Market News

Soybeans down as new sales still don’t meet expectations

Soybeans were modestly lower on fund and technical selling, cementing the week to week losses. China and unknown destinations both bought U.S. soybeans Friday morning, but the announced sales of around 1.5 million tons so far have fallen short of the 5 million to 8 million the trade was expecting. That said – it’s unrealistic to expect that volume of sales to be booked immediately and more announcements are likely. China did buy 300,000 tons and unknown picked up 130,000 tons, both for 2018/19. Beijing stated it will roll back U.S. auto-related tariffs in January. For now, the overall supply and demand outlook remains bearish, in sharp contrast to where beans sat just a few marketing years ago. Meal and oil followed beans lower. The monthly National Oilseed Processors Association’s member crush report is out Monday. Soybeans are also watching South America.

Corn was steady to modestly higher on spread trade and short covering, with contracts ending the week narrowly mixed. Japan bought 125,000 tons of 2018/19 U.S. corn Friday and sales remain ahead of the expected pace a little more than a quarter into the marketing year. Near term forecasts have drier weather in Brazil and wet conditions in Argentina, potentially stressing crops. An El Nino pattern is expected to develop this winter, possibly lasting until spring. The trade also has an eye out for increased export competition from Ukraine, while watching the very tail end of this year’s U.S. harvest, with an unknown amount of the 2018 still in the fields. Ethanol futures were higher.

The wheat complex was modestly lower on profit taking and technical selling, along with the firm U.S. Dollar index. Excessive rainfall is expected to harm wheat in Argentina and Australia, both of which are export competitors. U.S. sales have improved recent but continue to trail last marketing year’s pace about halfway through 2018/19. The Buenos Aires Grain Exchange lowered its outlook for Argentina to 19 million tons, citing weather issues. The trade is also waiting to see if Russia makes any changes to its export program, with fast sales during the first part of their marketing year drawing down supplies. New supply and demand estimates, along with updated winter wheat acreage totals and final 2018 corn and soybean production numbers are all out in January. Week to week, Chicago and Minneapolis were up modestly, while Kansas City was weak.