Market News

Grains, oilseeds higher, watching weather

Soybeans were higher on speculative and technical buying, taking back part of Friday’s losses. Most forecasts have more rain and possible severe weather in key U.S. growing areas for much of this week. That’s delaying soybean planting, but also leading to talk of increased acreage because of the corn and spring wheat delays. The USDA says 19% of U.S. soybeans are planted, compared to the five-year average of 47%, and 5% have emerged, compared to 17% on average. Soybean meal and oil were higher, following beans. Weekly export inspections were bearish and while most of the weekly total did go to China, Beijing’s tariff on U.S. beans remains in place and the continued spread of African Swine Fever is having at least some impact on Chinese soybean demand. The bigger issue though is the lack of progress in trade talks between the world’s two largest economics, which might not resume until the G20 in late June. At best, trade resumes, tepidly, at worst, the U.S. loses market share permanently. The Buenos Aires Grain Exchange pegs Argentina’s soybean crop at 56 million tons. DTN says U.S. soybean prices are at a discount to Brazil, but a premium to Argentina.

Corn was higher on speculative and technical buying, continuing to rally off last week’s contract lows. Corn is also watching the weather and expecting the USDA to report planting as about halfway complete. As of Sunday, 49% of corn is planted, compared to the usual pace of 80%, and 19% has emerged, compared to the 49% typically this time of year. Yield loss and big prevent plant acres are probable at this point and planted could fall below 90 million acres. Ethanol futures were higher. According to reports, in addition to leading to an increase in export competition, Brazil’s big corn crop is also supporting that nation’s ethanol and DDG industries. China’s corn prices have hit a six-month high as Fall army worm heads towards key production areas in the north east.

The wheat complex was sharply higher on speculative and technical buying. Wet weather is expected to have an impact on winter wheat quality and delay spring wheat planting. For winter wheat, 54% of the crop has emerged, compared to 66% on average, and 66% of the crop is rated good to excellent, up 2% on the week and 30% more than this time last year. For spring wheat, 70% is planted, compared to 80% on average, and 26% has emerged, compared to 51% normally in mid-to-late May. On the downside, the recent surge in price has made U.S. wheat less competitive for exports, which were already slow because of the large global supply. Higher U.S. prices have also pushed Russia’s new crop prices higher, but Black Sea origin is usually competitive because of lower freight costs. IKAR has Russia’s new wheat crop at 81 million tons. The 2018/19 U.S. marketing year for wheat runs through the end of May. According to Allendale, Egypt has bought 2.2 million tons of local wheat this year, out of an expected total of 3.6 million tons.