More demand support for soybean futures
Soybeans were higher on commercial and technical buying, with contracts closing at multi-month highs, all at or above $9. China bought 132,000 tons of new crop U.S. beans, the eighth business day in a row with a new sale to either China or unknown destinations, bringing the running total to 3,013,300 tons, mostly new crop. The sales come despite continued political tensions between the U.S. and China. Weekly numbers were neutral with strong new crop sales, but slow old crop numbers and shipments. According to reports, 93% of Brazil’s 2019/20 crop has been sold, ahead of the year ago pace, because of lower moves in their currency against the dollar, strong demand from China, and solid domestic crush use. 42% of the 2020/21 crop has been marketed. Argentina is reportedly being asked by China to guarantee shipments are free of COVID-19. Stateside, crop development weather looks mostly non-threatening, but there are some areas of concern, including drought or near drought conditions in parts of the Midwest and Plains. The International Grains Council has 2020/21 world soybean production at 365 million tons, compared to 364 million a month ago and the 2019/20 total of 339 million tons on expectations for bigger crops in the U.S. and South America. Soybean meal was higher and bean oil was lower on the adjustment of product spreads.
Corn was modestly higher on short covering and technical buying, staging a slight rally after the early weak activity. Corn is also watching the weather, expecting a cooler, wetter pattern in parts of the region next week. The rain will be welcome in some areas and cooler temperatures would lessen some of the concerns about crop stress during key phases of development. Weekly export numbers were solid, with good shipments and new crop sales over 2.3 million tons. China was the biggest buyer of new crop U.S. corn last week. China sold the entirety of its’ weekly state reserve auction of corn, nearly 4 million tons. Ethanol futures were higher. The USDA’s attaché in Indonesia estimates the 2019/20 corn crop at 12.0 million tons, up on the year thanks to improved yields, but feed use is expected to be down 4.4% on slower production. The International Grains Council projects 2020/21 world corn production at 1.164 billion tons, compared to 1.169 billion last month and 1.117 billion last marketing year.
The wheat complex was lower on fund and technical selling. The trade is watching the winter wheat harvest and spring wheat development conditions. The weekly export numbers were good, China was the leading buyer but the global supply outlook is bearish, with the USDA’s next set of supply and demand estimates out August 12th. China might have been the biggest purchaser last week, but the rumored sales this week haven’t turned up yet. DTN says the Philippines bought 55,000 tons of feed wheat and Thailand has issued a tender for up to 192,660 tons of feed wheat. Brazil reportedly bought wheat from Russia this month after Brazil secured tariff-free imports from outside of the Mercosur trading bloc. The International Grains Council expects 2020/21 world wheat production to be 762 million tons, compared to 768 million a month ago and 762 million during the previous marketing year. The USDA’s attaché in Indonesia sees 2019/20 wheat imports at 10.6 million tons, down from previous projections because of lower flour consumption caused by COVID-19, with feed use also expected to decline.