Market News

Corn, soybeans up on lower USDA crop guesses

Soybeans were higher on short covering and technical buying, rallying a little after the release of the USDA numbers. The USDA continues to project record production, but the estimate was down slightly on the month and could fall further as damage from recent weather is assessed. U.S. ending stocks were up from September and there were no changes to South American production. The USDA did raise export estimates for Argentina and Brazil, while lowering Paraguay. CONAB now projects Brazil’s 2018/19 bean crop at 117 million to 119.4 million tons, compared to the USDA’s most recent guess of 120.5 million. The Rosario Grain Exchange sees Argentina at 50 million tons, compared to the current USDA estimate of 57 million. The bearish combination of the potential for another record South American crop and the Chinese tariff on U.S. beans continue to hang over the market. China’s National Grain and Oil Information Center lowered its domestic crush outlook because of Beijing’s proposal to lower protein content in animal feeds. Soybean meal and oil were up, following beans. The USDA’s weekly export sales report will be out Friday at 8:30 Eastern/7:30 Central.

Corn was higher on short covering and technical buying, moving into positive territory thanks to nominally friendly USDA reports. The USDA’s corn production estimate was a little bit lower than last month and doesn’t reflect recent weather damage, so that number could continue to decline as harvest results roll in. U.S. ending stocks were lower than expected on that lower production guess and a higher export projection. The impact of proposed year-round E15 use on demand may not be fully reflected for a few months. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production last week averaged 1.04 million barrels a day, up 25,000, and stocks were 24.021 million barrels, 576,000 higher. CONAB has Brazil’s 2018/19 corn crops at 26 million to 27.3 million tons and 63.7 million, for a total of 91.1 million tons. The USDA has the combined crop for Brazil at 94.5 million tons. The Rosario Grain Exchange has Argentina’s corn crop at 43 million tons, compared to the USDA’s current estimate of 41 million tons. The USDA says unknown destinations canceled on 140,000 tons of 2018/19 U.S. corn.

The wheat complex was modestly lower on fund and technical selling. Domestic ending stocks were up on the month, but not as much as anticipated, and world supplies were down slightly, but remain ample. Exports were unchanged, kind of a surprise given the very slow pace during the first quarter of the 2018/19 marketing year. Recent rainfall has delayed winter wheat planting in some areas but should be beneficial in the long-term. The trade is also watching the slow spring wheat harvest pace in Canada, along with planting and development conditions in Argentina, Australia, the Black Sea region, and Europe. The USDA’s next set of domestic and global supply, demand, and production estimates is out November 8th at Noon Eastern/11 Central. Bangladesh is tendering for 50,000 tons of wheat and Japan has an open tender for 115,685 tons from the U.S. and/or Canada. The Rosario Grain Exchange lowered its wheat production estimate for Argentina to 19 million tons, compared to the USDA’s current projection of 19.5 million.