Market News

Corn, soybeans, wheat recover some losses

Soybeans were higher on short covering and technical buying, but the most active months posted double digit weekly losses. Beans are still waiting for some signs of increased demand from China, with uncertainties about the timing of purchases and enforcement of the Phase One agreement. No new sales have been announced since the signing on the 16^th and the USDA’s next weekly export report is pushed back until Friday the 24^th by Monday’s holiday. Conditions look good for most of South America, with generally favorable rainfall expected for Argentina and Brazil. That might delay harvest activity in some areas, but that probable record combined crop will start flooding to the export market soon. The USDA left its South American soybean production numbers steady this month, but that could change February 11^th once harvest activity becomes more widespread. Soybean meal was steady to weak on spread trade and profit taking, while bean oil was up on oversold signals.

Corn was higher on short covering and technical buying, helping most of the more active months close steady to firm on the week. Contracts bounced back from the recent losses but also remain wary about China. Still, there were some signs of at least a general improvement in demand Friday, with steady to firmer basis prices reported in the Pacific Northwest. In addition to corn, the other potential purchase targets for Beijing are DDGS, ethanol, and sorghum. The USMCA should also be a positive for demand and is expected to be signed by President Trump soon. Ethanol futures were higher. The USDA’s attaché in Mexico has 2018/19 corn production at 27.671 million tons, falling to 25 million in 2019/20 on dry weather in some key growing areas. 2019/20 imports are projected at 17.5 million tons, compared to 16.658 million in 2018/19, most of which was from the U.S. Mexico’s sorghum production for 2018/19 is pegged at 4.476 million tons, dropping to 4.3 million in 2019/20 on a reduction in government support programs for medium and larger farmers.

The wheat complex was higher on short covering and technical buying. There was that buying interest to end the week helping March contracts in Chicago and Minneapolis close the week in the black, but contracts were still overbought and precipitation in the Plains is bearish. March Kansas City had a fractional week to week loss on that precipitation in the Plains. That said – some soft red winter growing areas are now too wet with this latest round of snow and rain. The USDA’s next set of monthly state crop stories is out on the 28^th. There’s also talk of China buying U.S. wheat, but nothing has surfaced and, overall, while export demand is good, U.S. wheat is priced above most competing origins and the USDA projects a record global supply at the end of the marketing year. The USDA’s attaché in Mexico has 2019/20 wheat production at 3.215 million tons, less than the official estimate, but up from 2018/19’s total of 3 million. 2019/20 imports are seen at 5.2 million tons, compared to 4.861 million in 2018/19, 3.349 million of which came from the U.S. The European Commission says planted area in France was near 20-year low because of wet weather during planting, projecting production at 33.3 million tons.