Market News

Selloff continues in soybeans: July 8, 2009

Soybeans were mostly sharply lower on technical and speculative liquidation, along with profit taking and spillover from the outside markets. The dollar index was lower, but the Dow Jones Industrial Average was down during futures trade and crude oil was sharply lower. Also, crop weather continues to look generally good across the Midwest over the near term and there are general concerns throughout the commodity pits regarding potential increased government intervention in trading. Soybean meal and oil were lower on spillover from beans and the general liquidation in commodities. China bought 180,000 tons of 2009/10 U.S. soybeans. China’s National Grain and Oils Information Center left its 2009 soybean production estimate unchanged at 15 million tons, down 3.2% from a year ago with planted area 3.7% below 2008. The Buenos Aires Grain Exchange states that Argentina’s soybean harvest has wrapped up with the crop at 32 million tons. The Exchange expects a sharp increase in planted area for 2009/10.

Corn was mostly lower on spillover from beans, outside market direction and spread trade. Contracts were up for a large portion of the day with contracts due for a bounce after losing more than a dollar in the past few weeks and no deliveries on the July contract. Also, farmer selling has been pretty light recently. However, most corn contracts couldn’t hold on to their gains due to the good crop weather and the lower beans and crude oil. Ethanol futures were lower. A previously announced sale of 120,000 tons of 2008/09 corn to unknown destinations was switched to South Korea. China’s National Grain and Oils Information Center sees 2009 corn production at 163.0 million tons, 1.8% below 2008 despite a .7% increase in planted area. The Buenos Aires Grain Exchange reports that 97.7% of the corn crop has been harvested with the crop pegged at 12.5 million tons following a drought that also hit soybeans and is currently affecting wheat.

The wheat complex was mostly higher on short covering, spreading and oversold signals. The fundamentals remain extremely negative, but Egypt did buy U.S. wheat and contracts were due for a bounce. Egypt picked up 120,000 tons from France at $186.45 per ton and 55,000 tons of U.S. soft red winter at $181.99 per ton. Past that, harvest and crop development weather do look fairly good in the near term. July Minneapolis was down modestly ahead of Friday’s USDA spring wheat production estimate. European wheat futures were higher ahead of harvest on short covering. France’s Agrimer estimates the 2008/09 soft wheat crop at 37.040 million tons, compared to 30.775 million in 2007/08, and pegs durum at 2.148 million tons, compared to 2007/08’s total of 1.989 million. China’s National Grain and Oils Information Center has 2009 wheat production at 113.2 million tons, up .7% from 2008 at least partially due to a .5% rise in planted area. The Buenos Aires Grain Exchange reports that recent rain has helped Argentina’s wheat crop, but there’s a lot more needed with acreage a little more than half of what it was this time last year.

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