Market News

Soybeans mostly lower on demand questions

Soybeans were mixed, mostly modestly lower. Demand from China continues to be a question mark as Beijing reportedly continues to buy beans from Brazil. China did buy U.S. beans earlier this week, but the tensions between China and the U.S. over coronavirus, Phase One purchase totals, and Hong Kong are creating an aura of uncertainty. President Trump will reportedly hold a press conference Friday on China and Hong Kong. Most forecasts have warmer, drier conditions in many key U.S. growing areas, which should help planting, with the USDA’s weekly numbers out Monday, June 1^st. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. CONAB long-term projections have Brazil’s soybean crop rising to 152 million tons by 2028/29, with exports jumping to 96.7 million tons. The International Grains Council sees 2019/20 world soybean production at 336 million tons, down 2 million on the month and 7% on the year because of smaller crops in Argentina and India, with production for 2020/21 at 363 million tons, 1 million less than a month ago.

Corn was higher on fund and technical buying. Some areas are expected to wrap up planting in the next few days but there are uncertainties about how many acres remain to be planted with the USDA’s acreage totals out June 30th. Quarterly stocks numbers are also out in about a month. The expected warmer, drier weather could also cause some stress during early development. The USDA’s Quarterly Hogs and Pigs Report June 25^th will help give an indication of feed demand. The U.S. Energy Information Administration says ethanol production was up 61,000 barrels on the week at 724,000, down 333,000 on the year, and stocks were a nineteen-week low at 23.176 million barrels. Ethanol futures were mostly firm. Export demand is also an issue, with U.S. corn at a premium to Argentina and Brazil. CONAB sees Brazil’s corn crop moving increasingly higher over the next decade, but with the second crop gaining while the first crop declines, hitting 114.5 million tons by 2028/29, with exports moving 33% higher over the next ten years, compared to the USDA projection for a 19% increase. The International Grains Council estimates 2019/20 global corn production at 1.118 billion tons, rising to 1.169 billion in 2020/21, a jump of 11 million on the month because of higher projections for the U.S. and China.

The wheat complex was higher on fund and technical buying, with Chicago and Kansas City in the lead. Wheat is keeping an eye on forecasts for the U.S. winter crops, the spring wheat growing area, Europe, and the Black Sea region, all of which have the potential for weather issues impacting production. The USDA’s next set of supply and demand estimates, including global production projections, is out June 11^th. The USDA’s weekly export sales numbers are out Friday morning, delayed by Memorial Day. The USDA’s attaché in South Africa says wheat prices hit record levels in April 2020 on a declining currency and a downgrade of the nation’s credit rating, inflating spending on wheat products and overall spending on basic food products. DTN says Japan bought 112,109 tons of food wheat from the U.S., Australia, and Canada, while Jordan is tendering for 120,000 tons of wheat. The International Grains Council pegs the world wheat crop for 2019/20 at 762 million tons, increasing to a record 766 million in 2020/21.