China increased interest rates to keep down inflation. As a result dollar values have increased in parts of Asia making U.S. grain, oilseed and fiber exports more expensive for importing countries in some areas.
Wheat supplies hit a 10-year high.
Unemployment remains high, limiting prices. Demand for meat, and fiber products are not anticipated to rise without a rise in employment.
Anticipated fund trader buying did not materialize.
USDA increased production estimates for beans corn and rice. Carryover supply estimates were correspondingly increased.
The United States has another record soybean production year. Brazil and Argentina also have the largest soybean crop ever recorded.
Fewer acres of wheat without the need for additional soybean acres will result in more acres of corn, cotton and rice. Corn may not need to buy additional acres. Farmer selling has increased.
Bullish News: The drop in dollar values coupled with the drop in commodity prices has made U. S. grains, oilseeds and fiber less expensive for most importing nations.
Palm oil prices have dropped 3 percent. Since soy oil is a substitute for palm oil that price drop decreases support for soy oil prices and consequently lowers the value of soybeans. Commercial traders have begun selling soybeans stimulating profit taking from other traders.
Soybean production estimates for South America are a whopping 116 million tons. That is a 30 percent increase over previous production averages. World supply is expected to increase 35 percent as a result of South American harvest. Brazilian production estimates have increased over 2 million tons.
China is looking at cheaper soybean prices out of South America. The rumor is that China will apply soybean import quotas. United States carryover supply is expected to increase by 84 percent. Chinese imports are estimated to be a record 5.25 million tons. Soybean exports of 726,000 tons were down 25 percent.
Farmers in the United States and South America are actively selling soybeans. Soybean export demand is 7 percent higher than last year. Export sales of soybeans last year set a new record.
The break in corn price increases has not stimulated farmer selling. Weather has again become a factor in corn markets. Cold temperatures have increased the need for animal feed as livestock must have increased rations to withstand colder temperatures.
Brazil corn production estimates have increased another 500,000 tons. Argentina now predicts corn production to increase 5 million tons. The Argentine crop has responded to ample rainfall and yields are the highest on record at 50 percent above average.
Corn exports were below market expectations at 365,000 tons. Exports of 364,700 tons were well below market expectations. Farmers are selling before prices decline further. Traders are liquidating long corn contracts. Supply estimates are predicted to increase 89 million bushels. Some price predictions are under $3.60.
Increased dollar values are putting pressure on wheat prices. Canada expects to export an additional 2 million tons of wheat. Wheat export sales have hit a market year low at 93,000 tons. World supply remains larger than demand.
Winter wheat plantings are lower and maybe 3 million acres below previous estimates. World wheat planting is significantly below last year. Wheat prices ratios are below average compared to rice, corn and beans.
Winter wheat acres are down another 14 percent. That is the fewest winter wheat acres in nearly 100 years. Wheat prices are anticipated to fall less than beans or corn. Importing nations may stockpile more wheat because of lower dollar values and lower prices. Wheat is expected to hold above $5,00.
The dearth of news in rice markets provides no direction for prices. Wheat prices are leading rice markets in the absence of fresh news. Long term rice fundamentals support higher prices.
USDA raised rice production estimates 1 percent. The total supply is now 220 million hundred weight. Production estimates were increased 239 pounds above last year. Rice supply carry over estimates were increased 13 percent over last year. The support price for March is now estimated at $14.00
Cotton planting expectations have increased bearishly by 1 — 1.4 million acres. Higher dollar values are export unfriendly. Unemployment remains above 10 percent limiting consumption of fiber products. Export sales were disappointing at 130,000 bales the last week of December. Fund trader buying has been more limited than market anticipations. Cotton exports of 197,000 bales met expectations.
Cotton prices eroded more slowly than grain or oilseed prices. The current market may represent a buying opportunity. The selloff in commodities and stock markets along with high unemployment and higher interest rates in China pressured fiber prices. Market prices are expected to remain range bound between 72 cents and 75 cents until market news changes.