Market News

Wheat, soybean meal prop up corn

 

Soybeans were mostly modestly lower on commercial and technical activity but closed well above the session’s lows. China issued a list of proposed tariffs on U.S. goods and while soybeans aren’t on that list, at least not yet, trade retaliation is a general concern for several commodities. Weekly export sales continue to be slower than expected. Soybean meal was sharply higher and bean oil was lower on commercial spread adjustments. The Buenos Grain Exchange lowered its production outlook for Argentina to 39.5 million tons, but Brazil could pick up a lot of that nation’s lost export potential, even if China doesn’t decide to place official tariffs on U.S. beans. The Grain Exchange reports 80% of Argentina’s crop is in poor to very poor shape and 18% is mature. Allendale’s current estimate for U.S. planted area is 92.104 million acres, with quarterly stocks of 2.099 billion bushels. Informa Economics expects U.S. bean acreage to be 91.5 million. The International Grains Council projects 2017/18 global production at 341 million tons, down 6 million from the last guess, largely on those losses in Argentina. 2018/19 production is seen at 354 million tons, anticipating increased world acreage.

Corn was modestly higher on short covering and technical buying, in addition to spillover from bean meal and wheat. Corn is also watching developments with China and while export sales have increased, actual out movement is very slow. Corn itself is not on China’s initial tariff list, but ethanol is. The USDA’s prospective planting and quarterly stocks numbers are out on the 29th. Allendale sees corn planting at 88.514 million acres, with quarterly stocks of 8.743 billion bushels. Informa Economics pegs U.S. corn planting at 88.9 million acres. Ethanol futures were sharply lower, in response to the potential Chinese trade action. The Buenos Aires Grain Exchange estimates Argentina’s corn crop at 32 million tons, with 75% of the crop in poor to very poor condition, 34% fully mature, and 13% harvested. The International Grains Council sees 2017/18 world corn production at 1.045 billion tons, down 3 million on the month, while increasing the consumption outlook. 2018/19 production is projected at 1.052 billion tons.

The wheat complex was higher on short covering and technical buying, along with the weak dollar. Most of Friday’s forecasts had more generally dry weather in most of the southern U.S. Plains and more rain in parts of the eastern Midwest. The International Grains Council raised its production and carryover estimates, reflecting the bearish fundamental outlook. The IGC pegs global production at 758 million tons, up 1 million from February, with that slight rise and decreasing consumption raising the ending stocks expectation. Low prices may finally be taking a toll on global production, with the early estimate for 2018/19 at 741 million tons. Tunisia issued two new wheat tenders Friday: one for 67,000 tons of soft wheat and one for 50,000 tons of durum. Allendale projects U.S. wheat acreage at 46.889 million acres, including 32.554 million for winter wheat, 11.924 million acres for spring wheat, and 2.421 million for durum. Quarterly stocks are estimated at 1.488 million bushels. Informa Economics sees all U.S. wheat acreage at 46.1 million.