Market News

Soybeans mixed with old crop up on supply: July 20, 2009

Soybeans were mixed with old crop/new crop spread trade the big feature of the session. Nearby contracts were up on that spread trade and the tight supply and good demand while deferreds were down on the generally good crop weather. However, the new crop losses were minimal, so those forecasts may be factored in. China continues to be a question mark: Beijing will be auctioning soybean reserves Thursday, but there’s talk in the market that Beijing’s also looking to buy old crop U.S. beans. According to the USDA, as of Sunday, 44% of soybeans are blooming, compared to 62% for the five year average and 67% of the crop is in good to excellent condition, up 1% from last week. Bean meal was mostly lower with nearbys up on the tight supply and deferreds down on product spread trade. Bean oil was higher on the firm crude oil and that product spread activity. The Buenos Aires Grain Exchange projects 2009/10 soybean production at 50 million tons, thanks in part to record expected planted area. The 2008/09 crop totaled 32 million tons due to widespread drought.

Corn was higher on short covering and technical buying, along with lower trade in the dollar index and higher crude oil. However, crop weather continues to look generally non-threatening through the end of the month, which limited gains. The USDA reports that 31% of the corn crop is silking, compared to 54% on average with 71% of corn in good to excellent shape, which was unchanged from a week ago. Following planting delays, corn was developing slower than normal, but that pace may have slowed down further due to cooler than average temperatures in many areas of the Cornbelt. The Buenos Aires Grain Exchange sees 2009/10 corn production at 16 million tons with half kept for domestic use and half for export. The current crop is 96% harvested with production pegged at 12.5 million tons due to drought.

The wheat complex closed mostly firm in thin trade after spending the session mostly lower. Chicago and Kansas City were modestly higher on short covering, the lower dollar and technical buying. Minneapolis was lower on the overall very good condition of the spring wheat crop. For spring wheat, 84% of the crop has headed, compared to 93% on average with 73% of the crop in good to excellent shape, up 2% on the week. For winter wheat, 72% is harvested as of Sunday, compared to 77% on average. European wheat was lower on harvest pressure; November Paris was down 2.1% and November London was .7% lower. The Buenos Aires Grain Exchange continues to lower 2009/10 wheat production projections as continued drought pushes planted area to the lowest level in more than a century. The new Exchange guess is 7.4 million tons, compared to 2008/09’s total of 8.7 million tons and the five year average of 14.76 million. Argentina consumes around 6 million tons of wheat annually. Egypt issued a tender for 55,000 to 60,000 tons of wheat.

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