Market News

Grains and oilseeds lower on outside markets, weather: July 6, 2009

Soybeans were sharply lower on technical and speculative selling, along with spillover from the outside markets. The dollar was higher, while crude oil was sharply lower and the Dow Jones Industrial Average had an up and down day. The big factor was that crop weather is generally good – Allendale’s David Kohli says that the weather may not be great, but at least it’s non-threatening. In any event, the tight supply, strong demand and uncertainties about this year’s crop kept contracts from moving even close to limit down. According to the USDA, as of Sunday, 96% of soybeans have emerged, compared to 98% for five year average, and 14% are blooming, compared to 24% on average with 66% of the crop in good to excellent condition, down 2% from last week. Soybean meal and oil were lower following the lead of soybeans; losses in oil were limited by product spread trade.

Corn was lower on fund and technical selling, along with spillover from beans and the outside markets. The generally good crop weather is also a negative for corn with the crop in pretty good condition in most areas of the Midwest. July occasionally climbed into positive territory on the lack of deliveries against that contract and technical support around $3.45. The USDA reports that 8% of corn is silking, compared to 16% on average and that 71% of this year’s crop is in good to excellent conditions, down 1% from a week ago. Ethanol futures were lower.

The wheat complex was lower on technical and fund selling, in addition to soybeans and the outside markets. The higher dollar index was another factor; it makes U.S. goods more expensive on the export market and U.S. wheat’s already at a premium to other origins. Chicago and Kansas City had additional pressure from harvest selling. For winter wheat, 56% has been harvested, compared to 59% on average with 47% of the crop in good to excellent shape, up 2% from last week. For spring wheat, 30% has headed, compared to 65% on average with 72% of spring wheat in good to excellent condition, down 4% on the week. European wheat was lower on outside market direction; November Paris and London were both .2% lower. Rabobank has lowered its 2009/10 wheat production projection for Australia to 22.8 million tons on the potential for an El Nino event leading to below average rainfall. Saudi Arabia bought 440,000 tons of milling wheat from the U.S., Canada and the European Union.