Market News

Soybeans, corn rally from early losses

Soybeans were higher on commercial and technical buying, bouncing back from some early losses. Northern and western growing areas will see more hot, dry weather, but there’s a chance for relatively cooler, wetter conditions later this week. Even then, the precipitation in those northern and western growing areas likely won’t be a drought buster. The USDA says 58% of the crop is in good to excellent shape, 2% lower, with 76% of the crop blooming, compared to the five-year average of 71%, and 42% at the pod setting stage, compared to 36% on average. The USDA’s new production estimates are out August 12^th, along with the monthly supply and demand numbers. Any yield reduction will signal further tightening of already historically tight carryout projections for next marketing year. First notice day for August contracts is Friday, with deliveries on soybeans expected to be very light. Export inspections were up on the week, down on the year, with Mexico and Bangladesh leading the way. With just over a month left in 2020/21, the pace remains well ahead of 2019/20. Soybean meal was steady to higher, adjusting spreads, and bean oil was up, with palm oil hitting new highs ahead of the U.S. session on expectations for lower production in Malaysia. Canadian canola futures moved lower after rain in parts of the Prairies.

Corn was modestly higher on commercial and technical buying. Corn was also watching the weather and a chance for some relief after the probable near-term stress in some central and western growing areas. Conditions in eastern areas have generally been less threatening this growing season. As of Sunday, 64% of corn is called good to excellent, 1% lower, with 79% silking, compared to 73% on average, and 18% at the dough making stage, compared to the usual pace of 17%. Corn will need a trend-line yield or better to meet demand expectations, with the USDA already projecting a tight supply at the end of next marketing year. Corn inspections were down on the week, up on the year, with China and Japan claiming the top slots. The 2020/21 pace remains well ahead of 2019/20. Ethanol futures were steady. JBS Brazil has reportedly imported 30 loads of corn from Argentina, with Brazilian domestic production hit hard by weather issues for the first crop, along with late planting and weather issues for the second crop. Harvest of Brazil’s second crop is ongoing. The USDA’s attaché in Argentina sees 2020/21 corn production at 48.8 million tons, compared to the official projection of 48.5 million tons, rising to 51.5 million in 2021/22. Exports this marketing year are expected to be 35.5 million tons, rising to 37.4 million next marketing year.

The wheat complex was lower on fund and technical selling but managed to close above the session lows. The warmer, drier weather is expected to help the winter wheat harvest get ahead of average. For winter wheat, 84% of the crop is harvested, compared to 81% usually in late July. The spring wheat condition rating was expected fall even further in the weekly USDA update, but Minneapolis was unable to get any traction. For spring wheat, just 9% of the crop is called good to excellent, down 2%, with 97% headed, matching the normal rate, and 3% harvested, compared to 2% on average. The big questions now for spring wheat are less yield and crop size and more about abandonment and whether or not acreage will increase in 2022. The same issues impacting spring wheat have also affected white winter wheat. Export inspections were down on the week and the year. 2021/22 is trailing 2020/21, but it is still early in the current marketing year. The European Union’s crop agency MARS has increased its outlook for this year’s soft wheat yield, now expected to be 6.3% above the five-year average. Still, there are questions about production in parts of France and Germany following recent flooding. 14% of France’s crop is harvested, compared to 67% a year ago because of that rainfall. There are concerns about conditions in parts of the Black Sea region as well. The USDA’s attaché in Australia estimates a slight increase in wheat planted area, with key growing areas expected to see good conditions until at least September. 2021/22 production is seen at 29.5 million tons, compared to the official guess of 28.5 million and the 2020/21 total of 33.3 million tons. Exports for 2021/22 are seen at 21.5 million tons, compared to 23 million in the previous marketing year. The attaché in Argentina projects 2021/22 production at 20.8 million tons, compared to the official estimate of 20.5 million and the 2020/21 total of 17.63 million tons. Exports this marketing year are expected to be 14 million tons, compared to 10.7 million last marketing year.