Chinese soybean prices pulled back after the government released soy oil and beans from reserve supplies into domestic Chinese markets to curb food inflation. China may have less total grain supply, but soybean production is up 10 percent from last year.
U.S. traders have nearly 139,000 contracts of open interest on the buy side of the soybean markets. That would be bullish but it also has a large profit-taking potential. Export inspections were down 5 million to 11.5 million bushels.
Current U.S. production estimates were increased to a new high of 3.5 billion bushels. Sixty-four percent of the soybean crop rates good to excellent, 7 percent above average. Markets are overbought and harvest pressure is on the horizon. South America expects soybean acres to increase at these prices.
Bullish news: Current yield estimates over 44 bushels per acre are based on pod counts. Not only is there substantial soybean sudden death syndrome in part of the Corn Belt, but the lack of rain in the Delta may reduce test weight substantially.
Canada and Asia have much less rapeseed oil production than normal. The reduction in canola oil supply will support soy oil prices and help support soybeans. Weekly export sales near 992,000 tons met market expectations.
Bullish news: Corn yield estimates from private and university sources are lower than USDA estimates. Keep in mind that 13.3 billion bushels is still a huge crop. The carryover supply estimates have dropped ten percent.
Egypt is buying corn from the United States despite the proximity of Russia and the Black Sea area. Export inspections were up 5 million bushels to 37.5 million. Corn quality problems are reduced from last year. Weekly corn export sales of 1.735 million tons exceed market anticipation by 750,000 tons.
Traders are buying. Open interest is 294,000 buy contracts. Some profit-taking is possible but every 1 bushel reduction in yield cuts total production by 81 million bushels. USDA projects domestic feed use and ethanol consumption will use over 10 billion bushels of corn.
Bearish news: Eminent harvest pressures prices. Eight percent of corn is already mature. Fifty-four percent is in dent stage way ahead of average.
Bearish news: Russian officials announced that grain imports may not be necessary. Egypt bought French wheat this week. The rumor is Ukraine will increase wheat export quotas a million tons, putting the total at 2.5 million tons. Asia has rain in the forecast. Australia has more wheat than expected
Wheat market technical charts turned negative, indicating a market correction. There is no wheat shortage in the world. Stored supplies are adequate and the United States has a bumper crop. Spring wheat harvest is 53 percent complete with a rating of 82 percent good to excellent.
Bullish news: North African countries are buying U.S. wheat despite the proximity of Europe. Weekly export sales over a million tons exceed market expectations by 250,000 tons.
Canada increased their wheat production estimate. They now expect 22.5 million tons. That number is 8 percent higher than the July estimate. Russian wheat production is down 31 percent at 41 million tons. German production is down 5 million tons which is more than 10 percent.
Bearish news: Rice markets turned to follow wheat lower. The U.S. harvest estimate is down but the crop remains huge. Harvest pressure and lower wheat prices weigh on the market.
Bullish news: International rice market prices have firmed up on higher demand. The result has been increased exports for U.S. rice. Vietnam and India are exporting rice decreasing world supply. China bought enough Vietnamese rice to support prices. Iraq resumed imports of U.S. rice.
Trader open interest is 19,000 buy contracts above sell contracts. Total U.S. rice exports for the week were 88,000 tons. Milled rice sales made up 32,000 tons of that total. Weekly export sales were above market expectations at 418,000 tons.
Bullish news: Asia is unaffected by U.S. jobless claims. Clothing demand in Asia is rapidly increasing. Chinese cotton imports have increased 97 percent over last year. Asians can afford more new clothes than we can. Weekly export sales were anticipated to be 340,000 bales. The actual total was way above expectations at 488,000 bales.
Bearish news: Cotton prices started the week with light trading and range bound prices. Higher jobless claims in the United States have less affect on the market than anticipated due to Asian demand. Low unemployment and higher dollar values combined to reduce prices. Housing sales are down 15 percent.
Indian cotton export sales are increasing. They could have enough cotton to keep up with the increase in demand from the rest of Asia. China has a good cotton crop. Technical charts turned bearish.
Sixty-two percent of cotton rates good to excellent. Ninety-four percent of the crop is setting bolls. Twenty-one percent of the cotton is open. The crop is early and large enough to pressure prices.