Market News

Soybeans up ahead of more talks with China

Soybeans were modestly higher on short covering and technical buying. At least some progress was made in this last round of talks with China and more negotiations are expected in the coming week. Crop weather in South America looks non-threatening to favorable, including rain in dry parts of Brazil. Harvest is ongoing in Brazil, so there could be some delays, but in general the precipitation is expected to be beneficial. After a recent spate of buys from the U.S., China has switched back to Brazilian beans and there’s also talk of Beijing increasing purchases of soybean products. Soybean meal and oil were up modestly, following beans. The National Oilseed Processors Association says member firms crushed 171.630 million bushels of soybeans in January, down 129 million on the month, but more than what analysts had been expecting. Ahead of the USDA’s Ag Outlook Forum and the end of March prospective planting report, Informa Economics projects 2019 U.S. soybean planted area at 86.044 million acres, compared to 89.196 million in 2018.

Corn was mostly steady to fractionally lower. Corn was also waiting for new developments with China and watching weather in South America, especially the effects of improved rainfall for Brazil’s second crop. Unknown destinations bought 205,744 tons of 2018/19 U.S. corn, which could be confirming rumored demand from China, or could end up heading somewhere else. In any event, export demand continues to be a bright spot, along with feed use, because of the questions about ethanol. Ethanol futures were mostly weak. The industry continues to have a lot of questions about year-round E15 use and EPA policy. Weekly export sales get up to date January 22nd with the remaining six weeks of delayed numbers. Informa Economics sees 2019 planted area for corn at 91.591 million acres, compared to 89.129 million a year ago.

The wheat complex was modestly lower on fund and technical selling. There was more talk of new export demand, but U.S. sales continue to be slow. Winter weather is disrupting movement in the northern Plains and Pacific Northwest, but winterkill concerns in parts of the Midwest and Plains are apparently on the back burner. Depending on how China’s supplies are viewed, they’re very large, but not for sale, the fundamental outlook for U.S. wheat might not be that bearish, but it’d take cheaper freight costs and big cuts in production for export competitors to really shift the supply and demand outlook. DTN says Japan bought 113,138 tons of food wheat from the U.S., Australia, and Canada, and Morocco purchased 600,000 tons of milling wheat from an unknown origin. Informa Economics estimates planted area for all types of wheat this year at 46.782 million acres, compared to 47.8 million last year.