Corn down, but still posts solid weekly gain
Soybeans were modestly higher on fund and technical buying, capping off a bullish week, including big post-USDA report gains Wednesday. Most forecasts had generally dry conditions in some key U.S. growing areas during the first full week of July. Still, other growing areas are expected to see generally non-threatening to beneficial conditions over the near-term. There was also spillover from a higher move in global vegetable oils, which also supported soybean oil. Palm oil was higher, supported by demand expectations, while canola was up on the dry weather concerns for Canada’s crop. Bean meal was down on technical selling. Argentina’s soybean and soybean product export pace is being slowed down significantly by low water levels on the Parana River. Argentina is the biggest exporter of soybean meal and oil. The USDA’s attaché for China projects 2021/22 soybean production at 17.5 million tons, compared to an estimated 18.5 million in 2020/21, with some producers switching to corn because of high prices and subsidies from Beijing. 2021/22 soybean imports are seen at 102 million tons, compared to the official guess of 103 million, and the 2020/21 total of 100 million tons.
Corn was lower on fund and technical selling, still closing out the week in very bullish territory after the USDA’s surprising acreage number. Friday’s losses were despite those generally dry weather outlooks in some areas during key development phases for the crop, but there is more rain in the forecast for other portions of the region. Corn will need a trend-line yield or better to meet demand and replenish the supply. StoneX lowered its outlook for Brazil’s second corn crop by 1.55 million tons to 62 million, with total production at 87.93 million tons. CONAB’s new estimate is out July 8th. Ethanol futures were unchanged. The Renewable Fuels Association says May ethanol exports of 70.4 million gallons were down 38% from April, while DDGS exports were over a million tons, up 21% on the month. Canada was the top market for ethanol, while Mexico picked up about a quarter of the monthly total for DDGS. The USDA’s attaché in China estimates 2021/22 corn imports at 20 million tons, compared to the most recent official guess of 26 million and the 2020/21 projection of 28 million tons. Domestic production for China is expected to rise to 272 million tons next marketing year, compared to 260.67 million this marketing year, as producers respond to subsidies and higher prices.
The wheat complex was mixed, with the most active months at all three exchanges finishing the week in the black. Minneapolis was up modestly with further drought damage likely for spring wheat in the northern U.S. Plains and Canada. Drier weather will help the winter wheat harvest pick up steam, pressuring Chicago and Kansas City. The USDA’s weekly crop progress and condition numbers are out Tuesday afternoon with the USDA and futures markets closed for Independence Day. Futures market trading resumes Tuesday morning. Crop conditions outside of North America generally look good, with 79% of France’s soft wheat crop in good to excellent condition. The USDA’s next set of supply and demand estimates is out on the 12th. The USDA’s attaché for China estimates 2021/22 wheat production at 136 million tons, compared to 134.25 million for 2020/21, with new crop ending stocks of 140.432 million tons, compared to 145.432 million for old crop.