Market News

Corn, wheat lower on profit taking: August 4, 2009

Soybeans were mixed on consolidation, profit taking and the mixed outside markets. Fundamentals remain supportive with a tight near term supply and solid demand, which limited losses in the nearbys. The crop’s in good condition, but development is slower than normal, supporting deferreds. Also, forecasts show at least some hot weather headed for parts of the Cornbelt, potentially stressing crops during a critical development phase. Soybean meal was mixed, basically mirroring soybeans, and soybean oil was lower on profit taking and a lack of new direction from crude oil. Brazilian crop consultancy Celeres expects a significant rise in 2009/10 soybean production for the world’s number 2 producer. Celeres sees an 11.3% year to year increase, pushing the crop to 64.7 million tons due to the relatively high return on beans when compared to corn. However, a lot of that will be dependent on timely rainfall and a full recovery from drought in some areas during 2008/09. AgRural’s projecting a 3.7% planted area increase with a crop of just over 57 million tons. Brazil’s Foreign Trade Ministry reports that soybean exports during July totaled 3.3 million tons, compared to 3.9 million for July 2008.

Corn was lower on fund selling, the weak crude oil and profit taking. Corn is in overall good condition, and ahead of the August 12 production update, early estimates show an increase in the average yield guess. However, most traders do expect a cut in acreage and development remains slower than normal with the crop significantly behind on growing degree days. The next set of major private estimates is due out Wednesday morning from Informa Economics. The forecasts for hotter weather in parts of the Midwest were also a loss limiting factor. Ethanol futures were lower. South Korea bought 118,000 tons of 2009/10 U.S. corn. South Korea’s Nonghyup Feed Inc. issued a tender for 165,000 tons of optional origin corn.

The wheat complex was lower on profit taking and a lack of new buying interest. Monday’s higher move was overdone due to the negative fundamentals, leading to that profit taking. However, considering the gains made Monday, Tuesday’s activity losses were relatively minimal. Losses were limited by the slower than average winter and spring wheat harvests. In any event, with no real fresh supportive news and the ongoing harvests, wheat’s expected to remain a follower for the time being. Because of the fairly tight supply and good demand, Minneapolis continues to have a slightly better fundamental outlook when compared to Chicago and Kansas City. European wheat was modestly lower on profit taking and a lack of follow-through buying; November Paris was down .7% and November London was .2% lower. Japan’s Ag Ministry issued a tender for 148,000 tons of wheat (43,000 tons U.S. dark northern spring, 36,000 tons U.S. hard red winter, 27,000 tons U.S. western white, 21,000 tons Australian standard white and 21,000 tons Canadian western red spring).