Market News

Soybeans up on tight supply, good demand: June 17, 2009

Soybeans were higher on speculative and technical buying, along with outside market direction. The dollar was lower and crude oil closed higher after early lower trade; the Dow Jones Industrial Average was mixed during futures trade, eventually closing modestly lower. Soybean’s fundamentals remain supportive and there are some concerns about this year’s slow planting pace. Gains in the nearby contracts were limited by old crop/new crop spread unwinding. Overall, with no new fundamental influences and the outside markets providing support, contracts gained. Soybean meal was mostly higher, following the lead of beans, but July was down on profit taking and the unwinding of old crop/new crop spreads and the unwinding of spreads with oil. Soybean oil was higher on that spread trade. Argentina’s export body CIARA-CEC states that Buenos Aires and exporters have agreed to pay farmers a higher price for their exportable commodities in exchange for export licenses. CIARA-CEC adds the April soybean crush totaled 3.02 million tons, up 8% from April 2008.

Corn was higher on technical buying, short covering and spillover from crude oil and beans. There’s also support from the continued talk about acreage adjustments by the USDA and oversold signals with July finding good support around $4. July did go below $4 for the first time since May 5 before bouncing back. However, corn is watching the weather and near term forecasts generally look good for development with warmer, wetter conditions expected. Ethanol futures were mixed.

The wheat complex was narrowly mixed after a lower start to the session. In general, there was support from oversold signals and short covering against pressure from the bearish world fundamentals. Chicago was steady to higher on technical buying and the lower dollar. Kansas City was mostly lower with support from the weak dollar and pressure from the ongoing winter wheat harvest. Minneapolis was mixed with July down on profit taking and deferreds up on the tight supply and good demand for hard red spring. European wheat was lower on the overall negative world fundamentals; November Paris was down .2% and November London was .4% lower. The Rosario Grain Exchange has lowered its 2009 wheat planting estimate for Argentina by another 7.5%, pushing the total expected planted area down 35% from 2008.