Market News

Solid gains for corn, soybeans, wheat

Soybeans were sharply higher on commercial and technical buying but closed under the session’s highs. Contracts are oversold and there was spillover from meal on concerns about shipping delays from Argentina, along with coronavirus precautions. Argentina is the world’s biggest exporter of soybean products and expectations are for Chinese demand for meal to rise as the nation rebuilds their hog herd post-widespread African swine fever outbreak. That said – while bean oil demand will also rise, according to the USDA’s Foreign Ag Service, it’ll be at a slower pace because of reduced demand from food service due to COVID-19. The U.S. export outlook on beans remains neutral to bullish. The big buyer last week was unknown destinations, at least part of which will probably go to China. Informa Economics sees 2020 U.S. soybean planted area at around 85.6 million acres. Dry weather is expected to impact South American production to some extent, but Argentina and Brazil are both on pace for very large, if not record, crops. Soybean meal was mostly higher on commercial spread trade, but also below the session highs, while bean oil was supported by a rally in crude oil.

Corn was higher on commercial and technical buying. Corn is also oversold and watching South America, with potential shipping issues for both Argentina and Brazil. Both of those nations, along with Ukraine, have become big competitors on the export market and South Africa could play an increased role as well. Weekly export numbers were bearish but could improve if those issues in South America materialize. Overall, just over halfway through the marketing year, 2019/20 sales remain slower than 2018/19 by a significant margin. Sorghum is ahead of last year’s pace and China was the biggest buyer last week. The trade is also watching pre-planting conditions in the U.S. ahead of the USDA’s prospective planting numbers out on the 31^st, along with quarterly grain stocks. Informa Economics projects 2020 planted area for corn at around 95.2 million acres. Ukraine’s national grain institute expects corn production to be down 10.3% on the year at 32.2 million tons. Ethanol futures were higher on the rebound in crude oil. The USDA’s attaché in Cairo expects Egypt to import 10 million tons of corn in the 2020/21 marketing year, compared to 9.9 million in 2019/20. DTN says one South Korean feed mill bought 135,000 tons of corn and another purchased 60,000 tons, both likely either from South Africa or South America.

The wheat complex was sharply higher on commercial and technical buying. The complex continued to rally on improved domestic demand, including for grocery store use. Paris milling wheat futures were higher heading into the U.S. session, that was the third session in a row, and there’s been more talk of China buying U.S. wheat. China didn’t show up last week, but if this week’s rumors are true, it’ll show up in next week’s report. The trade is also monitoring winter wheat conditions as the crop emerges from dormancy and pre-planting weather ahead of widespread spring wheat planting. Informa Economics projection for all U.S. wheat acres this year is about 45.2 million. The USDA’s attaché for Egypt projects 2020/21 wheat production at 8.9 million tons, compared to 8.77 million in 2019/20, with imports of 12.85 million tons, compared to 12.8 million during the current marketing year. DTN says three flour mills from South Korea bought a total of 137,000 tons of U.S. wheat. Ukraine’s national grain research group estimates winter wheat production at 24.2 million tons, down 12.5% on the year.