Market News

South American rainfall sends soybeans lower

 

Soybeans were modestly lower on speculative and technical selling, hitting new three month lows. Dry parts of Argentina and Brazil received rain over the weekend with more possible in the coming days. It’s roughly mid-June for crops in the southern hemisphere and while La Nina conditions are weakening, they are still present. China bought 396,000 tons of 2017/18 U.S. soybeans, but that was apparently disregarded within minutes. Contracts are oversold and were up overnight, but couldn’t follow through because of the large world supply projections and fundamental implications of another big South American crop. Soybean meal and oil followed beans lower. Oil World lowered its fourth quarter 2017 soybean crush outlook for Argentina, potentially driving more business to the U.S.

Corn was steady to fractionally lower. Corn was also watching conditions in South America, with generally non-threatening weather for most of the continent in many near term forecasts. Hot temperatures in Argentina could be an issue if timely rainfall doesn’t continue. The USDA’s final 2017 U.S. production numbers are out next month, along with quarterly grain stocks numbers. Ethanol futures were higher, bouncing back from some of the recent losses. China bought 168,000 tons of 2017/18 U.S. sorghum. China’s the biggest buyer of U.S. sorghum, not only for livestock feed, but for (non-fuel) alcohol production.

The wheat complex was mostly modestly higher on commercial buying and short covering. The overall fundamental outlook remains bearish, but there’s continued buying interest at these price levels, which propped up Chicago and Kansas City. Many forecasts have scattered rain in dry parts of the Southern U.S. Plains. Drought or near drought conditions in the region may not be viewed as a factor until winter wheat comes out of dormancy in spring. Total U.S. wheat acreage this year could be the lowest on record, with the first official winter wheat projection of the season out in January. Minneapolis was narrowly mixed, consolidating. Jordan is tendering for 100,000 tons of milling wheat.