Market News

Soybeans supported by crude oil: August 5, 2009

Soybeans closed higher after an up and down day on short covering, technical buying and a late higher trade in crude oil. There wasn’t really any fresh news to drive trade one way or the other with beans turning higher after crude oil rallied and the dollar moved lower. Also, weather’s generally good but there are concerns about forecasts for a hot spell in the Midwest. The crop has developed slower than normal and while most estimates ahead of next week’s August 12 production update do have a year to year increase in average yield, for the most part they are under the July projection. Soybean meal and oil ended the day higher following the lead of beans. After two weeks of failing to sell any soybeans because of high prices, Beijing finally auctioned off 4,335 tons of soybeans in Inner Mongolia, according to Dow Jones Newswires. USDA’s weekly export sales report is due out Thursday at 7:30 AM Central. Soybeans are placed at 2.2 million to 2.5 million tons, meal is seen at 150,000 to 400,000 and oil is pegged at 15,000 to 90,000 tons.

Corn was lower on fund selling and a lack of new buying interest. Weather’s an issue – on one hand, the crop is short of growing degree days so some hot conditions would help the crop catch up, but on the other hand, it’s in a critical development phase. Past that, the fundamentals remain negative and most traders expect an increased production estimate in next week’s USDA update. At this point, it looks like the current downside target for the December contract is $3.50. Ethanol futures were lower. The Buenos Aires Grain Exchange states that it expects smaller corn acreage in Argentina next year due to the better return on beans and the recent poor season with the crop totaling 12.5 million tons following drought. Most of the acreage lost by corn is expected to go to beans. South Korea’s Nonghyup Feed Inc. bought 110,000 tons of corn at premiums to the December CBOT contract. Weekly U.S. corn exports are expected to be between 800,000 and 1.25 million tons.

The wheat complex was lower on technical selling, profit taking and a lack of new buying interest. Wheat continues to be a follower with no new fresh supportive news. The fundamentals remain negative with a lack of new demand and a large available supply, both domestic and international. Minneapolis continues to have a slightly better supply and demand outlook than Chicago and Kansas City because of the comparatively greater demand for hard red spring. European wheat was lower on the overall bearish fundamental outlook and a lack of new buying interest; November Paris was down 2.2% and November London was 2.4% lower. Egypt issued a tender for 55,000 to 60,000 tons of wheat. According to the Buenos Aires Grain Exchange, improved rainfall has helped the wheat crop but probably came too late to increase planted area. Weekly wheat sales are estimated at 350,000 to 550,000 tons.