Grains continued to move lower following yesterday’s sharp selloff. Corn hit fresh weekly lows, while soybeans got closer to short-term support in the $10.18 to $10.20 area. In outside markets, crude oil posted modest gains after yesterday’s steep slide while the US dollar index continued to drift lower.
Yesterday brought heavy selling to soybeans as a sharp drop in the Brazilian Real and Argentina crop estimates that were not as bad as expected. Informa on Tuesday pegged the Argentina soybean crop at 55 MMT. Early in the week Argentina’s state weather agency suggested a crop of 51 MMT. Another analyst, Dr Cordier who specializes in South America, said the crop could come in at 53 to 54 MMT but it is still too early to tell.
In wheat, the Kansas crop tour on Tuesday found above average yields in much of Northern Kansas. Recent rains have boosted crop prospects following excessively dry weather earlier in the year but also raised the threat of diseases such as the stripe rust that was detected in some fields surveyed by crop scouts.
In corn, Brazil saw no rain in the last 18 hours. Brazil rain forecasts remain mixed. Private analyst Celeres trimmed their estimates of Brazil second crop corn production by 10% from prior to 52.8 mmt – a call echoed today by Agroconsult. A boost in Brazil rain is still needed from Goias into Minas Gerais and northern Sao Paulo.
In crude oil, prices were awaiting direction from the weekly EIA crude stocks report later this morning. Analysts expect a 1.2 million barrel build in stocks on the week, which would mark another weekly inventory high. The American Petroleum Institute, an industry group, said late Tuesday that its own data for that week showed a 1.3-million-barrel increase in crude supplies. In addition, a gauge of China’s manufacturing industry reported Tuesday by Caixin Media Company Ltd. and Markit Economics fell in April, marking the 14th straight month of contraction.