Modest losses in corn, soybeans, and wheat
Soybeans were modestly lower on profit taking and technical selling after Wednesday’s modestly higher move. Beans continue to wait for signs of improved demand from China, with weekly export numbers out Friday. Beijing isn’t expected to start issuing one-year tariff waivers until early March. Conditions look non-threatening to favorable in South America, with Brazil’s harvest ongoing and most analysts projecting record production. A higher move in the U.S. dollar and lower moves in the currencies of Argentina and Brazil have hurt export demand, along with the continued spread of coronavirus in China. Paraguay’s Ag Ministry sees 2019/20 soybean production at more than 10 million tons, with harvest about halfway complete. Paraguay is the world’s fourth biggest exporter of beans. According to results from the Annual Ag Outlook forum, the USDA expects an increase in domestic planted area. U.S. planted area is expected to be up 12% on the year at 85 million acres. The price outlook is modestly higher on demand expectations, but this round of estimates doesn’t factor in Phase One of the U.S./China trade deal. Soybean meal and oil were lower, following beans.
Corn was modestly lower on follow through fund and technical selling. The USDA is projecting bigger corn planted area in 2020 but that will depend on weather. The current estimate is 94 million acres, up 5% from 2019, with the official projection out in March. Parts of the Midwest, Delta, and southeastern Corn Belt are currently very wet ahead of widespread planting activity. Conditions in Argentina and Brazil are also bearish for corn. Along with Ukraine, the two biggest producers in South America have taken a share of the global corn export market from the U.S. Ukraine’s Ag Ministry says it has export 18.3 million tons of corn since the start of the marketing year. The USDA’s attaché in Russia estimates 2019/20 corn production at 13 million tons, less than the current official guess, but up from 2018/19, with exports expected to be 4.04 million tons, more than a million above the previous marketing year. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol stocks last week hit an all-time high at 24.781 million barrels, up 423,000 on the week, with average daily production of 1.04 million barrels, an increase of 7,000. Part of the reason for the jump in supply was slow export demand. U.S. ethanol, corn, DDGS, and sorghum are all candidates for tariff waivers from China.
The wheat complex was modestly lower on follow through fund and technical selling. The USDA expects wheat acreage to be about steady at 45 million acres, but with higher prices on tighter supplies, especially for soft red winter. U.S. hard red winter conditions look good, many soft red winter areas are excessively wet, and there are expectations for spring wheat planting delays in parts of the northern U.S. Plains. The USDA’s prospective planting report is out in March. The global supply outlook remains bearish with the next set of supply and demand estimates out March 10th. The USDA’s attaché in Russia estimates 2019/20 wheat production of 73.5 million tons, down 500,000 from the prior projection, but up from the 71.685 million in 2018/19. Exports this marketing year are seen at 3.5 million tons, compared to 35.7 million last marketing year. DTN says Saudi Arabia is in the market for 715,000 tons of wheat and Jordan re-tendered for 120,000 tons of milling wheat, while Thailand bought 50,000 tons of wheat from the Black Sea region. Coceral has the 2020 soft wheat crop for the European Union at 125.5 million tons, compared to 129.7 million in 2019. Those figures exclude the United Kingdom. Egypt’s government says it has 4.7 months of wheat in strategic reserve. Ukraine’s Ag Ministry says marketing year to date wheat exports are 39 million tons, up more than 25% from last year.