Soybeans Up as Export Sales Build

By Kirk Maltais

-- Soybeans for July delivery rose 0.8% to $8.57 1/2 a bushel on the Chicago Board of Trade Wednesday as the USDA confirmed another export sale of U.S. soybeans this morning, boosting the market's confidence that the phase one trade deal is still in force.

-- Wheat for July delivery rose 0.8% to $5.12 a bushel.

-- Corn for July delivery fell 0.1% to $3.24 a bushel.

HIGHLIGHTS

Phase One Still Alive: 186,000 metric tons of U.S. soybeans have been sold to unknown destinations, the USDA said Wednesday. Of that, 66,000 tons are for delivery in the 2019-20 marketing year, and the remainder are for delivery in 2020-21.

While the market would be more excited by this sale being confirmed as going to China, the sale was positive for soybean futures Wednesday.

"U.S. beans are competitively priced into China," said Doug Bergman, head of the agricultural trading desk for RCM Alternatives, who forecasts soybean futures rallying to roughly $8.75 per bushel in the near future.

Follow the Leader: Wheat futures on the CBOT rose Wednesday, following Russian wheat futures higher.

"The Russian July fob wheat price has moved up ... amid the coming difficult transition between an old-crop quota and a new-crop sales system that is more state controlled," said AgResource.

A rise in Russian prices allows room for U.S. wheat to move higher since Russian wheat is one of its main competitors.

Grains traders polled by The Wall Street Journal say they expect Thursday's USDA report to show export sales of anywhere from 150,000 metric tons to 600,000 tons. This range is lower than last week's sales total of 706,300 tons.

Road to Recovery: Ethanol production in the U.S. continued its rally this week, with weekly production up to 765,000 barrels per day, up 41,000 barrels from last week, the EIA said. While still well off from normal production for this time of year, roughly 1 million to 1.1 million barrels per day, according to data from INTL FCStone, production has shot up considerably since finding a record low of 537,000 barrels per day in late April.

Ethanol inventories have returned to the levels they were at to start 2020, with stocks dipping another 700,000 barrels to 22.476 million barrels this week.

Corn futures pared morning losses after the release of the report.

INSIGHT

More Bumps Ahead: News of big export purchases by China may have sparked some buying in CBOT soybean futures, but the outlook for futures prices remains bearish, said Georgi Slavov of Marex Spectron.

"Soybean values have entered the clash zone, as in prices, do they stay, or do they go?" said Mr. Slavov, who views world soybean supplies as growing with demand not growing at a commensurate pace.

"End users, farmers, commercials, and small speculators are all on the sidelines waiting for clarity on what the new normal might be for oilseed values," Mr. Slavov said, adding that part of price movement currently is the market adjusting to life post-coronavirus pandemic.

Happy Meal: Grains traders are expecting soymeal exports to be up this week to as high as 650,000 metric tons, and abnormally high for soymeal.

The data suggest soymeal demand is on the rise, which makes sense considering the floor soymeal prices have found in recent days. Soymeal futures on the CBOT found a low of $281.50 per short ton in late May, a 17.3% decline since finding a nearly two-year high of $340.20 per ton in late March. With soymeal so cheap, it would make sense that export buyers find it attractive.

Soymeal futures finished up 0.9% to $286.30 per short ton Wednesday.

AHEAD:

-- The USDA is scheduled to release its latest weekly export sales numbers at 8:30 a.m. EDT Thursday.

-- The CFTC is due to release its weekly commitments of traders report at 3:30 p.m. EDT Friday.

-- The USDA is scheduled to release its weekly grain export inspections data at 11 a.m. EDT Monday.

-- The USDA is due to release its weekly crop progress report for the 2020/21 crop at 4 p.m. EDT Monday.

Write to Kirk Maltais at [e-mail]