Non-commercial traders reduced buy positions 56 percent in January. Grain and oilseed supplies are at the highest level since 2001 and 22 percent above 2007 supply. The availability of global wheat supplies is limiting corn and soy-meal export potential.
Bearish news: The prospect of a record corn and soybean yields in Argentina and Brazil is putting major harvest pressure on grain and oilseed prices. Current prices reflect demand shifting toward South American supplies. China is not expected to absorb South American soybean production.
Chinese prices moved 2 percent lower in one overnight session. Higher dollar values have a limiting effect on export sales of commodities from the United States. Soybean prices are expected to trade in a consolidation pattern short term but the trend remains down.
Soy-meal supply currently exceeds demand and is expected to remain oversupplied this season. South America will have large supplies of meal after harvest.
The trend is bearish; consider selling whenever soybean prices rally. Soybean prices have dropped $1.66 since the January high. Export inspections of 40 million bushels were below expectations.
Bullish news: Export demand for soybeans remains high near term.
Vegetable oil supplies are getting tight. Palm oil supplies are limited and production is down. Rapeseed oil supplies in Canada are good but soy oil and canola oil will be tighter because of limited palm oil supply. Indian rapeseed production is expected to be down 700,000 tons.
Soy-oil sales are 20 percent above average. Soy-oil supplies in the United States are below 3 billion pounds and below market expectations. Soybean crush last week was 173 million bushels. Soybean exports of 857,000 tons were at the high end of market anticipations.
Bearish news: Feed use is down significantly. Cattle and hog herds are down significantly from a year ago. Ranchers have been reducing their breeding stock. Smaller herd size equals less feed use. Corn and Soy meal are both negatively affected.
Corn export sales are near 52 percent of USDA export forecasts. The average for this week is 56 percent of that forecast. Corn exports are 4 percent behind average.
Traders anticipate the potential for farmer selling in corn and beans to become reality in the spring. This is anticipated to exacerbate the harvest pressure out of South America. Traders hold a large number of long positions keeping the potential number of sellers large.
Bullish news: Corn exports were over 900,000 tons and near the high end of market expectations. Lower prices usually stimulate exports. Export inspections near 37 million bushels were above market anticipations.
EPA renewable fuel mandates are near finalization. It is anticipated more ethanol and biodiesel will be in demand because mandates will increase. Ethanol production was up 6 percent last month using 362 million bushels. Higher energy prices support beans and corn.
Farmer selling of corn remains light. As transportation pipelines that have been clogged with soybeans become available. Corn export demand could increase quickly. Lower prices stimulate demand.
Bearish news: Wheat prices are expected to test new low levels in the near future. Traders expect prices to break through support levels established last fall.
Demand for United States wheat is not expected to hold up. Large supplies in Asia and Europe are more competitively priced. Eastern Europe estimates winter wheat production will increase 35 percent.
Winter wheat crops in the United States and Asia are in good condition. The number of acres planted is smaller and production is expected to decrease but carryover is the greatest in 50 years. Spain plans increased wheat of plantings 6 percent.
Wheat markets ran out of sellers this week allowing a short term recovery. This is an opportunity to sell wheat.
Bullish news: Fewer acres and reduced production may help prices later in the year if wheat use increases. Spring wheat plantings could decrease significantly if prices continue to fall.
Lower prices stimulate demand for export sales. Export demand last week was bullish at 689,000 tons. Demand will be limited if dollar values continue to climb.
Fund traders reallocated money on February first putting additional money into wheat contracts. Export inspections near 18 million bushels were the highest this year.
Bearish news: USDA reports were considered rice bearish. Traders estimate those reports depressed prices 58 cents in the United States. World rice prices were already lower and little affected by USDA reports.
Rice shipments were nearly anemic last week at 22,000 tons. That number is expected to recover next week. Rice acres are anticipated to increase next season.
Bullish news: The oversold condition in rice markets has been mostly corrected. The support price of $14.00 was broken through but prices have come up above that level again.
Rice export sales of 102,000 tons were half that of last week but still considered strong. Lower prices help stimulate exports. The government is expected to buy rice for earthquake victims in Haiti.
Haiti and Iraq placed a tender for 120,000 tons of rice for March or April delivery. U. S. rice is competitively priced for that offer.
Bearish news: The anticipated cotton acre increase next season has become a bearish factor in cotton pricing.
Traders profit taking in cotton continues to pressure prices. The anticipated down trend is underway. Traders expect new lows in cotton pricing.
Positive economic numbers regarding the GDP increase did not impress traders. Unemployment numbers remain high and consumer confidence low signaling limited fiber demand.
Bullish news: Exports of 493,000 bales were double market anticipations. Cotton exports exceed USDA forecasts and the market is oversold. Total market sales are 6 percent above average. Shipments were also bullish at 478,000 bales.
Asian economies are improving more rapidly than the U. S. economy. Cotton is oversold. Chinese cotton planting are predicted to drop by 5 percent.