The weather threat to soybeans and corn has been reduced with some rain south and dry weather in the north. Crop condition ratings were above average and price bearish.
Bearish news: Energy prices dictate biofuel prices and lower oil prices pressure soy oil and beans. Soy meal supplies are increasing as exports slow down. The soybean crush at 133 million bushels was below market anticipation. Without biodiesel tax incentives soybean prices will be limited.
China has ended the ban on Argentine soy oil and soybeans. Chinese soybean prices have weakened. Chinese soybean imports are declining. The large crop in South America and excellent production potential in the United States will push the market lower.
Soybean acres may exceed USDA estimates. Current estimates are near 78.85 million acres. That is 750,000 acres more than predicted. The second largest soybean crop in history is anticipated.
Bullish news: Beans intended for double-cropping with winter wheat are delayed for planting either because it is too dry or too wet. Late-planted beans in the Corn Belt are delayed due to excess rain. This could reduce production which will push prices higher.
Soybean export sales for the week, 541,000 tons, were 40 percent higher than last week. Rains in the Midwest with hot, dry conditions in the Mid-South are supporting soybean prices. Soybean shipments since last September hit a record 1.35 billion bushels.
Old crop soybeans are in tight supply. Farmer selling is slow in the United States and Argentina. Only 97 percent of U.S. soybeans are planted, 3 percent may not get planted.
Poultry populations on feed are increasing, beef on feed are steady and pork herd size is down. People are substituting chicken for pork. More Chickens and fewer hogs offset each other on feed demand.
Bullish news: Weekly corn export sales were stronger than expected, 1.49 million tons. Ethanol production has increased to 846,000 barrels per day. Export inspections were up 21 one percent this week and 20 percent last week.
Bearish news: Lower gasoline prices put pressure on corn because ethanol prices drop. EPA delays on increasing ethanol fuel blends have stalled corn prices. Trader profit taking in the corn markets is increasing.
Seven percent of corn is silking. Weather is production favorable and record yields, 165 bushels per acre are anticipated.
Bearish news: Australia has 11.6 million tons of wheat in supply which represents an increase of 28 percent over last year. Thirty-eight percent of U.S. winter wheat is in the bin. Thirty percent of spring wheat is heading and 84 percent rates good to excellent.
The U.S. wheat supply has increased 6.5 million bushels with winter wheat harvest. Spring wheat condition ratings are far above average. World wheat supply remains heavy for now. Traders are holding 49,000 more sell contracts than buy contracts on the wheat market. That is a substantial amount of negative open interest.
Bullish news: Rabobank estimates that world wheat production is 8 million tons below USDA projections. Canadian wheat acres are down 7 percent. Russian wheat production is down over 9 percent due to drought. World wheat supplies are declining.
Weekly wheat export sales were stronger than anticipated; over 720,000 tons.
Bearish news: Vietnamese rice is underselling the world market price with ample rice in storage and a bumper crop on the way. U.S. prices dropped to a new contract low. World supplies are increasing.
Market trader analysis is predicting a price of $9.75 for rice. The U.S. rice crop rating is 75 percent good to excellent. Acres maybe more than USDA projected. A record crop of 244 million hundredweight is expected.
Bullish news: Rice sales to Mexico and Central America remain steady. Rice shipments hit nearly 75,000 tons. The monsoons of India delivered less rain than anticipated. The Indian rice crop maybe light, limiting their export potential.
Bullish news: Cotton stocks certified for delivery continue to decline as more cotton is shipped to China and other importing nations. 500 July cotton contracts were delivered Monday. World Cotton supply is expected to drop to the lowest level in seven years under 50 million tons.
The correction for cotton markets appears to have ended. Demand for cotton products in the United States remains slow but higher Asian demand reflects their robust economic growth. The Chinese economy is growing at a rate of 12 percent a year compared to less than 3 percent for the United States.
Bearish news: World cotton production is on the increase. The United States is on track to have the largest cotton crop in three years. Current estimates of 10.75 million acres have increased another 250,000 acres over last month’s prediction. Forty-eight percent of cotton is squaring but only 8 percent is setting bolls.
Weekly cotton export sales of 256,800 bales were disappointing. Markets anticipated 300,000 to 500,000 bales. China released 600,000 tons of cotton from government reserves for sale into domestic markets to limit fiber price inflation.
New home sales are down 33 percent after the government incentive program expired. Current cotton conditions ratings of 62 percent good to excellent are providing some price pressure.