June: Week 4 — The value of our dollar relative to other world currency is affecting grain, oilseed and cotton export potential.
A rise in dollar value makes our commodities more expensive in other countries. When our dollar value drops exports increase. Volatile dollar values are one price-moving factor.
Cattle on feed are down 3 percent. Milk production estimates are reduced. Lower demand for feed grain is bearish.
Favorable weather graced most crop growing regions last week, stalling market price moves. Temperatures increased and rains were adequate. Weather that is positive for production means commodity supplies will increase and drive prices lower by exceeding demand.
Commodity and stock markets have been trading in a range bound condition. This is referred to as a consolidation pattern. To break out either upward or down will require additional news.
Fund trader and speculator buying has diminished, pressuring prices. Agriculture commodities are showing signs of detaching from stock market prices. That makes weather the dominant market moving factor looking forward.
Soybean supplies are now at a decade low. Any threat to the new crop will move prices higher. Oilseed crush of 142 million bushels was above the market anticipation. Export inspections of 12.5 million bushels were on the high end of market expectations. China has cancelled imports of U. S. soybeans for two weeks. Argentina has beans for sale at lower prices. China bought 100,000 tons of soy oil from Argentina and a large but unknown quantity of soybeans. Markets expected 300,000 tons of U. S. soybean exports but 250,000 tons of actual exports were at the low end of anticipations. Prices are in a consolidation pattern until market moving news becomes available.
Corn supply estimates are 10 percent above 1 billion bushels. This is significant because anything below 1 billion bushels is considered tight. Yield estimates have been reduced 2 bushels per acre to 153 bushels. Current weather conditions are favorable. The late corn crop is susceptible to pollination problems if temperatures rise above 90 degrees during pollination — a real possibility. Corn planting is complete and the condition rating of 70 percent good to excellent is above average but we have a long season ahead. Export inspections increased 4.5 million bushels to 31 million. Weekly exports of 1.14 million tons exceed market expectations of 1 million. Argentina has offered 3 million tons for export at prices below U.S. market levels.
Stronger dollar moves affect wheat and rice more than corn and soybeans. Wheat sales are slowing down. Asia has ample supplies of wheat selling at lower prices than U.S. wheat, making wheat market fundamentals bearish. Russia has shipped wheat to Egypt that has quality problems. It is feed grade but not food grade. Wheat export inspections of 13.5 million bushels were at the low end of expectations. Winter wheat quality is below average with low test weights and reduced production. Less than half the crop is in good to excellent condition. World wheat production is down but supplies on hand exceed world demand.
U.S. rice production estimates are dropping for two reasons. First, acres planted are less than anticipated. It is not yet known how much less rice is planted but 10 percent less is a good estimate. Second, the crop is late and has gotten off to a poor start. These factors have helped support prices. However, large supplies of exportable rice stored in Thailand and Vietnam are price bearish. U.S. rice is not price competitive with Asian rice. The overall trend in rice markets remains down.
More than half of the nation’s cotton is planted in Texas. Favorable weather there is production-positive but price-negative. Cotton export sales are 107 percent of the USDA forecast for the year which is not finished. The current crop condition rating of 45 percent good to excellent is below average. Current supplies are more than adequate making cotton prices more susceptible to stock market swings than other agricultural commodities. Lower prices and lower dollar values are stimulating exports. Markets anticipated 150,000 bales of export sales for the week but 260,000 bales exceeded market expectation. China and Turkey bought 110,000 bales.