Soybeans down, waiting for China
Soybeans were lower on profit taking and technical selling. The USDA says China didn’t officially buy any U.S. beans last week, Mexico was the top purchaser, and Ag Secretary Sonny Perdue says Beijing might not really start buying until late spring or summer. China is reportedly issuing one-year tariff waivers for U.S. ag goods and the Phase One trade agreement is fully in effect. China is buying beans from Brazil with prices significantly cheaper than U.S. supplies, even before factoring in tariffs. The USDA’s attaché in Argentina projects 2019/20 soybean production at 54.1 million tons, up 1.1 million from the previous guess. Soybean meal and oil were lower on confirmation of higher export taxes for Argentina on soybeans and soybean products for most producers. The new 33% soybean levy applies to farmers who produce more than 1,000 tons of beans, with 500 to 999-ton producers staying at 30% and farmers who produce less than 500 tons will be taxed at 20% to 29%. The tariff on soybean products will now be 33%. Argentina is the world’s leading exporter of soybean meal. That move by Buenos Aires has been decried by many farm groups. Weekly U.S. soybean oil sales were larger than expected and while meal was within estimates, sales were up sharply on the week.
Corn was modestly lower on profit taking and technical selling. Corn export numbers were bearish, continuing the pattern seen nearly all marketing year, with 2019/20 at roughly the halfway point. A lot of that business is going to either Argentina, Brazil, or Ukraine. Argentina’s export tax on corn will remain at 12%. Early reports out of Ukraine have producers increasing corn acreage. Stateside, the trade is watching weather in the Corn Belt ahead of widespread planting. The USDA’s prospective planting numbers are out on the 31st, along with quarterly stocks. Stock market pressure because of coronavirus concerns was also a factor. Ethanol futures were lower. Weekly sorghum sales backed off from the previous week’s marketing year high, but China was still the single biggest buyer and physical shipments were bullish. U.S. corn, ethanol, and DDGS are also possible purchase targets for China.
The wheat complex was mostly lower, with Chicago mixed and Kansas City and Minneapolis lower. Wheat export numbers were solid, but the global fundamental outlook continues to be bearish. Smaller crop projections in some countries are mostly canceled out by increased expectations for others, with supply and demand estimates out on the 10th. Nearby Chicago contracts picked up additional support from the tight supply of soft red winter wheat and concerns about wet weather in some growing areas. U.S. hard red winter conditions mostly look good and if weather cooperates, spring wheat planting in the northern Plains could get off to an early start. According to reports from the Black Sea region, following a warmer and drier than normal winter and with early planting underway, producers in Russia and Ukraine are on the lookout for improved rainfall. DTN says Japan bought 117,389 tons of food wheat from the U.S., Australia, and Canada, and Tunisia purchased 117,000 tons of soft wheat from an unknown origin. The trade is waiting to see if China follows through on its’ reported buying interest for U.S. wheat.