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Soybeans down on China questions
Soybeans were lower on fund and technical selling, cementing a lower close for the week. During the session, President Trump said he didn’t want a partial trade deal with China and doesn’t need a deal prior to the 2020 elections. Deputy level trade talks occurred this week, but the Chinese delegation cut what was expected to be a weekend long visit short, heading back home ahead of touring some U.S. ag operations. Higher level trade negotiations are still scheduled to resume in October at an unspecified date. U.S. crop development weather looks generally non-threatening to favorable. For South America, dry parts of Brazil do have rain in the forecast, but it’ll need to be more consistent, while Argentina is also drier than normal, with the additional complication of political issues. U.S. beans are at a big discount to other exporters, but demand continues to be limited by China’s tariff and the spread of African swine fever, with new cases reported this week in South Korea and Russia. Soybean meal and oil followed beans lower.
Corn was modestly lower on fund and technical selling, but ended the week mixed. Corn focused on weather, expecting mostly favorable late development conditions and while there is more rain in the forecast for some areas, leading to delays and flooding in parts of the region, the harvest is expected to pick up steam after that. Additionally, the warmer temperatures in some areas has likely helped development, which has been much slower than normal following the historically slow planting pace earlier this year. Corn is also monitoring conditions in South America ahead of widespread planting. Argentina and Brazil, along with Ukraine, have become bigger competitors on the export market. Corn is waiting to see what happens with Japan and the USMCA. Quarterly grain stocks number are out September 30th and new supply, demand, and production estimates are scheduled for October 10th. Ethanol futures were lower. The renewable fuels industry continues to wait for details on the White House’s biofuels reform package.
The wheat complex was mixed with Chicago and Kansas City down, while Minneapolis was up and sharply higher for the week. The winter wheat pits expect a better planting pace in the southwestern U.S. Plains, but there are uncertainties about just how many acres are going to get planted this year. Price wise, while Kansas City remains competitive on the export market, demand is expected to slow as the global harvest advances. Strategie Grains has the European Union soft wheat crop at 144.5 million tons, compared to the last guess of 142.9 million, while Russia’s Grain Union expects exports to top 47 million tons. Feed wheat demand is also a positive right now for Kansas City and Chicago, but that could also tail off as the corn harvest builds momentum. Minneapolis had a second day of support from concerns about the slow spring wheat harvest pace and quality concerns because of recent rainfall in the northern U.S. Plains. Wet weather has also delayed spring wheat harvest activity in Canada. The complex continues to watch dry weather in Argentina and Australia, along with conditions in Ukraine, with some of their winter grain growing areas dry ahead of widespread planting. The USDA’s small grains summary report is out at the end of September.
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