Will Chinese soybean buying slow down? Markets anticipate soybean prices near $8 when the South American crop comes in.
High moisture corn remains in the field. World cotton supplies are the lowest in seven years and dropping. Weak gold prices and lower oil prices put pressure on all agricultural commodities.
Chinese soybean buying is expected to slow down but China made another large purchase during the last week. South American soybeans will take market share from U.S. beans. Brazilian planting is 85 percent complete and the crop is in good condition.
Palm oil prices are expected to increase sharply in the near future as supplies from Malaysia and Indonesia tighten. Canola production in Canada has dropped 2 million tons. The quality of Canadian canola is also below Chinese standards. Europe is expected to buy 2 million to 3 million tons of soybeans.
Weekly export sales of 722,600 tons did not meet expectations. Yearly exports are bullishly higher than last year’s record. Soybean export sales are 25 percent higher than anticipated. Shipments of 1.36 tons were down 44 percent from last week. Total shipments are up 3 million tons over last year. Soybean crush is bullishly higher. USDA is expected to increase soybean export projections. U.S. ending stocks are expected to decrease but global supply is expected to increase bearishly next year.
Farmer selling is holding corn prices down. Export sales were down 46 percent as traders anticipated. Weekly export sales were 659,000 tons. The bearish export sales were offset by bullish shipments. Corn shipments increased 40 percent to 879,500 tons. Corn exports remain below predictions.
High moisture corn is a major concern. Elevators are limiting the amount of high moisture corn acceptance. Some high moisture corn is left to dry in the field. Corn harvest delays into snow and winter rain periods could keep some corn in the field until next spring. Twelve percent of the corn crop remains in the field.
South American corn acres are significantly lower. U.S. export sales have room to increase dramatically. Ethanol is underperforming without EPA support. The number of cattle on feed is rebounding, supporting higher corn prices. Asian animal is increasing and more feed will be needed.
Canadian wheat production is up 2 million tons, but total production is less than last year. Morocco has eliminated the 135 percent import tariff on wheat in an effort to import more wheat. Australian harvest is on schedule but production is less than predicted. Some private estimates expect a million tons less wheat from Australia.
Weekly export sales of 390,700 tons were up 11 percent over last week. Increased exports reflect the weakness of the dollar relative to foreign currencies. Shipments were bullish reaching 385,000 tons of wheat. Dollar value moves are affecting wheat prices. Traders have an abundance of sell positions. World wheat stocks could reach the second highest level in this decade. Markets expect a slow decline in wheat prices.
Rice demand has increased significantly. Demand will remain strong until Thailand releases stored rice into the market. Thailand is holding rice above market prices. The Philippines are shopping for rice. Big tenders by the Philippines boosted the international market last week. Japan and India are expected to make offers in the near future. Japan intends to increase rice reserves. India has a major rice crop failure in the wake of last year’s drought. India has large supplies of wheat to substitute for rice if necessary.
Rice production is expected to drop 9.3 percent. Price pressure on the market retraces part of gains made late last week. U.S. millers need to pick up some new sales to keep mills operating. The stronger international market has kept U.S. futures firm, while mills are having difficulty moving rice at current values. Lower export demand is fundamentally bearish.
Cotton export sales were up 54 percent last week. Total weekly sales were 250,700 bales. Shipments were less bullish at 120,300 bales. Consumer buying is slow despite indications of economic recovery. Trading volume is thin but increasing. World cotton supplies have reached a seven-year low. There is a rumor that China will buy an additional million tons of cotton.
Cotton prices are range bound between higher dollar values and world economic improvement. Lower gold prices are cotton bearish. Cotton price moves stall as the market continues to consolidate below recent highs. Traders expect USDA to adjust 2009 production numbers lower. Ending stock estimates would then be reduced significantly. Cotton prices must increase to be competitive with soybeans in order to pull acreage back in to production.