Market News

Soybeans down on China uncertainties

Soybeans were lower on fund and technical selling, unable to hold on to early modest gains. The big question continues to be when will phase one of the trade deal with China be signed. It has been another week of mixed rhetoric, with President Trump threatening more tariffs Tuesday and saying China wants to make a deal Wednesday, while Beijing still wants U.S. tariffs rolled back as the U.S. pushes for a fixed amount of ag purchases by Beijing, concessions on technology transfers, and intellectual property issues. Questions about Hong Kong have also hungover recent negotiations. The next round of U.S. tariffs is scheduled to go into effect December 15th. While the trade deal would likely mean higher U.S. sales to China, it might also drive up U.S. prices, while pressuring Brazil, leading other nations to buy from Brazil and having a net negative impact on U.S. exports. Most forecasts have wetter, cooler conditions in parts of the region later this week, further delaying harvest activity. Argentina and Brazil are also expected to see a wetter pattern. Soybean meal was lower and bean oil was higher on the adjustment of product spreads.

Corn was lower on profit taking and technical selling. Corn is also expecting mixed harvest progress over the next several days, better in some areas than in others. Propane supply not meeting demand will continue to be an issue in northern parts of the Midwest. Crop quality and test weights are also issues. The USDA says it will extend the weekly harvest updates past November 25th as needed. Unknown destinations did purchase corn Monday and Tuesday, but slow export demand will continue to limit any significant upside. Argentina and Brazil have reportedly stopped offering corn past December, which could help. The USDA’s weekly export sales numbers are out Thursday morning. The proposed trade deal with Japan would increase demand for U.S. corn to some extent. Commodities are also waiting for passage of the USMCA and whether or not the U.S. government can avoid a shutdown. Ethanol futures were firm. The U.S. Energy Information Administration says ethanol production last week averaged 1.033 million barrels a day, up 3,000 on the week, while stocks were down 471,000 barrels at 20.514 million, a near-three year low. DTN says South Korea bought 60,000 tons of corn from Ukraine.

The wheat complex was mixed, with Chicago and Kansas City up and Minneapolis down. The USDA’s national good to excellent rating for winter wheat was down from last week and emergence is slower than average, but the USDA does project a record world supply at the end of the current marketing year. Weather forecasts for U.S. winter wheat growing areas look mixed. New USDA supply, demand, and production numbers are out December 10th. New global estimates from the International Grains Council are out this week, with probable downward revisions for Argentina and Australia. Minneapolis drifted lower, with a lack of any real fresh supportive news. DTN says Tunisia bought 92,000 tons of durum and 75,000 tons of milling wheat, both from an unknown origin, while Syria is tendering for 150,000 tons of milling wheat from Russia. Export demand for U.S. wheat has been a bright spot this marketing year, but sales have slowed as harvest has moved forward in the European Union, Russia, and Ukraine, where larger crops have partially offset shortfalls in some other competing exporters. The trade is also monitoring the impact of a strike by workers on Canada’s largest railroad.

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