Market News

Tight supply supports soybeans: July 22, 2009

Soybeans closed modestly higher on technical buying, short covering and tight near term supplies. November has managed to avoid a new low for the move in the past two sessions. However, weather remains generally good across the Midwest and gains were limited by the mostly lower commodity trade. Overall, it was an up and down day for beans with no real fresh direction or news. Also, there’s some uncertainty about China’s soybean auction and demand from Beijing. While there haven’t been any fresh old crop sales to China, there haven’t been many major cancellations either. Soybean meal was mostly higher and bean oil was lower with product spread trade the big feature of the day. The U.S. Census Bureau’s monthly soybean crush report is due out Thursday at 7 AM Central. The crush is pegged at 138.36 million bushels, oil stocks are seen at 3.36 billion pounds and meal stocks are placed at 439,600 tons. Weekly export sales are out Thursday at 7:30 AM Central with soybeans placed at 400,000 to 700,000 tons, meal at 75,000 to 125,000 tons and oil at 20,000 to 100,000 tons.

Corn was lower on fund and technical selling. Crop conditions and weather continue to look generally very good, pushing September to new contract lows and nearbys to their lowest levels since October 2006. That said – there’s still quite a way to go for this year’s crop, which helped limit losses. Traders were also still possibly a little shell shocked following a record average yield projection from the University of Illinois. Weekly U.S. corn exports are expected to be between 800,000 and 1.3 million tons.

The wheat complex was lower on technical and fund selling. Traders are nervous about the potential for increased government regulation of trade following a hearing this week by the Senate Permanent Subcommittee for Investigations. Also, recent rain has helped Argentina’s crop and National Bank Australia upped their 2009/10 production forecast to 23.2 million tons. The fundamentals remain very negative especially for Chicago and Kansas City with a large world supply and fairly poor demand. The comparatively tight supply and good demand for hard red spring helped Minneapolis pull up from the day’s lows, which lent a hand to Chicago and Kansas City. European wheat was lower on harvest pressure; November Paris was down 1.4% and November London was 3% lower. Weekly U.S. wheat sales are estimated at 300,000 to 550,000 tons.