Soybeans Bearish news: Soy-meal supply bearishly exceeds demand. Russia has stopped imports of U. S. poultry reducing demand for soy-meal. The Russian market used 23 percent of our poultry exports.
Cattle on feed and cattle placements are the lowest in seven years. This will reduce feed demand for soy-meal, corn and wheat.
South American soybean yield projections keep rising. More than 10 percent of Brazilian soybeans are harvested. Weather there has turned dry assisting harvest. Private estimates of Brazilian production potential exceed USDA projections by a million tons.
China is on a week long holiday to celebrate Chinese New Year. This will reduce soybean exports to China this week.
Bullish news: Soy-oil has turned higher. Palm oil prices are up more than seven percent in a week. EPA renewable fuel standard requirements could use 1.15 billion gallons of soy-oil. Weekly soy-oil exports went up to a record high of 59,000 tons.
Argentina has turned dry. Dry weather is not yet a threat but drought would reduce soybean yields there. Argentine soy-oil production is down nearly twenty percent.
Bearish news: South American production of corn is projected to offset the reduction of ending stocks in the United States. Brazil did not cancel their tariff on ethanol imports.
Weekly corn export inspections were bearishly below market anticipations at 27 million bushels. Cattle and hog feed demand has dropped to the lowest level in five years. Corn supplies are not abnormally abundant but there is enough to meet lower feed demand.
Livestock feeding operations around the world are switching from corn to higher protein wheat for feed as prices drop. This phenomenon is especially true in Europe and Asia where wheat is available at lower shipping cost and lower prices.
Bullish news: World supply of coarse grain is estimated to have decreased 4.5 percent since last year. With corn prices down 75 cents from January first, selling is beginning to dry up. Traders have sold 150,000 buy contracts since the beginning of this year.
Total shipments of corn exports reached a new record high of 694 million bushels. The previous record was set last year at 680 million bushels. Corn ending stock estimates were revised down 4 million bushels by USDA.
Higher energy prices are supporting corn ethanol prices. As EPA renewable fuel standards are implemented, up to one third of the U. S. corn crop could be used for ethanol. Keep in mind that distillers grain is of higher protein value than corn. About half the weight of corn used for ethanol will be available as higher nutrition livestock rations.
Bearish news: Egypt passed on the opportunity to buy U. S. wheat opting for French wheat instead. Indian planting progress reached 28 million hectares (over 61 million acres) of wheat. World wheat supplies are estimated to increase near 195 million tons. Taiwan passed on a tender to buy U. S. wheat with expectations of lower prices.
A USDA supply estimate of 975 million bushels is a bearish number and a new record. That is an 8 million bushel increase over last year’s record supply. Some private market analysts are predicting wheat prices of $4.20. Exports were down 180 million bushels.
Bullish news: Australia’s wheat crop is bullishly less than expected and maybe 1-2 million tons below previous estimates. Canada has a million tons less wheat than previously anticipated. Canada also produced a million tons less barley which can be used in place of wheat.
Short positions held by traders in wheat markets are higher than normal. This will initiate some short covering such that traders take buy positions for insurance if wheat prices do not drop enough to trigger profit taking.
Bearish news: Vietnamese rice prices are below world market prices. Stronger dollar values make U. S. rice even less competitive. Thailand is selling rice below their target price and below current prices in the United States. Thailand and Vietnam have large supplies of rice for sale.
India has decided to get by on rice they have in storage and not purchase additional rice but substitute wheat. India has increased wheat planting substantially. The Philippines are making up most of their rice shortage with inexpensive Vietnamese Rice. Iraq is expected to buy Asian rice.
USDA predictions include medium grain rice supply in the United States to increase 2 million hundredweight.
Bullish news: Rice grown in the United States remains competitive for Mexico and Central America because of lower freight cost. Rice exports to Mexico and Central America remain steady.
Long grain rice supplies in the United States are projected to drop 3 million hundred weight by USDA. Weekly export sales were 89,000 tons. Most of our weekly export business, 56,000 tons went to Venezuela.
Bearish news: Recent unemployment numbers continue to limit household and clothing purchase potential. Cotton supplies are tight but so is consumer spending.
Bullish news: Cotton markets are focused on two factors. The world economic situation and acres planted including production potential. The support prices have moved above seventy cents for the second time this year. Cotton export deliveries so far this week are up to 528,000 bales.
USDA decreased cotton ending supply estimates to 3.3 million bales the lowest estimate in 25 years. World supplies are expected to drop 1 percent reaching 52 million bales. Projected exports of 12 million bales are bullishly increased a million bales.