Corn shrugs off bearish USDA numbers
Soybeans were modestly lower on fund and technical selling. The USDA raised old crop U.S. ending stocks on a lower export estimate, with slightly lower production outlooks for South America. The USDA lowered the 2019/20 export outlook for Argentina but that was more than canceled out by a jump for Brazil. The department also raised the old crop import guess for China. New crop U.S. soybean ending stocks are seen at just over 400 million bushels, while global ending stocks could be tighter in 2020/21 with strong demand cancelling out higher global production. China bought 136,000 tons of old crop U.S. beans. China reportedly wants some renegotiation of the trade deal with the U.S. because of COVID-19 impacts on demand, but the U.S. remains reluctant to discuss any changes. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. CONAB pegs Brazil’s 2019/20 soybean crop at 120.3 million tons, down 1.4% on the month because of weather, but up 4.6% from 2018/19. The trade is also monitoring harvest activity in Argentina.
Corn was modestly higher on short covering and technical buying. Old crop corn ending stocks were higher than in April because of slower food and fuel use, but export and feed demand projections were up. The USDA did lower the 2019 U.S. production estimate following a resurvey of parts of the northern U.S. Midwest and Plains. New crop corn ending stocks could top 3 billion bushels with USDA projecting record U.S. production. Of course, that does depend on weather. Global 2020/21 production is also expected to be record large. The current marketing year for corn and soybeans runs through the end of August and several of the demand assumptions would change if COVID-19 is not contained. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and supply estimates are out Wednesday. CONAB says Brazil’s first corn harvest is about to wrap up, with production at 25.3 million tons, down 1.5% on the year. The second crop is expected to be 75.9 million tons on a 7% increase in planted area with the third crop at 1.17 million tons, for a total of 102.3 million.
The wheat complex was mixed, with Chicago and Kansas City down and Minneapolis up. Old crop U.S. ending stocks were above a month ago, but a tighter supply is probable next marketing year because of a smaller U.S. crop. Old crop world ending stocks were up on the month and the USDA sees an even bigger carryover next marketing year. As usual, wheat remains more of a global game than almost any other commodity. The 2019/20 marketing year for wheat runs through the end of June with new supply, demand, and production estimates out June 11th. CONAB says Brazil’s wheat planting is ongoing, anticipating a 2.4% increase in planted area and production of 5.4 million tons, depending on weather.