheat end bullish week with solid gains

Soybeans were higher on fund and technical buying, closing below session highs, while still capping off a week of solid gains. Most forecasts have hotter, drier weather in northern and western growing areas starting in the coming days, during critical development phases. August is usually viewed as the key month for soybeans, but with the historically tight ending stocks projections through at least next marketing year, a trend-line yield or better will be needed to meet demand. The USDA’s next set of supply and demand estimates is out August 12^th. Because of the slow crush, the USDA is could lower that demand metric; any other adjustments are less certain. There was also spillover from global vegetable oils due to strong demand. Part of that is global palm oil demand, along with concerns about Canada’s canola crop. Soybean oil was supported by vegetable oil demand, with meal following beans and oil.

Corn was mostly modestly lower on spread trade and profit taking, still finishing the week on a higher note. Corn was also watching the weather and those potentially stressful forecasts for some key U.S. growing areas. Flooding and severe weather has potentially damaged crops in other parts of the region. As with beans, corn will need a good crop this year to meet the demand projections. Overall, conditions in eastern areas are expected to be generally more favorable. The USDA’s next set of production estimates is out August 12^th. Export demand has slowed but could pick up steam due to the issues with Brazil’s second crop. Brazil is rumored to buying corn to bolster its domestic supply after the first and second crop failed to meet expectations, but those purported purchases have been from Argentina. Ukraine is also expected to play an increased role in the export market. One sign of that slowdown is China only auctioning off a small percentage of their weekly offer. Ethanol futures were unchanged.

The wheat complex was sharply higher on fund and technical buying, with the three U.S. pits all moving higher for the week, including a gain of more than $1 in September Minneapolis. Minneapolis made those highs on those weather outlooks for the spring wheat region, stretching in to Canada. Hot, dry weather in that region has sapped hopes for this year’s crop and the big question now is how many acres will be abandoned. Following some rainfall over the past week in parts of the region, the USDA’s condition rating could stabilize somewhat Monday afternoon, but long-term outlooks are relatively dire. Chicago and Kansas City are watching winter wheat harvest activity, with reports of quality issues in some areas. France’s AgriMer says 76% of the that nation’s soft wheat crop is in good to excellent condition, down 3% on the week, but flooding is delaying harvest activity. There are also concerns about hot, dry weather in parts of Russia. China bought 134,000 tons of 2021/22 U.S. soft red winter wheat, likely to be used for livestock feeding. DTN says Japan bought 118,911 tons of food wheat from the U.S. and Canada, while Taiwan picked up 50,000 tons of U.S. milling wheat.