Any bounce in soybean prices is a selling opportunity.
Bearish news: Soybean acres increased to nearly 79 million which is a million more than USDA projections. Production potential has increased to over 3.2 billion bushels. That number assumes production of 43.5 bushels per acre average. Soybean supply will increase with the bumper crop in South America and high production in the United States.
Chinese soybean prices moved lower over the weekend. The rumor is meal demand diminished as Chinese pork producers are using less feed. There were no soybean or soy-meal shipments for July delivery. Soy-oil shipments were strong, however.
The monsoon rain returned for India and that increased the oil-seed production potential. Rain also blanketed the corn and soybean production areas in China.
Bullish news: Weekly export sales 715,000 tons were above market expectations. Old crop bean supply remains tight supporting prices.
Argentina increased bio-diesel blends to 7 percent from 5 percent. The rumor is that will be increased to 10 percent. This will limit exports of soy-oil from Argentina.
Bullish news: Corn supplies for June dropped to 4.3 billion bushels. That number is 200 million bushels below the smallest market estimate. Corn is selling for $7 in China and the government is trying to reduce inflation pressure on grain prices.
Bearish news: Corn export sales for the week were good but below expectations after so many weeks with sales over a million tons. This week’s disappointing sales were 726,000 tons.
China sold 575,000 tons of reserve corn from storage into domestic markets to reduce the price. The estimate is 163.5 bushels per acre for our corn crop. That will result in total corn supplies in excess of 3.2 billion bushels.
Traders have taken the short side of the market with 48,000 sell contracts of open interest. That number excludes the commodity fund traders which are holding a net long position in corn having more buy contracts than sell contracts.
Bullish news: Wheat sales increased because feed demand is growing. Smaller corn supply and higher corn prices are stimulating sales of wheat as substitute animal feed.
World wheat production is lower than market traders anticipated. Feed use of wheat is growing in Asia. The expected reduction is greater than anticipated because of weather.
Europe is experiencing a drought. France is the largest exporter of wheat in Europe and that French wheat has been hurt with this drought. Acres of wheat have been rained out in Canada.
Bearish news: Rice acre estimates are now 351 million. That is above market anticipation. Long grain rice acres have increased by 475,000. The total production estimate for July is more accurate than previous guesses. That July estimate is 190 million hundred weight which is heavy.
South Korea is now using excess rice from storage as feed grain. This action will not only reduce rice in storage in South Korea, it will also limit imports of corn and wheat.
Bullish news: Rice markets are heavily oversold which could limit downside price movement. Total export sales last week were near 100,000 tons.
Hurricane Alex is raining on Texas cotton. That is favorable for increased production and usually bearish for prices. World cotton supply will probably reach a decade low so increased production has the potential to increase profitability for cotton producers while not affecting prices.
Bullish news: The new Job’s Report from Washington is not positive but less negative than last month’s report. That news provided some support for cotton.
Traders are buying more cotton, another 720 contracts this week. That brings the total long side open interest to 40,000 contracts.
Bearish news: Cotton acres are just under 11 million. The estimates for production have a fairly wide spread from 16.5 million bales to 18.5 million.
The current uptrend maybe a selling opportunity for growers as market analysis in the current economic climate suggests we may be near the top price for December.