Broader market losses pressure grains, oilseeds
Soybeans were lower on fund and technical selling, along with spillover from the broader market. Beans followed through on Tuesday’s losses after the USDA’s bearish old crop demand and ending stocks projections. The trade is back to watching U.S. planting and development conditions, along with demand from China. Wednesday morning, China bought 396,000 tons of U.S. beans, half old crop, half new crop as Beijing continues to try and meet Phase One trade agreement purchase obligations. Still, that did not have an effect on futures because of the bearishness from Tuesday’s numbers and concerns about renewed tariff tensions between the U.S. and China. The trade is also watching harvest activity and the rate of COVID-19 infections in Argentina and Brazil. Brazil’s soybean harvest has reportedly wrapped up. Soybean meal and oil were lower on the generally bearish tone in commodities.
Corn was modestly lower on fund and technical selling, in addition to the outside market influence. Corn saw a delayed reaction to Tuesday’s USDA supply and demand numbers, especially the new crop supply estimate, including record expected production this year. The trade is watching planting weather, expecting more near-term delays in some areas. While progress has not been impeded nearly as much this year as it was last year and temperatures are expected to warm up, quickening emergence, there is a chance the USDA could lower the planted area estimate in June’s update. There were also questions about the generally rosy demand picture the USDA is painting for the upcoming marketing year. In Brazil, 88% of the first crop has been harvested, compared to 91% on average, with second crop planting over for the season. Some areas will plant a smaller third crop. Ethanol futures were mostly lower. The U.S. Energy Information Administration says ethanol production last week averaged 617,000 barrels a day, up 19,000 on the week, but down 434,000 on the year, with stocks of 24.19 million barrels, a decrease of 1.422 million from the previous week and an increase of 1.514 million from a year ago. Gasoline demand also improved on the week but remained slower than last year.
The wheat complex was lower on fund and technical selling, along with a higher move in the U.S dollar index. The USDA’s numbers were bearish with slow domestic demand, including a decline in feed use because of the drop in corn price, along with record large world production and supply expectations for the next marketing year. The 2020/21 marketing year for wheat starts June 1st. U.S. crop weather concerns appear to be on the back burner for now, with rain headed for some of the dry areas of the U.S. Plains. The trade is also monitoring the condition of crops in Europe and the Black Sea region. DTN says South Korea bought 67,000 tons of feed wheat from an unknown origin, while Jordan is tendering for 120,000 tons of wheat, Japan is in the market for 80,000 tons of feed wheat, and Tunisia is tendering for 67,000 tons of wheat. The USDA’s weekly export sales numbers are out Thursday morning.