Market News

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

Soybeans were lower on profit taking, technical selling and spillover from the outside markets. The dollar was higher while the Dow Jones Industrial Average and crude oil were lower. Also, weather looks non-threatening over the near term for most of the Midwest, however there is now less rain in the forecast for this weekend in some areas and there is a chance for a cold snap next week. Losses in the old crop were limited by the tight supply and demand outlook. Soybean meal and oil were lower on spillover from beans and the higher dollar. Brazil’s National Commodity Supply Corp. (CONAB) pegged 2008/09 soybean production at 57.1 million tons, down 4.8% from 2007/08 as a 2% increase in planted area was offset by drought or near drought conditions in southern Brazil. The Brazilian Vegetable Oils Industry Association (ABIOVE) estimates the crush at 30.9 million tons and the export total at 26.2 million. The Solvent Extractors Association of India states that oilmeal exports during July were down 63% on the year at 173,329 tons due to weak demand.

Corn was lower on fund selling, profit taking and spillover from beans and the outside markets. The generally good weather forecasts are also a negative for corn. Additionally, most analysts expect a bigger corn production number from the USDA next week with a new estimate from Farm Futures magazine a factor, in addition to continued bearish sentiment connected to Wednesday’s guess by Informa Economics. Ethanol futures were lower. CONAB reports that Brazil’s 2008/09 corn crop totaled 50.2 million tons, up modestly from last month but down 14% from last year’s total. The first crop was pegged at 33.6 million tons and the second crop was placed at 16.6 million tons. Brazil’s corn crop was down on the year due to a number of factors including poor returns on investment and hot, dry weather during critical portions of the growing season.

The wheat complex was lower on technical selling, the higher dollar and the lower beans and corn. A higher dollar makes U.S. goods more expensive on the export market limiting competition. The fundamentals remain negative with a lack of new demand and the large available supply. Additionally, Egypt bought 210,000 tons of wheat, but none of it was U.S. Out of the total, 180,000 tons is French origin, purchased at $178.96 per ton, and the remaining 30,000 tons is Russian bought at $176 per ton. European wheat was down sharply with the November contracts in Paris and London both losing 3% on wheat’s negative fundamentals.