Soybean futures bounce back a little

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Soybean futures bounce back a little

Soybeans were modestly higher on short covering and technical buying. Contract were oversold and due for a bounce, but the late gains were limited by slow demand and the bearish broader market. Those factors had contracts down for much of the session. In addition to the slow export demand from China, the slowdowns in livestock processing have led to concerns about bean meal demand for feed use. The trade is also watching harvest activity in Brazil, 92% complete, and shipping out of Argentina. 2% of U.S. beans are planted, with mixed progress expected this week in many key U.S. growing areas. Planting conditions are generally expected to be better in northern and western areas of the Midwest and Plains than in southern and eastern areas. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. The USDA’s attaché in Malaysia estimates 2019/20 crude palm oil production at 19.7 million tons, down 1.15 million from 2018/19 on dry weather and lower fertilizer use, but production is expected to rise to 20.7 million tons in 2020/21.

Corn was modestly lower on fund and technical selling, establishing another round of new lows, but closing above those lows. Corn was watching the broader market and crude oil ahead of the May contract’s expiration, while monitoring planting weather. 7% of the U.S. corn crop is planted, just behind average, with more delays expected this week in parts of the Corn Belt. There’s also still some 2019 corn left in the fields in parts of the northern Midwest. Concerns about feed and fuel demand continue to be big bearish factors for corn. There’s more talk of China issuing tariff waivers for U.S. corn but no confirmation. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. For two weeks in a row, the EIA has reported record low production and record high supplies. Blending demand has dropped because of lower crude oil use related to stay at home orders and social distancing regulations put in place to staunch the spread of COVID-19. Those measures have pushed crude oil futures to all-time lows, including a negative close for the May contract on Monday.

The wheat complex was mixed, with Chicago and Minneapolis down and Kansas City up. The USDA’s condition rating for winter wheat was down from last week, but still the one of the best in years for late April. While spring wheat planting is behind average, most of the northern Plains could see a better weather pattern over the near term. Dry parts of Russia are expected to get only light rain this week, less than what’s needed to alleviate dry conditions. Consulting firm IKAR has lowered its’ production outlook for Russia based on those conditions. Both Russia and Ukraine are expected to limit wheat exports through the end of their current respective marketing years. Forecasted U.S. rainfall is expected to be beneficial for hard red winter and potentially detrimental for soft red winter. Despite the global fundamental outlook, wheat is looking at decent domestic demand as grocery stores try to stay stocked with staples and food service operations in parts of the nation get ready to reopen.

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