Market News

Wheat leads on weather concerns

Soybeans were higher on commercial and technical buying. The trade continues to monitor ongoing tariff tensions between the U.S. and China. Unknown destinations bought 232,500 tons of 2017/18 U.S. beans. Beans are also watching the U.S. corn planting pace for any acreage change signals. The USDA’s next set of supply and demand numbers, out Tuesday at Noon Eastern/11 AM Central, is expected to show higher U.S. ending stocks against a tighter global supply. Soybean meal was higher on commercial support, while oil was narrowly mixed, adjusting old crop/new crop spreads. Near term, rain in Argentina will delay harvest activity, but the precipitation is welcome as that nation tries to bounce back from widespread drought conditions that harmed crops.

Corn was modestly higher on commercial and technical buying. Forecasts for this week look mixed, generally continuing to keep fieldwork and planting limited in some key growing areas. It’s still early in the planting season, but if the delays persist, it could lead to a decrease in corn acreage. The USDA says that 2% of the U.S. corn crop is planted, compared to 3% this time last year and the five-year average of 2%. Ahead of the WASDE report, most analysts expect bigger U.S. ending stocks, but a tighter global balance sheet. The 2017/18 marketing year for corn is more than halfway complete. Ethanol futures were higher. The renewable fuels industry continues to grapple with the uncertainties over possible Chinese tariffs on U.S. ethanol imports and White House policy towards ethanol and biodiesel. Second crop corn conditions in most of Brazil generally look good.

The wheat complex was sharply higher on commercial and technical buying. The southwestern Plains is expected to see more dry weather, while weather in the northern Plains and Canada should continue to limit spring wheat planting chances. Near term conditions in parts of the eastern Midwest are expected to remain wet and cool. As of Sunday, the USDA reports 3% of winter wheat has headed, compared to 8% a year ago and 4% on average, and 30% of the crop is rated good to excellent, down 2% on the week, while 35% is rated poor to very poor, up 5%. 2% of spring wheat is planted, compared to 4% a year ago and 6% on average. Tuesday’s new USDA numbers should reinforce the bearish fundamental outlook, with higher U.S. ending stocks and a nearly unchanged global carryover. There’s less than two months left in the 2017/18 U.S. marketing year for wheat. Jordan, Iraq, and Ethiopia all have open wheat tenders.