China demand concerns sink soybeans

phongphan5922/Thinkstock markets charts - green with red line
Afternoon report: Corn and winter wheat prices ease slightly lower Thursday

Grain prices were mixed but mostly lower amid a mostly bearish sentiment on Thursday. Soybeans incurred the biggest losses, at around 0.8%, while corn and winter wheat contracts suffered more modest setbacks. Spring wheat prices bucked the overall trend, picking up modest gains by the close.

Later this week, most areas east of the Mississippi River will see at least some measurable moisture between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. The Mid-South and Mid Atlantic regions are likely to see the largest totals during this time. Meanwhile, NOAA’s 8-to-14-day outlook predicts drier-than-normal conditions will return to the Great Lakes region between June 1 and June 7, with seasonally cool weather likely in the Northern Plains and upper Midwest.

On Wall St., the Dow trended 110 points higher in afternoon trading to 32,039 as investors digested news that the Federal Reserve may raise interest rates more than expected in an attempt to put a more aggressive pinch on inflation. Energy futures moved higher this afternoon. Crude oil firmed more than 0.5% to stay above $110 per barrel. Diesel jumped 2.5% higher, with gasoline up around 1%. The U.S. Dollar firmed moderately.

On Tuesday, commodity funds were net buyers of soybeans (+1,500) and soymeal (+3,000) contracts but were net sellers of corn (-15,000), soyoil (-1,000) and CBOT wheat (-20,000).

Corn

Corn prices suffered a minor setback, but the news wasn’t all bad. Prices were down around 15 cents overnight but nearly succeeded in its comeback attempt as Thursday’s session drew to a close. July futures eased a penny lower to $7.7075, with September futures down 2 cents to $7.39.

Corn basis bids were steady to firm after climbing 3 to 16 cents higher across seven Midwestern locations on Wednesday.

Ethanol production for the week ending May 20 cleared the 1-million-barrel-per-day benchmark for the first time since early April, averaging 1.014 million barrels per day, per the latest data from the U.S. Energy Information Administration. Ethanol stocks trended slightly lower week-over-week.

Ahead of the next USDA export report, out Thursday morning and covering the week through May 19, analysts expect the agency to show corn sales ranging between 13.8 million and 51.2 million bushels.

A late start to the season isn’t necessarily a bad thing. “Looks good,” noted a central Kentucky corn grower in the latest edition of Feedback from the Field. “[It looks] better than last year’s [crop] which we started planting in early April.” Click here for more farmer anecdotes and learn how you can participate in Feedback from the Field.

Almost 70% of China’s corn imports are sourced from the U.S., and the country has historically also leaned heavily on Ukrainian grain. However, in a “strategic consideration,” as described by one trader, China now plans to ramp up its purchases of Brazilian corn. Some worry that the move will mean a reduction in U.S. corn imports to China.

Zimbabwe plans to import 15.7 million bushels of white corn from neighboring African nations Zambia and Malawi after suffering local grain deficits due to drought. The country’s 2021/22 production is only expected to reach 61.4 million bushels after climbing to a multiyear best of 107.1 million bushels last season.

Eric Meyer with Advance Trading has been asking a critical question: What’s stopping you from locking in high prices? “It’s obvious to see that we are at some profitable levels for the 2022 crop, but what are some of the reasons that may hold us back from taking any action?,” he notes. “While there are multiple motives for this, most of them can be boiled down to two main reasons.” Those two reasons are worries that the market will keep going higher, and uncertainties about what your production is going to be. Meyer offers more analysis in a recent Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 250, 792 contracts, falling short of Tuesday’s final count of 281,232.

Soybeans

Soybean prices saw double-digit losses after demand concerns in China tripped prices 0.8% lower today. Soymeal prices saw similar losses, while soyoil prices faded more than 1.5%. July futures dropped 13.5 cents to $16.7950, with August futures down 13.75 cents to $16.1850.

Soybean basis bids were steady to firm after rising 5 to 13 cents higher across half a dozen Midwestern locations on Wednesday.

Prior to tomorrow morning’s export report from USDA, analysts think the agency will show soybean sales ranging between 11.0 million and 51.4 million bushels for the week ending May 19. Analysts also expect to see soymeal sales ranging between 100,000 and 425,000 metric tons, plus up to 30,000 MT of soyoil sales.

Lockdowns in China to prevent the spread of Covid have traders worried about waning soyoil demand for the world’s No. 1 importer. Restaurants account for approximately half of the country’s annual consumption of 17 million metric tons. Soyoil demand was down 15% in April versus pre-Covid averages.

Preliminary volume estimates were for 154,760 contracts, moving moderately above Tuesday’s final count of 132,422.

Wheat

Wheat prices were mixed but mostly lower after fresh export optimism in Ukraine (more on that below) spurred some technical selling. Prices were even worse overnight, with winter wheat contracts down more than 35 cents heading into Thursday’s session. But by the close, July Chicago SRW futures dropped 5 cents to $11.4975, July Kansas City HRW futures eased 2.25 cents to $12.3550, and July MGEX spring wheat futures picked up 1.25 cents to $12.7850.

Ahead of tomorrow morning’s export report from USDA, analysts think the agency will show wheat sales ranging between 1.8 million bushels 18.4 million bushels for the week ending May 19.

Russia announced plans for a so-called “humanitarian corridor” in the Black Sea that will allow Ukraine to ship out grain that has been stuck at port or in local facilities since late February. Russia wants some economic sanctions eased or lifted in return. Further complicating the matter, both Ukraine and Russia have lobbed accusations of planting drifting mines in the Black Sea. Ukraine is a significant exporter of corn, wheat and sunflower oil.

That news offers a perfect segue into the ongoing “Black Swan in the Black Sea” series from Farm Futures grain market analyst Jacqueline Holland. Today’s topic addresses how the Russian invasion of Ukraine is reshaping global wheat trade. Click here to learn more.

Pakistan has received multiple offers in its tender to purchase 18.4 million bushels of wheat. Additional details were not immediately available.

Preliminary volume estimates were for 93,579 CBOT contracts, inching fractionally below Tuesday’s final count of 93,670.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel      
22-Jul 773 755 772.25 -1
22-Sep 741.75 723.5 739.75 -2
Soybeans        
22-Jul 1697.75 1665.5 1681 -13.5
22-Sep 1564.25 1535.25 1549.25 -11.75
Soymeal                $/ton        
22-Aug 423 413.7 418.9 -2.9
Soyoil                    cents/lb        
22-Aug 78.05 76.4 76.9 -0.95
Wheat                    $/bushel        
22-Jul 1158.5 1114.5 1148.25 -5
22-Sep 1166.25 1123.25 1156.75 -5.25
KC Wheat        
22-Jul 1239.75 1192 1233.25 -2.25
22-Sep 1245 1196.75 1238.25 -2.25
MPLS Wheat        
22-Jul 1284.75 1239.25 1280.5 1.25
22-Sep 1284.75 1237.75 1280.5 3
Live Cattle             cents/lb        
22-Jun 133.55 132.025 132.125 -0.6
Feeder Cattle         cents/lb        
22-Aug 170.25 167.7 167.875 -0.275
Lean Hogs             cents/lb        
22-Jul 111 107.675 107.875 -1.175
Crude Oil  $/barrel *Energy prices may not represent final settlements
22-Jun 111.68 109.23 110.57 0.8
Diesel        
22-Jun 3.8885 3.7446 3.8615 0.0797
Unleaded Gasoline   $/gallon        
22-May 3.8882 3.786 3.8305 0.0195
Natural Gas        
22-Jul 9.437 8.798 8.924 0.088
U.S. Dollar Index        
22-Jun 102.47 101.75 102.135 0.265
Gold                      $/ounce        
22-Jun 1866.7 1838.7    
Copper        
22-May 4.2935 4.2615 4.27 -0.0555
Fertilizer Swaps     (as of 05/20)  
DAP Tampa-index           1,117.5 -12.5
DAP-New Orleans              920.4 -15.43
Urea-New Orleans              691.7 -13.78
Urea-Middle East              708.5 -14
Urea-Black Sea              585.0 35
UAN (32%) New Orleans              689.0 -5.51

Get our top content delivered right to your inbox. Subscribe to our morning and afternoon newsletters!

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish