Bearish market factors include any increase in relative dollar values that limit export potential.
Favorable weather-induced production potential is price bearish. Bullish factors include increased ethanol demand, early frost concerns where unseasonably cool weather retards development possibly reducing yields; sign of damage to crops as harvest begins with lower than anticipated yields. USDA predicts farm income will drop 38 percent this year. USDA lending rates on farm storage facilities: 7 year 3.25 percent; 10 year 3.625 percent; 12 year 4 percent.
India received beneficial rain on soybeans after the reduced production estimate. There are rumors China may cancel some soybean contracts. China has sold only 2 percent of soybeans offered at auction. Brazilian farmers have record soybean planting intentions and record production is predicted. Argentine farmers are ending their strike. India received beneficial rains on their soybean crop. Palm oil prices are down another 1 percent and export sales down 7 percent.
Soy-meal supplies are tight but soy meal price decreases when animal production drops. The USDA rates soybean crop condition 69 percent good to excellent where 54 percent is average. Pod setting has reached 93 percent of the crop. Total soybean sales are twice the 5 year average. Soybean export sales were above all market estimates. The United States sold 1,048,886 tons.
Argentine corn planting intentions are down 19 percent. China’s corn fields remain dry. Chinese auctions have sold 1.92 million tons of corn. Chinese government officials predict an average corn harvest. South Korea continues to buy corn from the United States. Brazil anticipates losing 20 percent of corn acres to soybeans. Turkey is selling 100,000 tons of corn on the world market.
The corn condition rating is 70 percent good to excellent where 56 percent is average. Corn maturity has reached the dough stage in 75 percent of fields in the United States. If warm weather persists through mid-September, 50 percent of the crop will reach dent stage. Once corn reaches dent, the crop is no longer susceptible to frost damage and 32 percent of the nation’s corn has reached that level of maturity. Private sources expect corn yields to hit 162.6 bushels per acre average. Export sales of 938,885 tons were on the high end of market expectations.
Large world supplies, modest export demand and harvest progress are all bearish factors limiting wheat prices. Most wheat export sales on the world market are of Asian origin. Australia’s wheat production is limited by dry weather. Russia has harvested two-thirds of its wheat crop but made only 52 percent of estimated production.
Wheat production estimates for the United States have increased. Harvest progress is behind average but could quickly catch up if weather remains dry. Wheat harvest passed 38 percent complete this week but 78 percent is the average. The condition rating is 75 percent good to excellent. Wheat exports were 406,707 tons.
Indian and U. S. rice production is projected to be lower. India is predicting 10 million tons less rice production than average. India has dry weather in rice and wheat growing areas. The trend in rice markets is turning positive, despite supplies in Thailand. Vietnam prices for rice are increasing. Lower wheat prices pressure rice market prices because people will substitute wheat for rice in their diet. The trend in rice markets is turning more positive as fundamentals of supply and demand improve. Expect lower grain prices to keep pressure on rice until after harvest.
India expects cotton production to reach a bearish 30.5 million bales. Demand remains low without Chinese buying. Cotton markets remain technically oversold. The cotton crop rating is 51 percent good to excellent. Cotton markets are absorbing ever increasing amounts of trader selling. World consumption for this next crop year is anticipated to reach 108 million bales but world production is now predicted at 107 million bales. Weekly export sales of 317,228 bales were well above all market anticipations. Cotton continues to trade in a sideways consolidation type pattern. The market is finding support enough to keep prices above 57 cents but reaches resistance at 60 cents.