Corn is trading lower at midday and although prices are comfortably off their contract lows that were set last Monday, futures are still encountering resistance and have fallen into a sideways trading pattern.
While US corn shipments are up 34% from a year ago, there is big competition from South America where Argentina is raising a crop that is rated 87% good to excellent while Brazil is planting with good weather conditions so far.
Friday’s WASDE report will likely have traders focusing on potential changes to South American production, but the average analyst estimates are showing that both US corn stocks and world ending stocks are expected to fall slightly.
Soybeans have reversed from earlier morning lows and are now trading closer to unchanged thanks to higher soybean oil while soybean meal is lower to unchanged. Crude oil has trended higher over the past month but has not lent much support to soybean oil.
The interesting thing to watch for in Friday’s WASDE report will be if the USDA lowers its estimate for Brazilian soybean production. It has maintained the highest estimate out of the analysts at 156 mmt with most other guesses closer to 149 mmt. Regardless, South America is on pace to produce a larger soybean crop than it did last year.
In China, soybeans on the Dalian Exchange rose by 0.6% and are trading at the equivalent of $13.68. China has bought US soybeans but will likely lean more heavily on Brazil’s cheaper beans as harvest progresses.
All three wheat classes are still trading lower at midday with Chicago wheat leading the way down. There has been little friendly news to attract buyers, and May Chicago wheat made a new contract low this morning.
Winter wheat conditions have been downgraded but are still largely above average for this time of year. The good to excellent rating in Kansas fell to 53% from 57%, in Oklahoma it fell to 65% from 70%, and in Texas it fell to 43% from 46%.
In Morocco, severe drought is expected, which will likely bring a much smaller wheat crop than anticipated and will need to increase imports to make up for the country’s deficit. Production is estimated below 4 mmt, while the number budgeted by the government is 7.5 mmt.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
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