Market News

Wheat sharply higher on smaller Australia crop

Soybeans were modestly lower on fund and technical selling. China says nearly 700 U.S. ag goods, including soybeans, are eligible for one-year tariff waivers, now Beijing has to actually start issuing those waivers. That might take some time. Crop conditions look good in most of South America and Brazil’s beans are cheaper than U.S. supplies, with the discount greater in the deferred contracts than in the nearby months. Also, China’s tariff on U.S. beans didn’t dip that much, moving from 30% to 27.5%. AgRural projects Brazil’s 2019/20 crop at 125.6 million tons, with 21% of the crop harvested. ABIOVE has Brazil’s crop at 123.7 million tons. The National Oilseed Processors Association says member firms crushed 176.940 million bushels of beans in January, larger than expected and a new monthly record. Soybean meal was mostly higher on commercial spread adjustments, while oil was lower on spillover from beans, along with the NOPA reporting a near two-year high for U.S. bean oil supplies.

Corn was modestly higher on short covering and technical buying, along with spillover from wheat. U.S. corn, ethanol, and sorghum are also eligible for one-year tariff waivers from China. The uncertainties about demand caused by the continued spread of coronavirus in China are bearish, but China attempting to rebuild its’ pork industry after the African swine fever outbreak is bullish. Corn is also monitoring crop conditions in Argentina and Brazil. More than 60% of expected second crop corn acreage has reportedly been planted in Brazil’s state of Mato Grosso. Ethanol futures were higher. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Thursday, delayed by Monday’s holiday, and weekly export sales will be out Friday. Weekly export inspections for corn were bearish, but sorghum inspections were more than what’s needed to meet USDA projections. DTN says one South Korean feed mill bought 66,000 tons of corn and another mill is tendering for 135,000 tons of optional origin corn. With Brazil and Argentina mostly out of the market right now, that optional origin tender will probably come down to the U.S. or Ukraine.

The wheat complex was sharply higher on commercial and technical buying, with Chicago in the lead. Australia Bureau of Agricultural and Resource Economics says the 2019/20 wheat crop will was 15.17 million tons, the lowest in more than a decade following widespread drought and wildfires. That will affect their exports, which topped 9 million tons during the 2018/19 marketing year. Also, Paris milling wheat futures were higher heading into the U.S. session. U.S. hard red winter conditions look good, while some soft red winter areas are excessively wet, providing additional support to Chicago. Additionally, soft red winter stocks are tight and sales by the European Union are moving out a lot faster than last marketing year. India’s government estimates wheat production at a record 106.2 million tons. U.S. wheat is also eligible for one-year tariff waivers from Beijing. DTN says Japan is in the market for 93,100 tons of wheat from the U.S. and/or Canada and Bangladesh is tendering for 50,000 tons of milling wheat, while Taiwan bought around 102,000 tons of U.S. milling wheat.

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