Weather worries push wheat, corn to new highs
Soybeans were mixed, with nearby contracts up and deferred months down. Most forecasts have improved planting weather in parts of South America, but activity has been delayed by a couple of weeks, including in some key growing areas of Argentina and Brazil. That is expected to lead to increased Chinese reliance on U.S. soybeans into early 2021. The Rosario Grain Exchange left its production guess for Argentina unchanged at 50 million tons. The trade is also monitoring U.S. harvest weather, expecting a solid week to week advance in most areas. China bought 261,000 tons of 2020/21 U.S. soybeans, bringing their announced total for the week to 525,000 tons. The USDA’s weekly export sales numbers are out Friday. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. The National Oilseeds Processors Association’s member firms crushed 161.5 million bushels of soybeans in September, a little more than expected and up 6% on the year.
Corn was higher on short covering and technical buying, pulling the most active months above $4. That is the first time a spot corn contract has closed above $4 in more than a year. Corn is also watching weather in South America, while keeping an eye on U.S. harvest activity, including rain delays in eastern parts of the Midwest. Most of the rest of the region is expected to see generally dry conditions, allowing for good progress. Those soybean planting delays in Argentina and Brazil have pushed back corn planting, especially for Brazil’s key second crop. For now, the Rosario Grain Exchange still sees Argentina’s corn crop at 48 million tons. The U.S. Energy Information Administration says ethanol production last week averaged 937,000 barrels a day, up 14,000 on the week, but down 34,000 on the year, with stocks pulling up from a near four-year low at 20.008 million barrels, an increase of 336,000 from the week before and a decrease of 2.053 million from last year. Ethanol futures were steady to weak.
The wheat complex was sharply higher on commercial and technical buying, with December Chicago at a five-year high for a spot contract and December Kansas City at a two-year high for a spot month. Near-term weather looks dry in Russia, with just a chance of rain next week, and dry for the U.S. Plains with no real relief in sight. Parts of Ukraine have received rain recently, but not enough to fully break drought conditions and the weather has damaged part of the crop. The Rosario Grain Exchange has lowered wheat production in Argentina by 1 million tons to 17 million because of drier than normal weather. The complex is also watching weather issues Australia and the European Union. Contracts were able to rally on those weather concerns, even with a higher move in the dollar, pulling all Chicago contracts above $6. DTN says Algeria bought 600,000 tons of wheat and Jordan purchased 60,000 tons, while Japan is tendering for 80,000 tons of feed what and Turkey is in the market for 175,000 tons of milling wheat.