Market News

Soybeans, corn bounce off recent lows

Soybeans were modestly higher on short covering and technical buying. Contracts saw a light bounce and while China did buy U.S. beans last week, it was a relatively small amount, just over 200,000 tons. Cumulative purchases by Beijing have been far short of expected amounts, with the face to face negotiations resuming next week. According to China’s General Administration of Customs, March soybean imports were 4.92 million tons, 2.79 million from Brazil, 1.5 million tons from the U.S., and 205,000 from Canada. The weekly U.S. export numbers were bearish beans. Brazil’s harvest is close to wrapping up and Argentina’s is about 40% complete. A delegation from Argentina recently visited China in hopes of increasing soybean meal sales. Still, there’s a lot of uncertainty because of the continued spread of African Swine Fever. Soybean meal futures up sharply on strong U.S. export sales and the adjustment of product spreads. Bean oil was down on those spread adjustments. The International Grains Council has 2019/20 global soybean production at 361 million tons, up 2 million on the month on improved expectations for South America.

Corn was modestly higher on short covering and technical buying, bouncing off the recent contract lows with help from beans. Some areas have been able to plant this week, but forecasts for the next couple of weeks look mixed. The USDA’s next set of crop progress and condition numbers are out on the 29^th. Even with this slight rally, corn continues to carry a record net short position. Corn is also watching development conditions in South America, which generally look good. Weekly export numbers were neutral for corn, but bullish for sorghum, with China the big weekly buyer, just ahead of Spain. Ethanol futures were higher. The ethanol industry is also waiting to see what role it plays, if any, in trade negotiations. The International Grains Council estimates 2019/20 world corn production at 1.125 billion tons, 1 million more than in late March.

The wheat complex was mostly modestly higher. Chicago and Minneapolis were up on an oversold bounce, along regional concerns about wet weather impacting soft red winter crop conditions and slow spring wheat planting. Kansas City is also oversold, but hard red winter is in good shape overall, and contracts closed very narrowly mixed. Weekly export numbers were neutral with less than a month and a half left in the 2018/19 marketing year for wheat. The USDA’s attaché for Kazakhstan projects 2019/20 14.0 million tons, compared to 13.98 million in 2018/19, but with the lowest planted area since 2004. Saudi Arabia is tendering for 600,000 tons of milling wheat. The International Grains Council sees 2019/20 world wheat production at 762 million tons, compared to 759 million a month ago.