Market News

Good weather pressures beans and corn: July 21, 2009

Soybeans were lower on speculative and technical selling. Near term forecasts generally look non-threatening and crop conditions remain solid with 67% of the crop in good to excellent condition. However, losses were limited by the slower than average blooming rate, along with outside market direction. Even then, those factors may have provided a small amount of early support, but not nearly enough to break the current weather focused trend. The University of Illinois’ Darrel Good raised his average yield estimate to 44.7 bushels per acre, compared to the USDA’s July projection of 42.6 bushels per acre. Soybean meal and oil were lower on spillover from beans and the product supply implications of a larger U.S. crop. Celeres states that 77% of Brazil’s new soybean crop has been sold, a little behind average as farmers hold on to supplies after a drop in price.

Corn is lower on technical and fund selling, along with spillover from beans. Similar to beans, the big issues were the weather and conditions ratings with 71% of corn is in good to excellent shape, unchanged from last week and up 7% from a year ago. However, also like beans, losses were limited by the slower than average silking pace and spillover from the outside markets. At this point, the trade sentiment is that this year’s crop will only get bigger from here on out. University of Illinois Extension Economist Darrel Good pegs yield at a record 161.9 bushels per acre, compared to the last USDA guess of 160.4 bushels per acre. Ethanol contracts were lower. Mexico bought 134,000 tons of U.S. corn (27,000 tons 2008/09 and 107,000 tons 2009/10) and Egypt picked up 120,000 tons of U.S. corn (half for this marketing year, half for next marketing year).

The wheat complex is lower on technical selling and profit taking with Minneapolis leading the way down. Spring wheat’s in 73% good to excellent condition, up 2% from last week and 10% more than this time last year. Still, spring wheat development and winter wheat harvesting are moving slower than average. Traders were disappointed that Egypt didn’t buy any U.S. wheat, instead purchasing 60,000 tons from Russia at $178.05 per ton. Egypt had recently looked to other origins due to some Russian wheat not meeting Cairo’s standards. European traders were also surprised by Egypt buying Russian wheat; November Paris was down .4% and November London was 1.3% lower. Japan’s Ag Ministry issued a tender for 108,000 tons of wheat (34,000 tons U.S. dark northern spring, 32,000 tons U.S. semi hard, 21,000 tons U.S. western white and 21,000 tons Australian standard white). India’s Farm Ministry expects wheat production to be a record 50.58 million tons but notes that is partially dependent on September monsoons.