Market News

Grains and oilseeds lower ahead of USDA numbers

Soybeans were lower on fund and technical selling, closing just above the day’s lows. The trade was getting ready for supply, demand, and production numbers Wednesday, expecting a big U.S. crop and higher ending stocks. The reports are out at Noon Eastern/11 AM Central. The USDA says 68% of U.S. soybeans are in good to excellent condition, up 2% on the week, and 31% of the crop is dropping leaves, compared to the five-year average of 19%. Unknown canceled on 192,000 tons of 2018/19 U.S. beans. That might not have been China, but Beijing’s tariff on U.S. beans and expectations for more U.S. tariffs on Chinese goods continue to hang over the market. Soybean meal and oil were lower on profit taking. The trade is also watching conditions in South America ahead of widespread planting. CONAB’s new estimate for Brazil’s 2017/18 crop is 119.3 million tons, with lower ending stocks because of strong demand from China. Chinese customs data shows soybean imports during August at 9.15 million tons, up 14% from July and above August 2017’s total. The UDSA’s attaché in China expects 2018/19 soybean imports to be 94 million tons, down 1 million, because of the trade tensions with the U.S., but also anticipates solid oilseed consumption because of rising meal demand as domestic livestock production expands. Soybean meal and oil were down, following beans.

Corn was fractionally lower after a narrowly traded session, pressured by fund and technical selling. Harvest is underway in some key U.S. growing areas and the USDA could lower its production estimate slightly Wednesday, with analysts citing anecdotal yields. As of Sunday, 68% of U.S. corn in rated good to excellent, a 1% week to week improvement, with 86% of the crop dented, 35% mature, and 5% harvested, all ahead of their respective averages of 75%, 21%, and 3%. Florence is expected to cause early harvest delays in eastern and southeastern portions of the Cornbelt. South Korea bought 138,000 tons of 2018/19 U.S. corn. Ethanol futures were steady to firm. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are also out Wednesday. CONAB lowered its outlook for Brazil’s 2018 corn crop to 81.4 million tons.

The wheat complex was mostly lower on profit taking and technical selling. The trade anticipates another bearish set of USDA numbers Wednesday. The global crop estimate could be lower, but U.S. supplies are expected to be nearly steady and world stocks should remain relatively ample, even if China’s ownership of roughly half of the world supply isn’t factored in. The sole exception was the lightly traded September Minneapolis contract. For U.S. spring wheat, 93% of the crop is harvested, compared to the usual pace of 85%, and 5% of winter wheat is planted, matching the five-year average. Australia’s Bureau of Meteorology’s ENSO division says there’s a 50% chance of an El Nino pattern forming in late winter, for the Northern Hemisphere, or late spring, for the Southern Hemisphere, with slightly weaker trade winds, which would lead to continued dry conditions in already very dry parts of Australia. According to wire reports, Ukraine has increased its 2018 grain production guess to 63.1 million tons, with the Ag Ministry anticipating exports of 42 million tons in 2018/19. Jordan is tendering for 120,000 tons of wheat and Algeria is in the market for 50,000 tons, both milling quality.