Market News

Wheat leads on USDA supply, demand changes

Soybeans were modestly higher on short covering and technical buying. The USDA lowered production and yield but that’s using June’s acreage numbers as they resurvey producers for the August report. New crop U.S. and world ending stocks were both down on the month, mainly tied to the U.S. production adjustment, with minimal changes to the global numbers. The USDA’s 2018/19 and 2019/20 import estimates for China were unchanged, despite the spread of African Swine Fever having an impact on demand. China did buy a nominal amount of U.S. soybeans last week and President Trump has expressed dissatisfaction with Beijing’s demand. No timetable has been announced for the resumption of face to face talks on tariffs and trade. Weekly export numbers were bearish overall. The trade is also watching the tail end of planting and U.S. development conditions. Soybean meal and oil followed beans higher. Weekly export numbers for soybean products were also bearish, with just under a quarter left in the marketing year for those commodities.

Corn was modestly higher on short covering and technical buying. The USDA raised corn yield and production, but that will probably change after the ongoing resurvey in 14 states out August 12^th. The USDA’s prevent plant numbers are also out in August. New crop U.S. and world ending stocks were above a month ago, largely because of the change to production, so an adjustment to those is also probable in August. At this point, there are more unknowns than knowns for the 2019 U.S. corn crop, delaying some of the probable ripple effect from lower production. Conditions for development mostly look good, but there are some dry spots in parts of the Midwest that will bear watching. Weekly export numbers were bearish, with more competition from Argentina, Brazil, and Ukraine. The 2019/20 marketing year for corn starts September 1^st. The export numbers were also bearish on sorghum, despite continued interest from China. Ethanol futures were higher. U.S. ethanol is also a possible purchase target for Beijing. China’s government did lower its corn for feed use estimate because of ASF.

The wheat complex was sharply higher on commercial and technical buying. The USDA made a bigger than expected cut to U.S. and world ending stocks, pulling contracts out their early doldrums. That canceled out a larger winter wheat production guess, which was up on the month because of better than expected yields. Those solid yields are helping to offset some of the concerns about protein content and disease issues. Weather generally looks favorable for winter wheat harvest activity and spring wheat development. The lower world figure was also tied to anticipated weather impact in some export competitors, including Australia, Canada, Europe, Russia, and Ukraine. Strategie Grains lowered its production outlook for the European Union by 2.2 million tons to 140.6 million because of June’s heatwave. Russia’s Ag Ministry has wheat production at 75 million tons, below the USDA, but with exports of 36 million tons, up from 2018/19. DTN says South Korea bought 80,000 tons of U.S. milling wheat, and Japan, Jordan, and Syria all have open wheat import tenders. 2019/20 exports are running ahead of the 2018/19 pace, but it’s still early in the current marketing year. That said – if global crop weather issues continue, it could open the door to more demand for U.S. wheat, but that’s partially dependent on price.