Market News
Soybeans, corn shrug off bigger USDA crop estimates
Soybeans were higher on fund and technical buying. The USDA raised the 2020 production estimate and expects a record yield, but the numbers don’t factor in any losses since the start of the month. The August report usually overstates yields, but that might not be a case this year. New crop U.S. ending stocks are seen at 610 million bushels, compared to 425 million in July, with new crop world stocks a little bit larger. The USDA did raise 2020/21 export projections for Argentina and Brazil while leaving new crop production estimates unchanged. 2020/21 imports by China are seen at 99 million tons, compared to 96 million a month ago and 98 million in 2019/20. Wednesday, China bought 258,000 tons of new crop U.S. beans and unknown destinations purchased 120,000 tons of new crop, the sixth business day in a row with a new sale for a running total of nearly 2 million tons. The domestic supply, demand, and production projections will likely decline next month. Soybean meal was firm and bean oil was higher, following beans.
Corn was modestly higher on fund and technical buying. The USDA projects a record corn crop, but that should be trimmed later on because of this week’s storm, with about 10 million acres of cropland in Iowa alone impacted by the derecho. Still, it is expected to be a large crop and demand is slow, limiting the upside. 2020/21 U.S. ending stocks are currently estimated at 2.756 billion bushels, up from the 2.648 billion in July, with modest adjustments to the balance sheet, aside from slightly lower 2019/20 ending stocks and the temporary increase in the production guess. World new crop ending stocks were up more than 2 million tons from July, with the USDA projecting higher global feed and export use. The 2020/21 marketing year for corn starts September 1st. Ethanol futures were higher. The U.S. Energy Information Administration says ethanol production last week averaged 918,000 barrels a day, down 13,000 on the week and 127,000 on the year, with stocks at 19.75 million barrels, a drop of 596,000 from last week and 4.133 million from last year. That is the tightest U.S. supply since the end of 2016.
The wheat complex was mixed, mostly lower following the USDA numbers. The USDA lowered the U.S. all wheat production estimate following a cut in the winter wheat crop guess cancelling out an increase in spring wheat. Global ending stocks were up on the month and expected to be record large at the end of the current marketing year, which runs through the end of July 2021. Domestically, the biggest month to month changes were slightly lower production and imports, while globally, a decrease in the world crop was offset by higher beginning stocks and slower domestic feed use. The USDA lowered the production outlooks for Argentina and the European Union, while raising expectations for Russia and Ukraine. The next set of supply and demand estimates is out September 11th. DTN says Syria is tendering for 200,000 tons of soft wheat from the European Union and Black Sea region, along with the previously reported tender for 200,000 tons of soft wheat from Russia.
