Will strong Asian demand for cotton override slow demand in the United States and Europe?

Bullish news: Weekly cotton export sales hit the yearly high at 624,000 bales. China bought 533,000 bales. That number eclipsed all market anticipations. Demand from Asia remains strong.

The current U.S. projected carryover is 2.9 million bales. That number not only predicts inadequate cotton supply in 2010 but also 2011.

Traders expect another cotton rally. Keep in mind that 80 cents could be profitable and cotton prices are very dependent on economic recovery. Commercial traders may have had difficulty filling some orders.

Cotton technical charts are positive and fundamentals of supply and demand bullish for new crop. Stocks certified for delivery dropped 284,000 bales last week.

Cotton registered for delivery is shipping out.

Bearish news: Domestic cotton sales were weaker than expected.

India and China have rain in the forecast covering cotton growing areas.

U.S. cotton condition rates 62 percent good to excellent. That number is above average but down 4 percent from last week. Ninety-five percent of the crop is planted and 17 percent is squaring.

Corn

Bullish news: Weekly corn export sales over a million tons again and commercial traders are buying. Corn feed demand has remained stable, neither increasing nor decreasing. We now have a shift where demand for exports and ethanol are gaining market share on corn for feed.

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Corn carryout estimates have declined to 1.5 billion bushels.

Corn export demand is now pivotal regarding price increases. China bought 120,000 tons of corn on June 15.

Bearish news: Trend traders have been selling corn. China projects 168 million tons of corn production, up 2.5 percent.

Weekly export inspections just over 37 million bushels were below market expectations.

Seventy-seven percent of U.S. corn rates good to excellent.

Chinese demand has been steady but slow. The Chinese government offered another million ton corn sale into domestic markets but less than 600,000 tons sold. That was a 60 percent drop from last week. Chinese exports were assumed to be increasing but dropped 3 percent.

Soybeans

Bearish news: Argentina’s soybean crop is going to market as farmers negotiate with the government over export taxes. Argentina now estimates the current soybean production at a record 55 million tons. Total South American production is huge at 122 million tons.

The crop rating for U.S. soybeans is 75 five percent good to excellent and that is a record 10 percent above average.

Weekly soybean crush under 128 million bushels was disappointing. Weekly export inspections at 7.384 million bushels was also disappointing.

Chinese soybean imports are declining. Several shiploads of South American bean deliveries have been cancelled.

World soybean supply is projected to increase to 67.5 million tons.

The trend is palm oil prices have been generally down.

Bullish news: Soybean markets have a weather premium working. Recent rains have delayed winter wheat harvest, impeding planting progress for beans after wheat. Higher energy prices are supporting soybeans with expectations of increased biodiesel demand.

China bought 40,000 tons of soy oil on Friday. Weekly soybean exports were above market expectations at 420,000 tons. Ending supply estimates for the United States are down to 360 million bushels.

Rice

Bearish news: Weekly rice export sales are 50 percent below the four-week average.

Asian prices remain low.

The production potential for United States rice remains large and price bearish. Production may exceed current USDA estimates.

Rice technical charts are neutral and the heavy world supply is fundamentally negative. Selling on rallies may be a good strategy.

Bullish news: Weekly rice export sales are up 6 percent from last week at 23,000 hundredweight. Rice markets are oversold and technical charts have turned positive (remember this is a short-term indicator). Shipments of rice were strong this week at over 60,000 tons.

USDA rice supply estimates are down 2 million hundredweight this week. Rice imports are projected down a million and domestic use is expected to increase another million hundredweight.

Wheat

Bullish news: Wheat market prices found support from lower dollar values. Winter wheat production estimates are below market expectations. Canadian wheat acres have dropped below market anticipation.

Bearish news: World wheat supply remains bearishly heavy and winter wheat harvest in the United States adds weight. Wheat carryover is estimated to be 990 million bushels. At the projected use rate on 47 percent will be consumed. World supply is expected to swell above 193 million tons.

Weekly export sales of 118,000 tons did not meet market expectations and were less than half the amount needed to reach USDA predictions. Russia and Europe have taken market share from the United States.

Weekly export inspections were below USDA projections at 14 million bushels where 17 million were expected. Winter wheat harvest price pressure is apparent with 10 percent of the crop harvested. Sixty-six percent of winter wheat rates good to excellent. Eighty-six percent of spring wheat rates good to excellent.

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