In the week ending Aug. 7: Palm oil prices reached a two-month high supporting soybean prices. Export demand for vegetable oil is increasing, especially in Asia.
Our soybean crop is late and vulnerable to adverse weather. Only one-third of soybeans are setting pods. Soybean bloom is 10 percent behind average.
It is becoming increasingly apparent that soybean carryover supplies will be tight, assuming the United States has a bumper crop. Old crop ending stocks are anticipated to be the tightest since 1972. New crop soybean carryover stocks are expected to be the largest in four years.
It is possible to have late planted beans make a bumper crop but the probability is below average yields.
Private sources expect record soybean production. USDA yield estimates are expected to decline. That will support higher prices if it occurs.
November soybeans posted a new market high before pulling back regarding negative economic news.
China attempted to auction 500,000 tons of stored soybeans above market prices again and had the same result from the previous week, no buyers. India’s Monsoon rain is catching up to normal in their soybean belt. Current yield projections are 41.5 bushels per acre, which translates to a total production number near 3.2 billion bushels. Traders expect weekly exports near 2 million tons, but that figure was optimistic.
Ethanol production is increasing and energy prices are rising despite any short-term setback. Ethanol prices are pulling back, but energy prices are expected to increase long term.
Eastern Europe and Western Asia expect corn yields to drop by 25 percent.
Only 14 percent of U. S. corn is in the dough stage where average is 30 percent. Silking is 13 percent behind average. The corn crop is late and vulnerable to adverse weather conditions although less so than soybeans.
Private sources estimate the second largest corn crop on record. Carryover stocks are expected to decline because of increased demand.
Traders took profits from sell positions (the short side of the market). That activity caused a short-term rally. Fund traders sold corn buy positions, taking profits and money off the table.
Weekly export sales were stronger than anticipated — near 1.25 million tons.
Since corn is less susceptible to weather now, traders expect prices could drop to the July low near $3.15 but that is expected to be the floor if prices fall that far.
Wheat harvest remains behind schedule, but the spring wheat crop is in better than expected condition. Weather is bearishly favorable for wheat production in North America. Wheat supplies are expected to be the highest since 2001.
Wheat yields in Europe and the Black Sea region are expected to drop by as much as 25 percent. Argentina has the smallest number of wheat acres on record going back 50 years. World production is expected to decrease 15 percent.
Exports are down 9 percent below average. Exports are 27 percent below the high set in the 2007-08 season.
Argentina removed export quotas on wheat, making more wheat available on world markets and pressuring prices. The Indian government has purchased 25 million tons of their domestic wheat, subsidizing production there. Egypt bought 55,000 tons of U.S. wheat, but exports remain below USDA projections.
Inflation fears are stimulating trader buying in wheat.
World production is down but carryover supplies from last season weigh heavy on market prices. Weekly export sales of 552,800 tons met expectations and have little market effect.
Lower rice production potential in the United States is offset by large supplies of stored rice available for export.
If prices rise and Thailand has a good crop, then the government will encourage the sale of intervention stocks. At this time Thailand is discouraging rice exports by keeping prices higher than the world market price. Thailand offered intervention stocks for sale from storage at higher than world market prices but received little interest. In the mean time, Vietnam is selling rice in quantities large enough to pressure world prices.
Only 60 percent of rice rates good to excellent. That is below average.
Technical signals and fundamentals in the rice market are mixed. Without fresh news, prices will trade in a consolidation pattern, that is a narrow range. Negative economic news drives prices down, but world supply is declining and demand is steady to increasing.
Rice export sales were up 27 percent last week at 31,300 tons. Mexico and Central America bought nearly 20,000 tons. Shipments increased 68 percent to 60,400 tons.
Without news from outside markets, rice follows other grains lower or higher.
Traders anticipate a pullback in cotton prices. However the pullback floor is projected at no lower than 58 cents.
Currently, large supplies in storage offset predictions of smaller production in the United States and the world.
Cotton markets are more sensitive to economic news than other crops. One bright spot in the current economic reports is an increase in housing starts and refinancing. That will increase the demand for household products made with cotton.
The weak tone in stock markets pressures cotton prices.
The support price was penetrated last week, sending a negative signal for market direction.
Improvements in Texas weather are a bearish market factor. If Texas has a bumper crop, it will depress cotton prices into next year.
Weekly cotton exports were 37,100 bales of old crop. The new market year started August 1. Exports were as expected and had little price effect.