Market News

Weather provides more support in corn, soybeans, and wheat

 

Soybeans were higher on commercial and speculative buying, closing near the session highs, including a new contract high for May. Forecasts for most of Argentina remain generally dry and parts of Brazil could see more harvest delaying rain. According to the Buenos Aires Grain Exchange, 76% of Argentina’s beans are in poor to very poor condition. The exchange lowered its production outlook to 44 million tons. Argentina processes most of their domestic production and is the world’s biggest exporter of soybean meal. China and unknown destinations both bought U.S. soybeans, 120,000 tons and 126,000 tons respectively, both split evenly for delivery this marketing year and next marketing year. Weekly numbers, overall, were bearish. New tariffs on aluminum and steel announced Thursday by the White House could have an impact on broad U.S. export trade, including ag. The new levies are expected to go into effect next week. Soybean meal was mostly higher on spread trade out of the March contract and commercial buying, while bean oil was up, also on commercial buying. The USDA says January’s soybean crush was 175 million bushels, down 1 million from December 2017, but up 15 million from January 2017. The USDA says the total crush in 2017 was 57.547 million tons, about 2.114 billion bushels.

Corn was higher on commercial and technical buying, ending the day at the high end of the trading range. Corn was also watching the dry weather in parts of Argentina, along with second crop planting delays in parts of Brazil. The Buenos Aires Grain Exchange says 76% of Argentina’s corn crop is in poor to very poor condition, lowering their production outlook to 37.0 million bushels. Weekly export sales were strong, but physical shipments continue to be slow, blunting some of that positive impact. Corn is also watching for potential trade retaliation on U.S. exports in the coming weeks. Dry weather in parts of the U.S. Plains and wet conditions in parts of the central and eastern Cornbelt could lead to complications with corn planting. Ethanol future were steady to firm. According to the USDA, corn consumption for fuel alcohol during January 2018 was 476 million bushels, down 2% on the month, but up 1% on the year. The 2017 total was 5.49 billion bushels, 4% more than in 2016. Monthly DDG production was 1.99 million tons, 1% more than the previous month, but down 4% on the year. The annual total was 23.2 million tons, slightly more than in 2016.

The wheat complex was higher on commercial and speculative buying, with May Kansas City notching a new seven month high. Drought conditions have improved in parts of the Plains, but other areas remain very dry. The drought or near drought conditions will also impact spring wheat planting, with the USDA’s prospective planting report out at the end of the month. Parts of the eastern Midwest are expected to see more near term issues related to flooding. This year’s U.S. winter wheat crop will start emerging from dormancy over the next few weeks. Japan bought 65,516 tons of U.S. milling wheat, along with 35,690 from Canada and 35,410 tons from Australia. Tunisia is tendering for 67,000 tons of milling wheat and Jordan is in the market for 100,000 tons, both optional origin. Weekly export numbers continue to show the impact of global competition, with just over a quarter left in the 2017/18 marketing year.