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Serving: Central

Chinese currency gains on dollar

China will no longer keep the yuan tied to the value of a dollar. The Chinese currency gained on the dollar, increasing exports of cotton and grains.


Bullish news: Canadian canola oil seed planting has now been reduced 3 million acres by rainy weather. Soy oil is the main substitute. Chinese soybean imports are expected to resume. Farmer selling remains light.

Soybean condition ratings were reduced 2 percent this week. Weather is becoming a concern with flooding in the north and drought in the south. Any yield threat supports prices.

Bearish news: Congress has failed to reinstate the dollar-a-gallon tax credit on soy diesel. Weekly soybean exports were a disappointment at 316,000 tons. Weekly soybean export inspections were 7 million bushels, down 9.5 percent.

Ninety-three percent of soybeans are planted; 94 percent is average. Sixty-nine percent of soybeans rate good to excellent, that is down 3 percent from last week but remains above average.


Bullish news: Energy prices are gaining strength. Ethanol use is increasing. Weekly corn export sales were again over a million tons at 1.27 million. Corn export sales have been over a million tons for nine of the past 11 weeks.

Cattle placed on feed were increased again. Poultry and pork production in China and Asia continues to increase. Chinese corn fields are dry and need rain. Weather in the southern United States and Delta is dry for corn. Some flooding may damage corn in parts of the Corn Belt. If production drops, that is price bullish.

Bearish news: Japan has reduced corn imports and the main supplier has been the United States. China sold only 60 percent of the corn offered for sale from government reserves.

EPA stalled on raising the ethanol blend to 15 percent. U.S. pork production is reduced by 50 million pounds. Corn export inspections dropped a whopping 41 percent this week. Total export inspections were 24.5 million bushels.

Seventy-five percent of corn rates good to excellent. That is down from 77 percent last week but average is 68 percent.


Bearish news: Argentina projects wheat production of 15 million tons. Australia’s wheat production is also expected to increase and reach 22 million tons. The European crop condition is also above average.

Winter wheat is 17 percent harvested, pressuring prices. The winter wheat crop is larger than predicted with a crop rating of 66 percent good to excellent. Spring wheat rates 84 percent good to excellent. Weekly export inspections dropped 18 percent from last week to 11.5 million bushels. Winter wheat is 17 percent harvested and pressuring prices (27 percent is average).

Bullish news: Weekly export sales of 959,500 tons are the largest of the year. Wheat demand has increased and world production is lower.

Russia, Uzbekistan and Canada all have fewer acres of wheat planted this year. The crop condition rating for U.S. spring wheat is near record high 84 percent good to excellent, so yields are good. Winter wheat harvest is pressuring prices and the condition rating is high at 66 percent. The bottom-line: crop profitability may be good despite declining price.


Bearish news: Technical charts turned bearishly down and fundamentals (large supply, low demand) returned to pressure prices. U.S. rice production potential is bearishly high. The crop is on track to hit record production numbers.

Vietnamese rice is selling for $360 per ton. The Vietnamese crop has excellent potential. Other nations have large supplies of rice, but Pakistan prices are about as high as Thailand prices.

Bullish news: Weekly rice exports were 56,300 tons. That number would not be considered high except that it is high for this time of year. Most of the sales went to Central America.

Thailand rice production potential is rumored to be dropping due to drought and reduced reservoir levels limiting irrigation. China also has dry conditions but no talk of reduced rice production.


Bullish news: Export demand is leading cotton prices higher. Supplies registered for delivery have been declining as commercial traders release stored cotton for export shipments. Bales registered for delivery have declined from over a million bales to 548,000 this month. There was a 23 percent drop in one week of 173,000 bales. Shipments of cotton are increased.

Weekly cotton exports were 536,000. That is less than last week’s 823,000 but more than twice the market expectation. A weather premium is developing with hot, dry weather in Texas and the Delta. Cotton prices reached a 20-month high but a pull-back is expected.

Bearish news: China had much needed rain on at least half of their cotton acres. India’s entire cotton crop received favorable rain. Production in Asia is now expected to increase.

U.S. cotton condition rating is now 62 percent good to excellent. That has dropped slightly but exceeds average. Twenty-seven percent of cotton is squaring and that is ahead of average. Interestingly, only 4 percent is squaring where 6 percent is average. That is not a significant difference.


TAGS: Management
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