Market News

Soybeans supported by possible trade talks

Soybeans were sharply higher on commercial and technical buying. Thursday morning, President Trump tweeted he and President Xi will meet later this month at the G20 summit in Argentina. Nothing has been officially scheduled, at least publicly, but according to wire reports Xi confirmed the call with Trump and said he wants a better relationship with the U.S. and is willing to meet at the G20. For now, China’s tariff on U.S. beans remains in effect, with another bearish week for export sales. Beans continue to watch U.S. harvest activity and the planting paces in South America. Brazil is expected to produce another record crop this year. According to Chinese customs data, Beijing’s purchases of soybeans from Brazil during September were up sharply on the year. Soybean meal and oil were higher on the prospect of renewed business with China, along with a solid start to exports for the 2018/19 marketing year. The USDA says the September 2018 soybean crush was 169 million bushels, lower than expected and down 1 million from August, but up 24 million from September 2017. The latest estimate from brokerage FC Stone has U.S. production at 4.699 billion bushels with an average yield of 53.2 bushels per acre, down from their previous projections.

Corn was modestly higher on short covering and technical buying. Corn found new buying interest to start the month and also had spillover from that higher move in beans, while watching harvest activity. Near-term progress is expected to be mixed, much better in some areas than others. FC Stone’s new U.S. production estimate is reportedly 14.83 billion bushels with an average yield of 181.4 bushels per acre, both a little bit less than earlier expectations. New crop progress numbers are scheduled for Monday the 5th and new supply, demand, and production projections are out Thursday the 8th. Ethanol futures were higher. The USDA says corn for ethanol use in September was 449 million bushels, 7% less than the previous month, but 1% more than last year. The industry continues to await approval of year-round E15 use, with the EPA having sent proposed 2019 blending volumes to the White House for approval. Weekly export sales were a little disappointing, but year to date shipments remain ahead of the USDA’s projected pace. With China also not buying U.S. sorghum, sales are a fraction of what they were a year ago. Corn is also waiting to see what happens, and when, with the USMCA. The USDA’s attaché in South Africa estimates a 10% decrease in corn planted area because of large domestic supplies and low local prices. 2018/19 production is now pegged at 12.0 million tons with exports of 1 million, compared to the 2017/18 estimates of 12.9 million tons and 2.5 million, respectively.

The wheat complex was higher on short covering and technical buying, in addition to spillover from beans and the sharply lower U.S. Dollar index. Weekly export sales were larger than expected for the second week in a row, confirming some of the recent talk about improvements in demand. There are also continued uncertainties about Russian sales and quality, but nothing is confirmed. That said – it’s just two weeks in a row and physical shipments remain slower than a year ago. Most forecasts have more rain in the U.S. Midwest and Plains, delaying winter wheat planting, but further improving soil conditions before the crop heads into dormancy. The USDA says all wheat ground for flour during the 3rd quarter of 2018 was 233 million bushels, up 3% from Q2, but down 1% from Q3 2017. The durum grind was 16.7 million bushels, an increase of 6% on the quarter and 3% on the year.