Market News
Wheat gains, but corn down on drop in crude oil
Soybeans were lower on fund and technical selling. Demand continues to be a big concern because of export competition from South America. Purchases by China haven’t met Phase One trade agreement levels and might not for months because of the record crop in Brazil and recent activity in currencies. China’s Ag Ministry projects 2020 soybean imports at 92.48 million tons, moving to 96.62 million in 2025 and 99.52 million by 2029, with domestic production this year at 18.81 million tons. AgRural says 92% of Brazil’s soybean crop is harvested, compared to the five-year average of 91%. Brazil will reportedly release water from an upstream hydroelectric dam to facilitate movement on the Parana River, where low levels have limited Argentina’s ability to move commodities to ports. Weekly U.S. soybean export inspections were bearish. The USDA says 2% of U.S. soybeans are planted, compared to the five-year average of 1%. Soybean meal and oil were lower on the generally bearish tone in commodities. Slowdowns in processing for the pork and poultry industries are also a negative for bean meal demand. DTN says a feed mill from South Korea bought 60,000 tons of soybean meal from South America.
Corn was lower on fund and technical selling, notching another round of lows. Corn saw pressure from the broader market, including the expiring May crude oil contract closing in negative territory, down $55.90 at -$37.63, on the drop in demand because of stay at home and social distancing restrictions. That is the first-time crude oil has traded, much less closed, in negative territory. The losses were relatively modest in the June crude contract, which did close above $20 a barrel. Feed demand is a concern as livestock processors slow down or idle because of COVID-19 and planting conditions look good in many key U.S. growing areas. The USDA says 7% of U.S. corn is planted as of Sunday, compared to 5% a year ago and 9% on average. Ethanol futures were sharply lower. The renewable fuels industry is not a part of the U.S. government’s ag relief program. AgRural lowered its’ forecast for the second corn crop in central and southern Brazil to 67.9 million tons, compared to 69.3 million in 2019. Weekly export inspections for corn were down sharply on the week and the year, but it was another solid week for sorghum. DTN says a feed mill from South Korea bought 58,000 tons of optional origin corn, “likely” from South America.
The wheat complex was higher on commercial and technical buying, but below the session highs, with gains trimmed by a higher move in the U.S. dollar index. Russia and Ukraine are both reportedly close to exhausting their supplies of exportable wheat for the current marketing year as both nations try to shore up reserves on concerns about higher prices and shortages. Some of that business is expected to go to the U.S. The U.S. winter crop is in good shape with parts of the Plains expected to get rain in the next week. For winter wheat, 14% of the crop has headed, a little slower than normal, while 57% of the crop is rated good to excellent, down 5% on the week and also 5% below a year ago. For spring wheat, 7% of the crop is planted, compared to 18% on average. DTN says Japan bought 132,277 tons of food wheat from the U.S., Australia, and Canada and Egypt purchased 240,000 tons of wheat from France, while Taiwan is tendering for 220,000 tons of U.S. milling wheat. Weekly export inspections for wheat were bearish.
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