Market News

Wheat takes the lead on world weather worries

Soybeans were modestly higher on fund and technical buying. Beans are watching weather, with only limited rainfall this week and a return to hotter temperatures in some areas next week. The USDA says 60% of U.S. beans are rated good to excellent, up 2% on the week, but down 13% on the year, with 86% of the crop blooming, compared to the five-year average of 82%, and 58% at the pod setting stage, compared to 52% on average. Soybeans will need a trend-line yield or better to meet demand and keep already tight carryout projections from getting even tighter. With a month left in the marketing year, old crop soybean demand is slow. That could be due to several factors, ranging from end users having needs covered to demand rationing. The USDA says the June soybean crush was 162 million bushels, down 12 million from May and 15 million from June 2021. Export inspections were down on the week and the year but remain well ahead of the 2019/20 pace. The top destinations were Mexico and Vietnam. China reportedly bought 10.72 million tons of soybeans in June, 4% less than in May. Soybean meal was supported by demand expectations, while bean oil followed most global vegetable oils lower. The USDA’s attaché in Indonesia estimates 2021/22 palm oil production at 45.5 million tons, compared to 43 million for 2020/21, with new crop exports of 30.5 million tons, compared to 28 million for old crop. Soybean imports for 2021/22 are seen at 2.8 million tons, compared to 2.725 million in 2020/21.

Corn was higher on fund and technical buying, along with spillover from wheat. Corn was also watching development conditions ahead of the weekly crop numbers, which were out after the close. As of Sunday, 62% of the crop is called good to excellent, 2% less than last week and 10% below last year, with 91% silking, compared to the usual rate of 86%, and 38% at the dough making stage, compared to 33% on average. The USDA’s next yield and production estimates are out on the 12^th. Corn will also need a trend-line yield or better to meet demand and bolster supplies. The trade is also watching yield results from Brazil’s second crop corn harvest. AgResource cut its outlook for Brazil to 82.7 million tons and some other projections are even lower. CONAB’s next domestic estimate is out August 10^th. Export inspections were up on the week and the year, with 2020/21 ahead of the pace needed to meet expectations, with China and Mexico leading the way. The USDA says June corn for ethanol use was 439.879 million bushels, 2% less than the previous month, but 16% more than this time last year. DDGS production was 1,929,769 tons, a decline of 1% on the month, but a jump of 16% on the year. Ethanol futures were unchanged.

The wheat complex was solidly higher on speculative and technical buying. Private and governmental production estimates for Russia, Canada, and the U.S. have declined recently due to weather issues. IKAR has Russia at 78.5 million tons, while SovEcon sees production at 76.4 million tons. There are also questions about quality in China and Europe following flooding. Stateside, for winter wheat, 91% of the crop is harvested, compared to 86% on average. For spring wheat, 10% of the crop is in good to excellent shape, 1% higher than a week ago, but 63% lower than a year ago, with 17% of the crop harvested, compared to 8% typically in early August. The USDA says wheat for flour use during the second quarter of 2021 was 223.289 million bushels, 1% under the first quarter, but 2% above the second quarter of 2020. Export inspections were below the week before and a year ago, with 2021/22 trailing 2020/21. The main destinations were Mexico and the Philippines. DTN says Jordan is tendering for 120,000 tons of milling wheat and Algeria is in the market for 50,000 tons of milling wheat.