Market News

Slow demand continues to weigh on soybeans

Soybeans were modestly lower on fund and technical selling, following an up and down session. The trade stalemate continues with China as Beijing didn’t buy any U.S. soybeans last week. China is reportedly delaying some purchases of soybeans, even from Brazil, because of slowing feed demand linked to African Swine Fever along with margin concerns. U.S. and Chinese tariffs remain in place and recent rhetoric from both points to the probability of protracted negotiations, even if China has pledged to increase policing of U.S. intellectual property violations. A couple hundred million bushels of U.S. soybeans previously purchased by China remain unshipped and unknown destinations canceled on 2018/19 U.S. beans last week but did buy 2019/20. ADM says the current trade dispute between the world’s two largest economies will probably lead China to become more self-sufficient for soybean needs. U.S. crop condition concerns are on the back burner, with mostly good development weather expected in August. Soybean meal and oil were weak, following beans. Export numbers for soybean products were bearish, with the current marketing year for meal and oil running through the end of September.

Corn was lower on fund and technical selling, closing just above the session lows. Heat stress is possible in parts of the Corn Belt through this weekend, but forecasts for next week are generally less threatening. It’s already been a long year for corn because of the slow start to planting, with the USDA’s acreage resurvey results and prevent plant numbers out August 12^th. Weekly export sales were lower than expected, reflecting the increased competition from Argentina, Brazil, and Ukraine, with about a month and a half left in the 2018/19 marketing year. The big weekly buyer was Japan, currently working on a trade deal with the U.S. Commodities in general would also like to see the USMCA be enacted. Ethanol futures were lower. Brazil is expected to sign a memorandum of understanding with India on ethanol trade. The Rosario Grain Exchange estimates 2019 corn production at 51 million tons, compared to the USDA’s most recent guess of 50 million. China did buy U.S. sorghum last week.

The wheat complex was lower on fund and technical selling, with Chicago and Kansas City leading the way down. Weekly export numbers were neutral and U.S. wheat is priced higher than most competitors. Near-term weather should be good for the winter wheat harvest and spring crop development. The solid yields for winter wheat have canceled out some of the concerns about lower protein content and disease issues and while the spring wheat condition rating did dip last week, it’s higher than average. The trade is also watching development conditions in Australia, Canada, Europe, Russia, and Ukraine. The USDA did lower its global production outlook in the last supply and demand report, but the total world crop is still expected to be larger than last year. DTN says Japan is tendering for 51,821 tons of food wheat from Canada and/or Australia, illustrating the current lack of competitiveness for U.S. wheat. Sales are ahead of last year’s pace, but it’s still early in 2019/20. Mexico was the top buyer for the week.