Soybeans, corn eke out modest gains
Soybeans were modestly higher on short covering and technical buying, along with spillover from the broader market. Contracts were oversold and Mexico bought 108,860 tons of U.S. beans ahead of the open. Out of that sale, 65,316 tons were for 2019/20 delivery with the remaining 43,544 tons for 2020/21. Mexico is the second biggest buyer of U.S. beans, after China. The trade is waiting to see when China will buy more U.S. beans again after last week’s spike in interest, with DTN reporting U.S. beans at the Gulf held a slight edge over Brazilian prices earlier this week. Producers in parts of Argentina are delaying harvest activity because of heavy rainfall. U.S. planting weather generally looks good, but some areas will see near-term delays. Soybean meal was up on expectations for improved feed demand following the president’s executive order invoking the Defense Production Act and bean oil was supported by the general tone in the soy complex.
Corn was modestly higher on short covering and technical buying after an up and down session. Corn was also oversold but did establish new lows Wednesday, while also watching planting conditions with delays probable in parts of the Corn Belt. President Trump’s order to reopen livestock processing facilities is expected to be good for feed demand. Several major plants have closed or slowed down to contain the spread of COVID-19. That said – feed demand likely will not return at those “normal” levels, at least not immediately, and the slow down in ethanol production is expected to add a lot of corn to the 2019/20 carryout. The USDA’s next set of supply and demand estimates is out May 12th. Ethanol futures were higher. The U.S. Energy Information Administration says ethanol production last week averaged 537,000 barrels a day, down 26,000, hitting a record low for the fourth consecutive week, but stocks declined 1.352 million barrels to 26.337 million, the first week to week reduction in five weeks.
The wheat complex was lower on profit taking and technical selling, giving back Tuesday’s modest gains and then some. Most forecasts have improved rainfall for dry parts of Europe and the Black Sea region. Spring wheat planting in the northern U.S. Plains is expected to pick up steam this week, but the southwestern Plains are expected to see a warmer, drier near-term pattern, potentially stressing winter wheat. Combined with expectations for big crops in Australia and potentially India, offsetting projected losses in other nations, the fundamental outlook for wheat remains neutral to slightly bearish. Additionally, rain in the forecast for Argentina will help recharge soil moisture ahead of widespread planting. The trade is also monitoring the export paces of Russia and Ukraine.