Soybean and corn prices decrease as expectations of US-China trade tensions ease and favorable weather for the growing season.
Soybean and corn prices on the Chicago exchange dropped due to a weak positive sentiment about US-China negotiations and favorable weather in the Midwest supporting crop yields. Despite reports that the two countries reached a trade agreement framework, the lack of details regarding agricultural goods disappointed the market. The market is awaiting the June supply and demand report from the USDA, while the ongoing tension between Russia and Ukraine continues to be monitored due to its impact on wheat exports.
Wheat Market: Wheat Prices Close with Slight Opposing Trend
Wheat prices recorded slight fluctuations in trading on Wednesday, with contracts trending differently across three exchanges, where spring wheat was the strongest performer. The soft red winter wheat futures (Chicago SRW) were nearly flat in the nearby contracts. The hard red winter wheat futures (Kansas City HRW) only fluctuated around 1 cent, showing no significant change during the session. Meanwhile, spring wheat at the Minneapolis exchange saw an increase of 3 to 4 cents during the session.
The market is monitoring export sales figures for the week ending June 5, with forecasts for the 2024/25 marketing year ranging from a net decrease of 100,000 tons to a net increase of 500,000 tons (only 2 trading days left for the old marketing year). The forecast for new contracts (new season) is between 400,000 and 600,000 tons, according to the weekly export sales report.
A Bloomberg survey of analysts indicates that wheat production is expected to increase by 3 million bushels in the crop progress report released on Thursday, reaching 1.924 billion bushels. Most of this increase is believed to come from winter wheat, with production estimated to rise nearly 8 million bushels to 1.389 billion bushels. This includes hard red winter wheat (HRW) expected to increase by 4 million bushels to 755 million, soft red winter wheat (SRW) expected to rise by 2 million to 346 million, and white wheat remaining unchanged at 253 million bushels. Old season wheat stocks are predicted to increase by 4 million bushels to 845 million, while total stocks for the new season are expected to rise slightly by 2 million to 925 million bushels. Globally, analysts forecast that old wheat stocks will decrease by 0.3 million tons to 264.9 million tons. New wheat stocks are anticipated to drop by 0.7 million tons to 265 million tons.
Corn Market: Corn Prices Stagnate Despite Record Ethanol Production
Corn prices slightly decreased on Wednesday, despite U.S. ethanol production reaching a record level of 1.12 million barrels per day. Ethanol stocks fell by more than 700,000 barrels, while exports and the amount of ethanol used for processing both rose slightly.
The market is waiting for the Export Sales report on Thursday, with expectations that corn sales for the 2024/25 season will reach 0.7–1.2 million tons. Forecasts indicate that old crop corn stocks in the U.S. will decrease by 23 million bushels, while new crop stocks will be at 1.789 billion bushels. Brazil's corn production may increase to 131.8 million tons, and Argentina remains at 49.9 million tons. Taiwan has just purchased 65,000 tons of corn from Brazil.
Soybean Market: Soybean Prices Decrease Ahead of USDA Data Release
Soybean futures fell by 2 to 7 ¼ cents in Wednesday's trading session, led by the near-term contracts. The spot soybean price dropped by 10 3/4 cents to 10.02 1/2 USD/bushel. Soybean meal contracts fell by 1 to 1.70 USD/ton, while soybean oil increased by 5 to 23 points.
The NOAA weather forecast indicates that there will be rain in many areas across the United States next week.
By the end of Tuesday, the US and China had reached a framework agreement to reduce bilateral tensions. China currently maintains a 10% tariff on US goods. Although no specific trade agreement has been signed, this is seen as a positive sign for the relationship between the two countries.
Export Sales data will be released on Thursday morning. The market expects the amount of old crop soybeans sold in the week ending June 5 to be between 100,000 and 500,000 tons; sales for the 2025/26 crop year are expected to be between 0 and 200,000 tons.
According to a Bloomberg survey, analysts predict that old U.S. soybean inventories will increase by an average of 3 million bushels to 353 million bushels. New crop inventories are expected to rise slightly to 298 million bushels. South American soybean production is expected to remain relatively unchanged, with Brazil increasing slightly by 0.3 million tons to 169.3 million tons and Argentina increasing by 0.1 million tons to 49.1 million tons.
Coffee Market: Coffee Prices Under Pressure from Harvest Progress in Brazil
The July futures price for arabica coffee (KCN25) closed on Wednesday down 4.40 cents (-1.24%), while the July futures price for robusta coffee on ICE (RCN25) decreased by 17 USD (-0.39%).
The prices of arabica and robusta coffee both fell on Wednesday due to pressure from the rapid harvest progress in Brazil and abundant rainfall that alleviated drought concerns. The increase in coffee inventories at the ICE exchange also put downward pressure on prices.
However, robusta prices are still supported due to reduced production in Vietnam caused by drought, with coffee exports in 2024 expected to fall sharply. The USDA and other organizations forecast an increase in global coffee production for 2025/26, but ending stocks could drop to the lowest level in 25 years. Volcafe predicts a global arabica market deficit for the fifth consecutive year.
Source: SFVN Compilation
