Market News

Soybeans, corn sink on demand concerns

Soybeans were lower on fund and technical selling, with losses accelerating after new tariff news. China’s Ministry of Commerce raised its tariff on U.S. soybeans to 30%, effective September 1^st, ahead of the G7 meeting and next month’s negotiations between the U.S. and China. The most active months ended the week more than $.20 lower. China had already been relying on Argentina and Brazil for oilseed needs and demand has dipped with the spread of African Swine Fever. The trade is also watching development weather, which looks mostly non-threatening stateside, and conditions in South America ahead of new crop planting. The USDA’s next set of supply, demand, and production estimates is out September 12^th. Soybean meal and oil followed beans lower.

Corn was modestly lower on fund and technical selling, with the most active months declining at least a dime for the week. Corn is also watching the weather and the potential impact on late development. Recent rainfall will likely help crop conditions improve in Monday’s report, but parts of the Corn Belt also experienced flash flooding, along with that much needed rainfall. There are also concerns about an early frost in some areas and even a normal frost would probably cause some damage with the historically slow pace of planting. China will also reportedly increase its tariffs on U.S. corn and sorghum. China usually relies on domestic production for corn needs, but demand was expected to increase at least slightly because of fall army worm, and 2018/19 U.S. sorghum sales have shown the impact of the tariff Beijing already had in place. Ethanol futures were lower.

The wheat complex was mixed, with Chicago up, Kansas City mostly firm, and Minneapolis modestly higher. Rain in the southern Plains is recharging soil moisture ahead of winter wheat planting and while the spring wheat harvest is slow, but yields are reportedly good. For the week, December Chicago was up fractionally, while December contracts in Kansas City and Minneapolis were down modestly. China might also raise its tariff on U.S. wheat imports as the trade war heats up. It’d essentially be a nominal move as China doesn’t do a lot of wheat trade, producing most of it’s domestic needs. Just under a quarter into the 2019/20 marketing year, U.S. wheat exports are a bright spot. DTN says South Korea bought 30,000 tons of U.S. feed wheat and the Philippines purchased 60,000 tons of feed wheat, possibly from Australia. Morocco and Jordan also have open wheat tenders.