China bought over 800,000 tons of a million tons of soybeans sold last week. Private sources expect Chinese demand to increase raising bean prices. China had a week-long holiday reducing potential export sales.
Palm oil prices are down 2.3 percent to the lowest level in three months.
Brazil increased soybean production estimates by 1 million tons to 63.3 million.
Soy-oil supplies are 3 billion pounds. Bio-fuel used 156 million pounds of soy-oil last month. Soy-meal sales have been lower as livestock operations reduce herd size. Soybeans, soy-oil and soy-meal sales are all above the five-year average.
Weekly export inspections were 12.5 million bushels, compared to 7.5 million last week.
Soybean production estimates of 3.5 billion bushels are price-bearish. Traders now expect USDA productions estimates to increase 100 million bushels. USDA estimates do not reflect recent rain and freeze events.
Soybean maturity remains well behind the 10-year average. Soybean harvest is normally 35 percent complete but this year that is 15 percent. Rain in the forecast is negative for beans and corn.
Private production estimates for corn exceed government estimates — 13.38 billion bushels verses 13.24 billion.
The USDA estimate over 13 billion bushels and subsequent carryover of 1.68 billion bushels has not factored in recent production negative weather events. Lower gasoline prices also undercut ethanol prices.
Export inspections of 38.4 million bushels were above market expectations.
Only 57 percent of corn is mature — 84 percent is average. Some quality problems are reported, including low test weight. At least 25 percent of corn is vulnerable to cold weather. Chinese corn production estimates are dropping lower. World corn supply estimates are also significantly lower.
Expect soybean and wheat prices to follow corn upward if the rally continues. Capital may flow into commodities as dollar values weaken. Trader’s fear of inflation is returning to the markets.
Ukraine wheat exports are up 57 percent in a year reflecting large world supplies and low prices. Argentine wheat acres are down 40 percent from last year.
Ethanol production in the United Kingdom may stimulate grain imports there. Planting intentions are down worldwide.
Brazilian wheat production is down 750,000 tons (near 5.25 million) in a year.
Wheat export sales continue to meet or exceed market expectations. Many traders suspect this is catching up for lower sales early in the year.
U.S. wheat faces tough competition from foreign producers, but lower dollar values increase export potential. Export inspections were 18 million bushels and down a third from last week.
Iraq is shopping for rice. Increased export demand is the only solution to low prices. Rice exports remain slow. World supplies remain fundamentally bearish. India has rain damage to rice in spite of less monsoon rain.
Rice harvest delays continue to reduce quality and affect production potential. Weather events are supporting rice prices despite good yields. Late planted rice remains in the fields. The trend in rice markets is positive.
Unemployment figures of 9.8 percent predict less fiber consumption. Current cotton supplies could be adequate without increasing world economic improvement. Cotton price resistance at 60 to 61 cents is holding despite economic news.
Cotton production worldwide is expected to drop more than 1 percent and demand is anticipated to increase 2 percent. The world stock to use ratio may drop below 50 percent for the first time in 24 years. World production could drop by 2 million bales with production problems in China and Pakistan.
Cotton harvest is the slowest harvest in 25 years. Only 10 percent is harvested where 25 percent is average. Total crop production may be closer to 13 million bales. Cool, wet conditions are affecting yields and quality. Weather problems are worsening as open bolls are susceptible to loss of quality.