Market News

Grains and oilseeds lower ahead of July 4th weekend: July 2, 2009

Soybeans were lower on technical and speculative selling, along with spillover from the outside markets. The dollar was higher, while the Dow Jones Industrial Average and crude oil were sharply lower. The fundamentals remain supportive on the tight supply and strong demand, but weather forecasts look good over the near term and traders were getting ready for the long holiday weekend. Even with the good crop weather and increase in planted area, there’s not much room for error in crop size this year. Soybean meal and oil were lower on outside markets and spillover from beans. China bought 660,000 tons of U.S. beans for 2009/10 delivery. Ahead of the USDA’s crop production report July 10, Informa Economics has soybeans at 3.214 billion bushels with an average yield of 42.0 bushels per acre.

Corn was lower on fund and technical selling, in addition to outside market direction. Corn also received pressure from the generally good crop development weather across the Midwest. Weekly export sales were larger than expected but shipments were less than what’s needed weekly to meet USDA projections. December hit a low of $3.57, the lowest price since early December 2008. There’s still a chance for another spell of hot weather next week, but as of late this week, it’s not expected to last too long. Ethanol contracts were mostly lower. Unknown destinations bought 152,400 tons of U.S. corn for 2009/10 delivery. South Korea’s Major Feedmill Group canceled their tender for 55,000 tons of U.S. corn on expectations for a continued decline in price. Informa Economics projects 2009 U.S. corn production at 12.524 billion bushels with an average yield of 156.3 bushels per acre.

The wheat complex was lower on technical and fund selling, along with the lower soybeans and higher dollar index. A higher dollar makes U.S. goods more expensive on the export market and U.S. wheat is already at a premium to other origins. Chicago and Kansas City had additional pressure from harvest related selling and Minneapolis picked up extra selling interest from the fairly good condition of the hard red spring crop. Fundamentals remain negative, especially on the supply side of the ledger. European wheat was mixed on position squaring ahead of the long U.S. weekend; Paris November was up 1.3% and London November was down 1.1%. Japan’s Ag Ministry bought 108,000 tons of wheat (37,000 tons U.S. dark northern spring, 29,000 tons U.S. western white, 21,000 tons U.S. hard red winter and 21,000 tons Australian standard white) and the Taiwan Flour Millers Association purchased 82,350 tons of U.S. hard red winter, soft red winter and dark northern spring. Informa Economics has U.S. hard red winter production at 915 million bushels, with an average yield of 38.2 bushels per acre, soft red at 422 million and spring wheat at 502 million bushels with an average yield of 38.0 bushels per acre.