Market News

Weather concerns support grains, oilseeds

Soybeans were higher on speculative and technical buying. Some areas will be able to make near-term planting progress ahead of another round of rain starting this weekend. Gains were limited by expectations for at least some switch in acreage from corn or spring wheat to beans because of the persistent planting delays. Weekly export numbers were bearish but could improve. A recent surge in prices now has Brazil on par with the U.S., except for China because of the tariffs. Trade negotiations with China have stalled, with no public timeline for the resumption of discussions ahead of the G20 in late June. There is talk U.S. goods currently in route to China won’t be allowed to offload at ports and the spread of African Swine Fever remains a big question mark for demand. Soybean meal and oil were higher, following beans. According to a shipping agency, China’s imports of Brazilian beans between January and April 2019 were 20.07 million tons, down 13% from the same period in 2018.

Corn was higher on speculative and technical buying. Corn is also watching the weather, expecting heavy rainfall in parts of the Midwest and Plains soon, further pushing back planting in some key U.S. growing areas. Weekly export numbers were neutral to bearish. In addition to the trade talks with China, commodities wait for more discussions with Japan and the implementation of the USMCA. Ethanol futures were higher following the European Union decision to end import duties on U.S. ethanol. The industry continues to wait for clarity on year-round E15 use, small refiner waivers, and what role it plays in proposed trade deals. U.S. DDGS and sorghum might also be a part of various trade propositions. Strategie Grains lowered its E.U. corn outlook by 200,000 tons to 62.9 million tons because of dry weather because of dry weather in some key growing areas.

The wheat complex was higher on speculative and technical buying. Wet conditions are a big issue for soft red winter and spring wheat planting remains slower than normal. Also, while hard red winter is in good shape, development is slower than average. Export numbers were neutral with just a few weeks left in the 2018/19 marketing year for wheat. There are several open export tenders, but it’s unclear just how much of that will be supplied by the U.S. Strategie Grains reduced its soft wheat production projection for the E.U. from 144.8 million tons to 143.9 million tons, citing drought in Hungary. The USDA’s attaché for Iraq pegs 2019/20 wheat production at 4.071 million tons, compared to 3.070 million in 2018/19.