Market News

Soybeans down, waiting for China

Soybeans were modestly lower on fund and technical selling. It was another day with more talk about China buying U.S. ag goods and while there’s no confirmation, tariff waivers could take some time. The U.S. and China are expected to meet next week for face to face negotiations but recent rhetoric hasn’t exactly been friendly from either side and tariffs remain in place. China’s tariff on U.S. beans, along with big crops from South America, have made U.S. soybeans a lot less competitive on the export market. Still, Chinese demand is down because of African Swine Fever and lower protein content from Brazil. Stateside, the USDA’s crop condition rating was unchanged and development is slower than average, but both of those could be helped by weather. Soybean meal was down and bean oil was up on the adjustment of product spreads.

Corn was modestly higher on short covering and technical buying. The corn condition rating dipped 1%, while development continues to be behind the normal pace. Most forecasts for this week have generally non-threatening weather for much of the Corn Belt. The USDA’s next set of supply and demand estimates is out August 12th and will include the acreage resurvey results and prevent plant totals. Ethanol futures were higher. The U.S. Energy Information Administration’s weekly ethanol production and stocks report is out Wednesday. According to AgRural, 67% of Brazil’s record second corn crop is harvested, compared to 36% a year ago. Higher production from Brazil, Argentina, and Ukraine has led to a big increase in export competition for the U.S. The USDA’s attaché in Mexico estimates 2018/19 corn production at 26.85 million tons, up from the previous guess because of higher harvested area and good weather. Exports are pegged at 17.2 million tons, with consumption of 44.1 million. Mexico’s sorghum crop is seen at 4.45 million tons, a decrease because of lower planted area and comparatively poorer weather. Consumption and imports were also lowered.

The wheat complex was mostly modestly lower. The winter wheat harvest is expected to wrap up soon in some areas, it’s already over in Arkansas, Missouri, Oklahoma, and Texas, and spring wheat is in very good shape for this time of year. Kansas is one of the states that should wrap up soon, with Kansas Wheat reporting mixed yields. A major spring wheat crop tour gets underway next week. 2019/20 wheat export inspections are ahead of last marketing year, but 2018/19 was a low bar to beat and the recent increase in price has put the U.S. above most competitors. The trade is also watching weather in Australia, Canada, Europe, Russia, Ukraine. Most forecasts have more hot, dry weather in parts of western and northern Europe, potentially stressing crops. DTN says Egypt is tendering for an unspecified amount of wheat and Tunisia is in the market for 92,000 tons of milling wheat. The USDA’s weekly export sales report is out Thursday.

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