Market News

Soybeans down, despite slow harvest

Soybeans were modestly lower on profit taking and technical selling. Harvest is still slower than average, but more than halfway complete, and the crop is in very good shape for mid-October. The U.S. is expected to produce a very large if not record crop again this year, but projections ahead of the final totals out in January could fall from current levels after a wet, cold snap in parts of the Midwest and Plains. The trade is also watching planting conditions in South America and Brazil’s presidential election is Sunday, which could impact trade and/or fiscal policy. Tuesday’s trade volume was fairly light and impact from the volatility in the broader market was limited. Soybean meal was mixed adjusting old crop/new crop spreads and bean oil was lower on technical selling and the drop in crude oil. According to Allendale, soybean basis bids have “softened slightly’ because of an increase in harvest activity in parts of the Midwest. China’s tariff on U.S. soybeans continues to be a big bearish factor, with no apparent resolution in sight. President Trump and President Xi are both scheduled to be at the G20 summit in Argentina next month.

Corn was firm on short covering and technical buying. The U.S. corn harvest is a little faster than normal and condition ratings remain high for this time of year. The USDA’s new supply, demand, and production report is out November 8th, with a lot of uncertainty about what the numbers may show. There’s also uncertainty about the implementation of year-round E15 use and introduction, passage, and impact of the USMCA, or the “new NAFTA”. Additionally, there have been rumblings of increased trade tensions between the U.S. and the European Union. Ethanol futures were mixed. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. Allendale says a few locks on the Mississippi River that had been closed because of high water have reopened.

The wheat complex was mixed, with Chicago modestly higher, Kansas City mostly firm, and Minneapolis weak. Technically, contracts are oversold, but the fundamental outlook continues to be bearish. U.S. winter wheat planting and emergence are both slightly slower than average. Recent rainfall in some key growing areas has delayed planting activity, but the soil moisture is generally welcome. Japan is in the market for 104,673 tons of food wheat from the U.S. and/or Canada, while Tunisia issued two new tenders for soft wheat: one for 125,000 tons and the other for 50,000 tons. Algeria, Bangladesh, and Jordan also have open wheat tenders. The trade also has an eye on global crop conditions, including a potential El Nino pattern emerging this winter. According to Australia’s Bureau of Meteorology, that would further exacerbate the warmer, drier than normal conditions impacting that nation’s wheat crop.