Market News

Weather pressures beans and corn: July 16, 2009

Soybeans were lower on technical and speculative selling. The outside markets were mixed with the dollar lower and the Dow Jones Industrial Average and crude oil mixed during the session. The big source of pressure continues to be the weather with conditions generally good across the Midwest. Losses were at least somewhat limited by the supportive fundamentals and in any event, there’s a long way to go for this year’s crop. China confirmed plans to sell 500,000 tons of soybeans from state reserves. However, Allendale’s David Kohli notes that planned prices are above market price and the prices paid to farmers. Soybean meal and oil were lower on spillover from beans.

Corn was lower on fund and technical selling, along with spillover from beans. The generally good crop weather across the Midwest is also the big factor for corn, overriding nearly every other influence right now. That said – losses were a little limited by some production uncertainties and the solid weekly export sales. In any event, there’s still a long way to go until this year’s corn crop is finished and weather over the next month will be extremely critical. Ethanol futures were higher. In addition to soybeans, China will be auctioning off 2 million tons of corn next week. Strategie Grains pegs 2009/10 European Union corn production at 56.6 million tons, down from June and 9% less than a year ago.

The wheat complex was mixed on technical selling, profit taking and spillover from corn and beans. There are some signs that demand is picking up but overall, fundamentals remain negative due to the large world supply. Also, while harvest related pressure in Chicago and Kansas City is lessening, near term weather looks good. Contracts were higher for most of the day on the lower dollar index and short covering. European wheat was lower in thin trade with Dow Jones Newswires stating that there wasn’t much attention paid to wheat; November Paris was down .7% and November London was .9% lower. China states that along with corn and soybeans, Beijing will be auctioning off 750,000 tons of wheat. Japan bought 108,000 tons of wheat (35,000 tons U.S. dark northern spring, 21,000 tons Australian standard white, 21,000 tons Canadian western red spring, 17,000 tons U.S western white and 14,000 tons U.S. semi hard). Strategie Grains pegs the European Union’s 2009/10 soft wheat crop at 126.5 million tons, up 200,000 from the June estimate but down 10% from 2008/09.