Wheat up on lower world crop outlook

Market News

Wheat up on lower world crop outlook

Soybeans were mixed, adjusting spreads, but still finishing the week modestly higher in the most active months. Unknown destinations bought 252,000 tons of U.S. beans, 6,000 for 2019/20 and 246,000 tons for 2020/21, the ninth business day in a row with a new sale. That brings the running total for China and unknown to more than 3.25 million tons, mostly new crop, even as tensions between the U.S. and China grow. Most forecasts had a cooler, wetter pattern in much of the Midwest and Plains in the coming week, potentially alleviating stress as the crop heads into key phases of development. Celeres estimates 2020/21 soybean production for Brazil at 130.8 million tons, compared to 124.7 million in 2019/20. Soybean meal was firm on light follow through buying and bean oil was narrowly mixed, consolidating. The Philippines bought 133,000 tons of U.S. soybean meal for delivery this marketing year. The 2020/21 marketing year for beans starts September 1st and 2019/20 for soybean products runs through the end of September. The Malaysian Palm Oil Association says that nation’s crop could lose as much as 25% of yield potential because of a labor shortage exacerbated by COVID-19.

Corn was mixed on spread adjustments, with the most active contracts modestly lower for the week. Corn was also watching the weather, expecting rain in some dry parts of the region. Still, it could miss some areas and while the general expectation is for a good yield this year, that could change, at least for parts of the Corn Belt, depending on the weather in late July and early August. The USDA’s next set of supply, demand, and production numbers is out August 12th. Export demand for 2020/21 corn has improved thanks to China, but U.S. supplies remain more expensive than South America and Ukraine. Celeres has Brazil’s 2020/21 corn crop at a total of 111.5 million tons, which would be a record high. 2019/20 sales trail 2018/19 and there are also concerns about feed demand and fuel use. Ethanol futures were lower.

The wheat complex was higher on fund and technical buying, cementing the firm to modestly higher finish across the three U.S. exchanges. The International Grains Council this week lowered production estimates for the European Union and Russia, projecting the world crop at 762 million tons, down 6 million on the month, but steady with the 2019/20 total. The Buenos Aires Grain Exchange says dry weather in parts of Argentina will probably reduce planted area. Argentina primarily exports wheat duty free to other members of the Mercosur trading bloc, including Brazil. Most forecasts have more dry weather in Russia, but rain for parts of Australia. Export data from the European Union shows marketing year to date soft wheat exports at 460,329 tons, 53% less than this time last year. Stateside, wheat is watching winter wheat harvest activity and late spring wheat development weather. There was more talk Friday of China buying U.S. wheat, giving Chicago additional support, but nothing was announced. DTN says the Philippines bought 55,000 tons of feed wheat.