Big gains in soybeans on lower production, stocks

Market News

Big gains in soybeans on lower production, stocks

Soybeans were sharply higher on commercial and technical buying, ensuring a higher close for the week and a new two-year high for November beans. The USDA lowered U.S. production and ending stocks from the August levels, but the crop should still be up sharply on the year with a record average yield. The new crop guess for Brazil was up on the month and imports by China were unchanged. The trade will now go back to monitoring U.S. yield signals and the export market but might be overbought for now. Weekly export numbers were strong with new crop sales at 116.2 million bushels thanks to strong demand from China and unknown destinations. Friday, China bought 262,000 tons of U.S. beans and unknown picked up 222,000 tons, the sixth business day in a row with announced sales for a running total of 2.481 million tons. CONAB says Brazil’s 2019/20 soybean crop totaled 124.8 million tons, up 4.3% from 2018/19. Soybean meal and oil followed beans higher.

Corn was higher on fund and technical buying, pulling corn to a higher weekly finish and December closing at a five-month high. The USDA did lower the crop production estimate because of weather issues during August, primarily the drought or near drought conditions in some key growing areas and the derecho storm. The USDA cut the harvested acreage estimate by 550,000 acres and that could fall further after harvest starts in earnest. However, the production projection was above some expectations and the department does see a record yield this year, even if the guess was down on the month. Weekly new crop export sales were strong, led by China, but 2019/20 sales were down 14% from 2018/19. According to CONAB, Brazil’s combined 2019/20 crop should be more than 102 million tons. The Rosario Grain Exchange has Argentina’s 2019/20 corn crop at 48 million tons. Ethanol futures were steady to firm.

The wheat complex was lower on fund and technical selling, cementing week to week losses for December contracts at the three U.S. exchanges. There were no changes to the U.S. balance sheet, leaving ending stocks unchanged, while world ending stocks and production were up on the month, both currently at record levels. That leaves the fundamental outlook neutral to bearish. Still, a quarter into the 2020/21 marketing year, sales have generally been better than expected, even with U.S. wheat priced above many competing origins. Weekly export sales were good and shipments were more than what’s needed to meet projections for the current marketing year. SovEcon has Russia’s wheat crop at 83.3 million tons, compared to their last guess of 82.6 million. Rain has aided some of Argentina’s wheat crop, but more will be needed. The USDA’s attaché for Egypt has 2020/21 wheat imports at 12.9 million tons, up 1.57% from the 2019/20 total.