Market News

Beans, corn rally on outside markets: July 23, 2009

Soybeans were higher on technical buying, short covering and spillover from the outside markets. The unwinding of old crop/new crop spreads and good crop weather limiting gains were additional features. The dollar was lower while crude oil was higher and the Dow Jones Industrial Average moved above 9,000 points for the first time since early January. Also, China bought 116,000 tons of new crop beans, weekly export sales were solid and the June Census bean crush was larger than expected at 140.169 million bushels. Meal/hull stocks were under the average guess at 417,935 short tons and oil stocks were above estimates at 3.403 billion pounds. China’s planned auction of 500,000 tons of soybeans didn’t exactly go as planned with no sales due to the high price. Soybean meal and oil were higher on spillover from beans. Gains in oil were limited by product spread trade and the comparatively poor weekly export sales number.

Corn was higher on short covering, technical buying and outside market direction. Weekly export sales were solid at more than 50 million bushels, combined old and new crop. Also, the USDA is surveying farmers in some prime production areas and will adjust corn acreage in August, with the trade expecting a slight decrease following widespread planting problems earlier in the season. Also, temperatures are cooler than average in many areas and with the crop pollinating, that’s a concern. Corn is still in a downtrend, but this news may hang around in the background providing underlying support until the report August 12. However, that could be negated by a warm up in temperatures and/or increased farmer selling. Also, in general, the trade expects an increased yield estimate. Ethanol futures were higher.

The wheat complex was modestly higher on technical buying and spillover from beans, corn and the outside markets. Wheat was oversold and due for a bounce after the recent lower trade. However, the supply is more than ample, demand remains weak and export sales were towards the low end of estimates, reflecting those negative fundamentals and helping pull contracts down from the highs. However, there’s always a certain amount of demand for higher quality U.S. wheat, evidenced by Japan picking up 87,000 tons of U.S. wheat (34,000 tons dark northern spring, 32,000 tons semi hard and 21,000 tons western white), along with 21,000 tons of Australian standard white. European wheat was mixed with pressure from harvest activity and support from the higher U.S. trade; November Paris was flat and November London was up .8%.