Market News
Grains and oilseeds follow fundamentals: August 7, 2009
Soybeans were higher on technical and speculative buying. The fundamentals remain supportive with a pretty tight supply and fairly strong demand. Ahead of the upcoming USDA production update, the average guess is for slight decreases in total crop and average yield with ranges running from 3.000 billion bushels to 3.275 billion bushels and 40.9 bushels per acre to 43.5 bushels per acre, respectively. Also, old crop stocks could fall below 100 million bushels and new crop stocks are seen as down from the previous estimate. Crop weather over the near term does look good, but given the tightness of supply, there’s not much room for error with this year’s crop. Soybean meal was higher on spillover from beans, the fairly tight supply and product spread trade. Bean oil was lower on that spread activity, the comparatively ample supply and spillover from crude oil.
Corn was lower on profit taking, fund selling and technical weakness. Weather looks generally non-threatening with rain in the forecast for some areas of the Cornbelt. In any event, this year’s crop could be the second biggest ever and the supply and demand outlook for corn remains negative with neutral demand and a fairly large supply. The average pre-report guesses for the USDA numbers have production and average yield up from July. The average guess is 12.472 billion bushels, compared to July’s figure of 12.290 billion, with average yield at 157.1 bushels per acre, compared to the estimate of 153.4 in July. Old and new crop ending stocks should be ample. Ethanol futures were lower.
The wheat complex was lower on fund and technical selling, along with the higher dollar. A higher dollar makes U.S. goods more expensive on the export market, limiting competition. The fundamentals remain negative with a large available supply and weak demand. Ahead of the USDA’s wheat production estimates Wednesday, the wheat crop is expected to be around 2.150 billion bushels with winter wheat at 1.531 billion, “other” spring at 523 million and durum at 85 million. For the total crop, winter wheat and “other” spring, that would be up from the July estimates but down from last year. European wheat was mixed on the fundamental negatives against oversold signals; November Paris was up .4% and November London was down .3%. German firm FO Licht pegs 2009/10 world wheat production at 648.4 million tons, down .1% from the July estimate and .2% below 2008/09. That’s with an 11.6% drop in Canada offsetting bigger crops from other major producers.
Add Comment