Market News

Another round of weather support

Soybeans were higher on short covering and technical buying, cementing a week to week gain. Beans went back to watching the weather, expecting more planting delays, but also anticipating at least some switch from corn and spring wheat to soybeans. Still, the uncertainties about Chinese demand could limit switching. African swine fever is expected to drive demand down, but it remains to be seen by how much. Details on several parts of the trade aid package are in question and uncertainties about China are also in the background. The next expected meeting between the U.S. and China is the G20 in about a month and rhetoric from Beijing has been less than friendly. The trade aid package is $16 billion, most of it will be direct payments. Soybean meal and oil were higher, following beans.

Corn was higher on short covering and technical buying, helping the most active contracts gain more than $.20 on the week. The planting pace is the slowest on record and probably won’t pick up that much anytime soon. The USDA’s weekly crop progress and condition and export inspection numbers are pushed back until Tuesday and commodities markets are closed Monday for Memorial Day. Commodity trade resumes Monday night. Mexico bought 113,000 tons of old crop U.S. corn, but the overall pace of sales remains slower than expected. Ethanol futures were higher. Ukraine’s Ag Ministry estimates 2019/20 corn production at 33.1 million tons, compared to 35.6 million in 2018/19, with exports down 2 million tons at 26.5 million. That means less competition next marketing year, but the U.S. will still have to contend with Argentina and Brazil.

The wheat complex was higher on short covering and technical buying, with all three pits holding strong weekly gains. Soft red winter areas are wet, at least some of the hard-red winter crop has been damaged, and spring planting is slow. Still, with world crops in generally good shape, the fundamentals remain bearish and the recent surge in price has further limited U.S. competitiveness on the export market. The 2018/19 marketing year for wheat officially ends on the 31st. Ukraine’s Ag Ministry sees 2019/20 feed wheat production at 26.8 million tons, compared to 24.6 million last growing season, with exports of 8.2 million tons, an increase of 900,000. AgriCensus says Australia is importing more wheat. Australia is usually a net exporter, but drought has hit production hard. Japan bought 90,194 tons of U.S. food wheat, along with 32,650 tons from Canada.