Market News

Short covering supports corn and wheat

Soybeans were lower on fund and technical selling. No new export sales to China were announced Wednesday and the trade is taking a wait and see attitude towards talks. While no date has been reported, high level negotiations are expected to resume next month. Parts of Brazil are dry ahead of widespread planting, but it’s still early in the planting window. For now, most projections have an increase in planted area and another record crop for Brazil. Stateside, conditions look generally non-threatening for late development. Development is slow and the USDA’s national good to excellent rating is back to where it started the season, but the China question and South America continue to cap any attempt at a sustained rally. Soybean meal was down, following beans, and bean oil was narrowly mixed, consolidating.

Corn was modestly higher on short covering and technical buying. Near-term crop weather looks generally non-threatening to favorable for development and harvest in many key U.S. growing areas. Parts of the Corn Belt are expected to see rain late this week and while most forecasts aren’t calling for an early freeze, even an on-time freeze could cause some damage. The ethanol industry is waiting for details on the President’s biofuels plan. The U.S. Energy Information Administration says ethanol production last week averaged 1.003 million barrels a day, down 20,000 on the week for the lowest average since early April, while stocks were up 739,000 barrels at 23.238 million. Ethanol futures were higher.

The wheat complex was higher on short covering and technical buying. The spring wheat harvest is slow, with quality concerns after the recent harvest delaying rain, and there are uncertainties about winter wheat acreage. Conditions in the southern and southwestern Plains have been mixed, good in some, dry in others, and the early pace is behind normal. Globally, dry weather is an issue in portions of Argentina, Australia, the Black Sea region, and European Union. Still, export demand is slowing down as the world harvest moves forward, supplies build, and prices drop in some exporting nations. DTN says Algeria bought 420,000 to 600,000 tons of milling wheat from an undisclosed seller. The USDA’s weekly numbers are out Thursday morning. Big crops in some countries have canceled out production problems in others and the USDA projects a record global supply at the end of the current marketing year.