Russian wheat production is down another 5 million tons to 70 million. Exports are likely to be down 10 million tons. Russia, Kazakhstan and now Ukraine are considering placing limits on wheat exports.
Ukraine harvest is 84 percent complete. Yields are lower in Russia, France, Kazakhstan, Ukraine, Canada and northwest Europe. Russia has severe damage on 32 percent of the crop.
U.S. exports more than doubled market expectations, going to 920,000 tons.
French wheat prices soared and Chinese prices went up sharply. Wheat is higher in Asia and Europe. Russia is selling stored wheat into domestic markets to limit food inflation.
China is taking measures to suspend import capability for companies that are hoarding grain. Black Sea region nations are limiting further exports.
Bearish news: U.S. wheat production capability is high. Australian wheat received much needed rain. Egypt bought 180,000 tons of Russian Wheat. North Africa and Mediterranean nations are buying Australian wheat.
Bullish news: Rising wheat prices have supported rice market prices. The expectation is that rice will substitute for wheat, especially in Asia. Rice export sales increased over last week to 39,000 tons.
Prices on rice markets could be range bound with high wheat prices on one side and heavy rice supply on the other.
Bearish news: U.S. rice production could easily reach a record 200 million hundred weight. Current predicted use is only 178 million hundredweight. However, if wheat supply becomes limited then the use of rice could increase beyond estimates. As prices rise, Thailand is likely to release rice from reserves for export.
Bearish news: Crop ratings at 67 percent are 7 percent above average. Seventy-five percent of soybeans are in bloom. Thirty-five percent of soybeans are setting pods. The soybean crop is ahead of average. Favorable weather keeps production potential high and fundamentally supply will exceed demand.
Heat stress in the Delta is offset by rain in the Corn Belt. Commercial traders and speculators are selling soybeans where index funds are buying.
Bullish news: Seventy-eight percent of Brazilian soybeans are sold into the market. Brazilian beans are 20 cents higher than U. S. soybeans. Argentine farmers continue to hold soybeans in storage.
Soybean prices in China and the rest of Asia went up 37 cents in the aftermath of reports about declining wheat supply. Soybean exports hit a home run beyond all expectations at 1.47 million tons. Rapeseed oil supply will be limited with lower yields in Asia Canada and Europe. The best substitute will be soybean oil.
Bullish news: Corn export sales met expectations at 960,000 tons. Corn prices are supported by higher wheat prices as corn supplies substitute for feed wheat. The drought conditions in Asia are limiting corn production in Russia, China and other countries.
Declining Russian exports have opened the door for increased exports from the United States. Less wheat production in Europe and Asia limits the supply of feed wheat. Corn feed use is already increasing. Brazil is increasing corn ethanol production.
Corn supply and demand fundamentals are shifting. Corn supplies could be tight. Traders are buying corn. Corn in the Delta and South is heat stressed reducing yield potential.
Bearish news: China has quality issues with U.S. 10 percent damaged corn. China is limiting imports of GMO corn. The Corn Belt has ample moisture and good temperatures for a record crop.
Bullish news: Cotton is trading near the 100-day moving average. That is technically bullish and a short term indicator. Weekly export sales met expectations but supplies certified for delivery have dropped to 47,000 bales. Tight supply is fundamentally positive, a long term indicator.
Lower dollar values are stimulating exports. High temperatures in the Delta may limit cotton production but Texas has ample rain. Traders are buying cotton.
Bearish news: World economies are soft. Consumer confidence is down and so is spending. Unemployment remains way above average. Production potential is supported by favorable weather pressuring prices. The cotton market is overbought.