Market News

Soybeans, corn shrug off USDA numbers

Soybeans were modestly higher on commercial and technical buying. According to reports, there have been new talks on trade between the U.S. and China this week, with Beijing reportedly open to cutting tariffs on auto imports, signaling a possible willingness to discuss ag trade. Still, there’s probably a lot of negotiating left to be done and the trade would like to see some actual progress. In the monthly supply and demand update, the USDA left U.S. ending stocks unchanged and raised production and exports for Brazil. CONAB has Brazil’s new bean crop at 120.1 million tons, up 0.7% on the year, with a 1.8% increase in planted area. ABIOVE has Brazil at 120.9 million tons, with 2018 exports at 82.7 million tons and 2019 at 73.9 million. For Argentina, some forecasts have heavy rainfall in some areas starting later this week, potentially damaging crops. The USDA also lowered the export outlook for Argentina and left imports by China unchanged. Soybean meal and oil were modestly higher, following beans, with U.S. ending stocks unchanged and only minor revisions to the global tables.

Corn was modestly higher on short covering and technical buying, along with light spillover from beans. U.S. ending stocks were up more than expected with a cut to the ethanol use projection. The USDA says first quarter use of corn for ethanol was down on the year for the first time since 2012. There’s also some uncertainty about the long-term lifespan of the RFS and the industry is waiting for year-round E15 availability. Poor margins also contributed to the production slowdown. A resolution to the trade dispute with China could increase demand for U.S. ethanol, DDGS, and sorghum. China’s Ag Ministry did increase its 2018/19 corn import guess to 2.5 million tons, likely because of increased feed demand. Ethanol futures were higher. The weekly U.S. Energy Information Administration numbers are out Wednesday. World ending stocks and production were both higher than last month, with no changes to production for Argentina and Brazil and a lower projection for South Africa. The trade also continues to watch the very tail end of this year’s U.S. corn harvest with the final 2018 production totals out in January. CONAB pegs Brazil’s first corn crop at 27.4 million tons, with a combined crop of 91.1 million tons, which, if realized, would be 12.8% higher than last year. Brazil’s second crop is the source of most of their exports. The trade will also monitor the impact of expected heavy rainfall in parts of Argentina.

The wheat complex was mixed, with Chicago and Kansas City modestly lower and Minneapolis steady to modestly higher. The fundamentals remain bearish, with higher U.S. ending stocks after a lower export use estimate as sales continue to trail expectations halfway through the marketing year. World ending stocks were up slightly on the month; the USDA did lower the production outlook for Australia but raised the projection for Canada. More on the supply and demand report is available in our news section, including a full breakdown of selected U.S. and world balance sheets. CONAB has Brazil’s 2018 wheat crop at a total of 5.5 million tons, a jump of 28.4% from 2017. Heavy rainfall in Argentina could also impact their wheat crop. Japan is tendering for 137,657 tons of food wheat from the U.S., Canada, and/or Australia. Iraq reportedly bought 50,000 tons of U.S. wheat. The trade also is waiting for updated U.S. winter wheat acres, with the possibility of a 100-year low in Kansas because of delays.