Corn: Bullish news: Corn has started the battle for acres next season. The opponents are soybeans and cotton. Corn will need increased acres and increased yields to rebuild tight supply.
Higher ethanol blends are expected to be enacted by congress. Ethanol production is on target to use those 4.7 billion bushels of corn projected by USDA.
Bearish news: Harvest progress in corn is picking up speed and is now 18 percent complete. Harvest pressure is expected. Corn condition ratings remain 10 percent above normal.
Trader profit taking potential is high because they hold a large open interest of buy contracts. Higher prices could limit exports. Corn export sales were well below market anticipations at 562,000 tons. Ethanol followed corn prices lower.
Soybeans: Bullish news:Soybean prices 3 percent higher in China after palm oil prices climbed 3 percent. South America is too dry to plant soybeans. The freeze in Canada damaged the canola crop limiting vegetable oil supplies. Late planted Chinese soybeans are vulnerable to frost.
Chinese soy oil imports are up 20 percent. Export inspections were only 12 million bushels and below expectations.
Open interest in the soybean market exceeds 141,000 buy contracts. The record open interest for buy contracts in the soybean market is 156,000 buy contracts. Soybeans are not acre competitive with corn and cotton.
Bearish news: The soy-diesel tax credit was rejected by congress; however, demand from other nations is increasing rapidly. If we do not burn our soy-diesel, somebody else will.
Soybeans are overbought and harvest pressure has just begun. Palm oil prices have weakened and soybean crush this week was down to 128 million bushels.
Chinese soybean imports were down 3.5 percent for August but that month remains the fourth largest month of Chinese imports on record. U.S. soybean exports were down to 558,000 tons as anticipated.
Wheat: Bearish news:Wheat harvest is 87 percent complete and putting pressure on prices. Traders hold a large number of buy contracts in open interest. Profit taking potential is high.
Bullish news:Canadian wheat quality has declined after the freeze. Approximately two-thirds of Canadian wheat has been affected by cold weather. European feed wheat prices have increased. China imported 90,000 tons of wheat in August. India will not lift the export ban on wheat as most Eurasian nations are increasing strategic reserves.
Russia’s export ban continues. Ukraine is considering an export ban on wheat. Russian wheat supply is down 8 million tons. Russia’s planting progress for winter wheat is only 29 percent of average. U.S. weekly export sales were above expectations at 950,000 tons.
Rice: Bearish news:Large rice supplies in the United States could limit upside price potential. Weekly export sales less than 50,000 tons were perceived as low but that is above average for this time of year. Most of the rice was sold to Latin America as usual. Asian business has not picked up yet. Some Vietnam rice is selling under the minimum allowed by their government.
Harvest in our area is 75 percent complete. Expect harvest pressure to reduce prices only if corn and wheat prices drop. All of these markets are oversold and subject to trader profit taking. Trader open interest in rice markets is high over 18,000 buy contracts.
Bullish news:The rice uptrend remains intact. As wheat follows corn higher it leads rice up also. U.S. milled rice is underselling Asian rice from our two main competitors, Vietnam and Thailand. Latin American imports remain strong. Lower prices could attract Asian customers.
Rice market prices came within a dime of their yearly high this week. Higher grain prices are supporting higher rice prices.
Cotton: Bullish news:U.S. cotton supplies are on target to reach historic low levels. The record high price of $1.17 is in jeopardy. One dollar resistance in the cotton markets was broken this week. Farmers are selling cotton at prices in excess of 90 cents. Farmers are more presold than normal as prices passed a 15 year high.
Fabric demand in Asia is increasing. Asian economies are recovering rapidly despite the sluggish U.S. economy. Chinese imports are up 119 percent. Brazil dropped their import tariff on 1.1 million bales of U.S. cotton. Export sales exceed expectations near 547,000 bales.
Next year’s cotton crop could be smaller. Corn and Soybean prices are very competitive for acres. The market fears reduced supply. Cotton prices must increase to attract more acres.
Bearish news:Profit taking has commenced as the month and the quarter come to an end. Trader open interest is above 73,500 buy contracts is near a record and subject to profit taking
Harvest is 13 percent complete and 67 percent of cotton bolls are open.