Market News

Soybeans, corn up on oversold signals, China talks

Soybeans were higher on short covering and technical buying. China has reportedly agreed to buy an additional $30 billion of U.S. ag products and even if details are hard to come by, talks are ongoing. The big questions are which products, when will the purchases start, and if “additional” is being used in comparison to directly pre-trade dispute levels or some other mark. Additionally, China’s Ministry of Agriculture reportedly plans to encourage an increase in domestic soybean production. Contracts were also oversold and due for a bounce after the recent losses. The trade is also monitoring weather in South America. Brazil’s harvest is ongoing and the Buenos Aires Grain Exchange says 13% of Argentina’s crop is rated poor to very poor, with most of the crop filling pods. The USDA’s Ag Outlook Forum pegs 2019 U.S. soybean planted area at 85 million acres, compared to the average pre-report guess of 86.144 million and the 2018 total of 89.196 million acres. The USDA’s prospective planting report is out at the end of March. Soybean meal and oil were up, following beans. Gains in meal were limited by demand uncertainties connected to the spread of African swine fever.

Corn was higher on short covering and technical buying. Corn was also oversold and waiting to see what role corn plays in these trade negotiations with China. There’s been more talk of China buying U.S. corn to replenish state reserves and jump start their ethanol industry, but nothing has officially surfaced. Probable spring planting delays were an additional supportive factor, with many key growing areas expected to see wet, cool weather during the early part of spring. At the Ag Outlook Forum, the USDA projected 2019 corn planted area at 92 million acres, compared to the average pre-report estimate of 91.512 million acres and last year’s total of 89.129 million. Ethanol futures were higher. The U.S. Energy Information Administration says ethanol production last week averaged 996,000 barrels per day, down 33,000 on the week, while stocks were up for the first time in three weeks, gaining 447,000 barrels to 23.913 million. South American crop weather generally looks non-threatening to favorable.

The wheat complex was higher on short covering and technical buying. Wheat was very oversold after the recent runs to new contract lows, but export demand continues to be slow, probably limiting the long-term upside. The USDA will be releasing six weeks of export sales numbers Friday, most of which were delayed by the recent government shutdown. DTN reports Japan bought 56,056 tons of U.S. food wheat, along with 36,774 tons from Canada, South Korea purchased 60,000 tons of feed wheat from an “unknown origin”, and Thailand picked up 100,000 tons of feed wheat “likely” from the Black Sea region. Taiwan is tendering for 110,000 tons of U.S. feed wheat. The USDA’s Ag Outlook Forum has 2019 U.S. wheat planted area at 47 million acres, compared to the average pre-report expectation of 47.196 million and the year ago total of 47.8 million acres.