Wheat builds on recent gains

Market News

Wheat builds on recent gains

Soybeans were lower on fund and technical selling, also closing lower for the week. Contracts followed through on the losses after Thursday’s bearish USDA quarterly grain stocks numbers. Still, that increase in supply is tempered by reports of mixed yields in some key growing areas. Chinese demand is a question mark, with some crush facilities reportedly idled due to energy availability concerns and a major holiday ongoing through the coming week. China did make an announced purchase U.S. beans September 27th, but less than what the trade had been talking about. U.S. beans have a price advantage into early 2022. The USDA says the August soybean crush was 168 million bushels, 2 million more than in July, but 7 million less than August 2020 due to tighter supply and higher prices. Soybean meal was lower on follow through selling, while bean oil was mixed, mostly firm on spread adjustments and the recent strength in global vegetable oils, especially palm oil.

Corn was modestly higher on fund and technical buying, managing a higher weekly finish. Corn was able to shrug off Thursday’s bearish USDA numbers, with some help from the higher move in wheat. Corn is back to watching U.S. harvest activity, including near-term rain delays expected in parts of the region, and planting in Argentina and Brazil, with a probable La Nina pattern potentially limiting South American yields. U.S. corn will need a trend-line yield or better to bolster supplies and both Argentina and Brazil want to see improved production after some old crop disappointments. Export demand is slow but could increase as Gulf operations come back online. China has reportedly left its tariff rate quota for corn imports at 7.2 million tons. Ethanol futures were unchanged. The USDA says August ethanol production was 417.317 million bushels, 7% less than the previous month, but up 2% from the year before, with DDGS production at 1,827,378 tons, 7% lower than July but 1% higher than August 2020.

The wheat complex was sharply higher on fund and technical buying, ensuring weekly gains for the most active months at all three major pits. The Thursday USDA numbers were bullish, with lower-than-expected stocks and a reduction in 2021 production. The bigger than expected cut to winter wheat helped Chicago and Kansas City outgain Minneapolis. Spring wheat was down, just not as much as expected. The trade is monitoring winter wheat planting conditions in the U.S., Russia, and Ukraine, along with development weather in Argentina and Australia. The USDA’s next supply, demand, and production report is out on Tuesday the 12th. China has reportedly left its tariff rate quota for wheat imports at 9.63 million tons. DTN says Algeria bought 580,000 tons of wheat from an optional origin and Tunisia picked up 100,000 tons of wheat from an unknown origin.

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