Bearish news: The Chinese government is selling over 200,000 tons of soybeans from state reserves. Chinese soybean crushers have thin margins or negative returns. Will Chinese soybean demand remain high? How much Chinese demand will go to South America?
Private sources predict 66.5 tons of soybean production from Brazil and 55 million tons of production in Argentina. That total over 121 million tons is the highest estimate so far and over a million tons higher than the highest USDA estimate.
Weekly soybean exports of 384,000 tons were bearish below market expectations by 40 percent. Russia stopped imports of U.S. poultry, limiting use of soy-meal and grain. Brazilian soybean harvest is 10 percent complete. Private estimates of the Brazilian crop exceed USDA estimates by a million tons.
Bullish news: Argentina has too much rain and potential flooding of bean and corn fields. Argentine soy-oil production is down 19 percent.
USDA is predicting a million less acres of soybeans will be planted. Yield projections of 43 bushels per acre puts production near 3.5 billion bushels which is near current annual use. USDA expects 25 million more soybean exports. Ending stock estimates were lowered 35 million bushels.
Energy prices are rising. EPA renewable fuel standards call for 12 billion gallons of biofuel use this year. 1.15 billion gallons of soy-oil is anticipated to be used for soy diesel production. Weekly soy-oil exports hit a new record near 59,000 tons.
Lower market prices in Chicago are stimulating demand for corn, cotton, rice, soybeans and wheat. Soy-oil exports hit a record 59,000 tons. EPA renewable fuel standards use mandates 1.15 billion gallons of soy-diesel. Total U.S. soybean shipments 978 million bushels exceed last years record by 262 million.
Bearish news: USDA is projecting 88 million acres of corn this season producing near 13 billion bushels. Trend traders have dropped 150,000 buy contracts since the beginning of this calendar year. Weekly corn export inspections were bearish at 27 million bushels.
Private sources now expect Brazil to produce over 53 million tons of corn and Argentina over 18 million. The total estimated production out of South America is more than 5 million tons above USDA projections. Just 5 percent of Brazilian Soybeans are in the market so far.
Bullish news: South Korean feed mills are tendering for 165,000 tons of corn. How much if any from the United States is not yet determined. Zimbabwe is shopping for 500,000 tons of corn.
Renewable fuel standards by EPA were favorable for corn. The amount of renewable fuel supplies mandated is 36 billion gallons by 2022. That will replace 328 million barrels of foreign oil per year. Brazil wants to drop their ethanol tariff if the U. S. will reciprocate.
World coarse grain supplies are now estimated to be 4.5 percent below last year. Weekly corn exports of 926,000 tons were near the high end of market anticipation. Corn prices are down 75 cents from January first. Weekly corn shipments of 694 million bushels exceed last year’s record of 680 million. USDA says 1.72 billion bushels of ending stocks, down from 1.76 billion last month.
Bearish news: Wheat fundamentals were too weak to support a price rally. Worldwide wheat supplies substitute for corn and soy meal as feed pressuring all grain prices. India has 28 million hectares planted but planting is yet in progress.
Private estimates predict a price of $4.20. This could be a selling opportunity. Exports are 180 million bushels below last year. USDA predicts ending stocks of 981 million bushels, up 8 million. The new world supply estimate is 195 million tons. That is enough to hurt wheat prices but also pressure corn and rice.
Bullish news: Lower prices and lower dollar values help increase wheat export potential. South Korea tendered for 55,000 tons of feed wheat. Asia has more low quality wheat than the United States. Weekly export sales near 483,000 tons were near the middle of what market traders expected.
North Africa and the Middle East are importing wheat from the United States at current low prices. Canada has 1 million tons less barley and a million tons less wheat than expected.
Bearish news: Rice acres are expected to increase next season. World wheat supplies are a big negative since people will substitute wheat for rice.
Vietnamese prices for rice continue to fall, underselling U.S. rice. India has planted more wheat and plans to get by on current stored rice supplies.
Bullish news: Rice followed other grains in the rally. Traders are looking for a change in fundamentals. That 120,000 ton tender from Haiti and Iraq would be bullish for prices in Chicago. The U.S. government is buying rice for humanitarian relief in Haiti.
Thailand prices for rice remain above world market prices and less competitive with U. S. rice than Vietnamese rice. The short term trend for rice remains higher.
Bearish news: USDA is projecting 10.5 million acres of cotton with production near 15.5 million bales. Cotton markets are focused on two factors. The world economic situation and acres planted.
China is on a week-long holiday at this time. That will limit the amount of U.S. cotton imported by China.
Bullish news: Cotton technical charts are pointing higher with world economic recovery under way. USDA supply/demand numbers for cotton were bullish. The projection is now 3.3 million bales carryover. That estimate is below the last projection of 4.2 million bales.
Traders are covering sell positions. Deliveries increased again reaching 491,000 bales. Weekly exports hit another market year high at 519,000 bales. There were an additional 143,000 bales sold from next seasons crop. Lower prices are attracting buyers.