Market News

Corn ignores record export sale to China

Soybeans were modestly higher on short covering and technical buying. Contracts bounced off the recent lows following a week to week decline in the USDA’s national crop condition rating. That followed a week of hot temperatures and storm damage in parts of the Midwest and Plains. Many forecasts do have improved rain chances in many areas this week into next week. China bought 129,000 tons of 2020/21 U.S. soybeans even as political tensions between the U.S. and China continue to flare up. China’s General Administration of Customs says June soybean imports were a record 11.16 million tons, up 19% on the month and 71% on the year, largely on improved shipping out of Brazil. The European Union says soybean imports for the first two weeks of July were 531,185 tons, down 19% from this time last year. Soybean meal and oil followed beans higher. The USDA’s attaché in Brazil projects 2020/21 soybean production at 130 million tons with a 4.05% increase in planted area, compared to the 2019/20 total of 123 million tons. 2020/21 soybean exports are seen at 84 million tons, compared to a revised 78 million for 2019/20.

Corn was mostly modestly lower. Corn consolidated, watching the weather, and ignoring the recent spike in demand from China. China made its’ biggest ever purchase of U.S. corn Tuesday morning, 1,762,000 tons for 2020/21 delivery, with a two-week total of more than 3 million tons. If the expected rainfall and cooler temperatures next week don’t materialize, corn could rally. That said – even with the likely yield loss because of recent weather, it’d take a lot to shift the fundamentals for corn from the current neutral to bearish outlook. The USDA’s national condition rating for corn did dip over the past week and most of the crop is pollinating or close to that critical stage of development. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday. The USDA’s attaché in Brazil has 2019/20 corn production at 100 million tons, down from earlier estimates because of dry weather in some key growing areas, with 2020/21 production projected at 103 million tons. Exports this marketing year are expected to be 33.5 million tons, potentially rising to 36 million next marketing year. Brazil, along with Argentina and Ukraine, has become a big competitor for export business.

The wheat complex was mixed, with Chicago firm, Kansas City lower, and Minneapolis steady to weak. The USDA’s spring wheat condition declined last week and is now well below a year ago, despite some recent improvements in weather. The winter wheat harvest made a solid week to week advance and has wrapped up in parts of the southern U.S. Plains. The trade is also monitoring global crop conditions, especially yield results in Russia and Ukraine. Egypt is tendering for an unspecified amount of wheat. The USDA’s attaché in Brazil estimates 2020/21 wheat production at 5.6 million tons, compared to 5.15 million in 2019/20. Imports for 2020/21 are seen at 7 million tons, compared to 7.25 million the previous marketing year, largely because of the increase in domestic production. The USDA’s next set of supply and demand estimates is out August 12^th.