Market News

Corn sees an oversold bounce: July 14, 2009

Soybeans were mostly higher on old crop/new crop spread trade, end user buying and consolidation. For the most part, contracts saw an oversold bounce after the recent sell off and fundamentals remain supportive. Even with July now off the board, new spot August holds a significant premium over the November contract, reflecting the tight supply and good demand. However, crop weather forecasts continue to look non-threatening over the near term, limiting gains in the new crop contracts. Soybean oil was higher on technical buying and product spread trade. Bean meal was mostly firm on technical buying, but gains were limited by that spread activity. Unknown destinations bought 130,000 tons of 2009/10 soybeans and 42,000 tons of 2008/09 soybean oil. According to the National Oilseed Processors Association, member firms crushed 133.1 million bushels of soybeans in June, down from May and under the average pre-report guess. Bean oil stocks were up on the month and larger than expected at 2.907 billion pounds.

Corn was mostly higher on fund buying, technical support and short covering. Corn contracts were also due for a bounce after the recent lower activity. Also, farmer selling remains very light with producers holding on to supplies following that sell off. Gains were limited by the forecasts for generally non-threatening near term crop weather and the generally good condition of this year’s crop. New spot September closed back above the 10-day moving average. Ethanol futures were higher. A group of South Korean feed mills, including the Korea Feed Association, is tendering for 110,000 tons of U.S. corn.

The wheat complex was lower on technical and fund selling along with profit taking after Monday’s gains. Chicago and Kansas City picked up additional pressure from harvest selling. The fundamentals remain negative with an ample global supply and fairly weak demand. There are a couple of crop weather worries to keep an eye on: wheat planting in Argentina remains limited due to drought and Russian news agency RIA Novosti, via Dow Jones Newswires, states that around 7% of this year’s Russian grain crop has been “destroyed” by drought with the worst damage in western and southern Russia. European wheat was modestly lower in pretty quiet activity; November London was down .9% and November Paris was .7% lower. Ukraine’s Ag Ministry reports that as of July 1, wheat stocks totaled 3.4 million tons with the total grain supply of 7.3 million tons up 35% on the year. Japan’s Ag Ministry issued a tender for 108,000 tons of wheat (35,000 tons U.S. dark northern spring, 21,000 tons western red spring from Canada, 21,000 tons standard white from Australia, 17,000 tons U.S. western white and 14,000 tons U.S. semi hard).