Bullish factors in the market include the lower dollar values which stimulate increased export demand and the recent rally in gasoline reflects increased demand for oil and ethanol. Traders expect demand to increase if stock market prices rise reflecting economic improvements.
Bearish market factors are dominated by weather forecasts that favor increased production and consequently lower prices. World ending supplies of grain are expected to increase. Harvest pressure is helping keep prices down. USDA weekly supply / demand forecasts were price bearish.
Traders are getting nervous about selling soybeans as the crop needs heat units to generate optimum yields.
The drought in China is getting worse and the effect on soybeans is more pronounced. China has predicted a 15 percent reduction in soybean production and 11 percent increase in exports. China expects to import 6 percent fewer soybeans next year, but another 8 million tons in November and December. China sold nearly 30,000 tons of 500,000 offered in last week’s auction.
Canada has a good canola crop if it does not freeze. Brazil has predicted an increase of 10 percent in soybean exports next season. India had enough rain to increase soybean yield potential.
Private sources predict soybean production will not meet world demand.
Total soybean sales for this year are at 41 percent of USDA estimates where 20 percent is the average.
Biodiesel demand has increased farm returns for soybean sales by 25 cents per bushel. The total income increase over four years has been 2.5 billion dollars.
Palm oil prices took a 4 percent jump on the first trading day of the week then dropped 2 percent.
Weather continues to be the major market factor with anticipation of a bumper crop. Fund traders are buying but trend traders are selling soybeans.
Favorable production weather continues to pressure prices. Last week USDA reported 97 percent of soybeans were setting pods. Only 7 percent of the crop was beginning to drop leaves. At least 68 percent of the crop rates good to excellent, 54 percent is the 10-year average.
Export inspections of 9.5 million bushels were disappointing and down 46 percent from the previous week.
USDA estimates the soybean crop at 3.245 billion bushels and that raised ending stocks to 110 million bushels.
Weather is favorable for corn maturity, keeping pressure on prices. Corn does need more heat units but fewer than soybeans. One-third of the U.S. corn crop will mature after the average first frost date.
Exports remain strong but world supplies look bigger. Argentina estimates 24 percent fewer corn acres next year.
Some private sources are estimating corn yields will be lower than USDA estimates.
Fund traders are buying and selling but trend traders are selling. Corn markets appear to be consolidating.
The percentage of United States corn in the dough stage has reached 86 with 50 percent in the dent stage. The average amount of corn in the dent stage for this time of year is 75 percent. Dent stage corn is beyond freeze damage. The corn crop rating reached 69 percent good to excellent exceeding the 50 percent average.
Export inspections of 43 million bushels were at the high end of expectations. The market hit a new price low despite good demand. Private sources estimate corn prices as low as $2.65.
USDA weekly supply and demand report predicts total corn production of 12.995 billion bushels with 1.72 billion carryover stocks. Deliveries this week were zero.
Harvest pressure continues to keep wheat prices down. Harvest pressure here is aggravated by Canadian and European harvest. Canada expects ending wheat supplies to increase 46 percent. World supply estimates are increasing which also pressures prices. Australia has rain and expects increased production. Production potential in South America and India has improved with recent rain. India now expects 15 percent more wheat due to recent rains. Brazil expects wheat yields to be 5 percent lower. French wheat exports are down 27 percent from last year.
Every fund trader buy is offset by at least one trend trader sell. Export inspections near 17 million bushels met market expectations. USDA export estimates were increased 551 million tons. World ending stocks and United States ending stock estimates were both increased.
Rice harvest has moved up into Arkansas. Export demand is weak but so is production potential. India is expecting 6.5 million acres less rice this season. That will put India’s rice crop on 30 million acres in place of the expected 36 million acres. World supplies remain ample but steady use is rapidly eroding those supplies. Stored rice supplies in Thailand remain a negative market factor. Low wheat prices pressure rice prices as people substitute wheat consumption for rice. World rice supply estimates are bearish and the trend is turning down. Rice made a limit down move to finish the week.
Cotton continues to follow stock market prices. Demand is beginning to improve and stocks will become tight very quickly. Traders anticipate an increase in cotton demand. China has returned to the market but Chinese buying remains light. Chinese cotton production estimates are declining but India has a bumper cotton crop. The U.S. cotton crops ratings are average at 51 percent good to excellent. Market fears of inflation support cotton prices above 59 cents. The prospect of fewer cotton acres in the United States is price supportive. USDA demand estimates are up and world production estimates were lower.