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Soybean market fluctuating

The United States has lost 23 million acres of productive farmland to urbanization in 23-plus years.

One million acres a year sold into urbanization is usually the result of inheritance taxes or the lack of farming ability within the heirs (less than 2 percent of us know how to grow food).

FDA has an alert on imported processed foods containing pesticides illegal in the United States.

Traders expect USDA supply and demand reports with increased harvest inventory.


Bearish news: Soybean markets are vulnerable to profit taking as traders hold a large number of buy positions. As China takes steps to curb inflation and U.S. dollars gain strength, demand will fluctuate. Brazil’s harvest is 97 percent complete. Brazilian exports up a million tons. U.S. soybean planting is 15 percent complete where 8 percent is average.

There is a record crop of soybeans produced in South America with financial uncertainty in Europe and market regulation discussion in the United States, all bearish. Export inspects were down 23 percent near 7 million bushels.

Chinese buyer demand is slowing down. They have booked fewer South American beans, so the United States gets that business for now. South American yield estimates are rising. Traders anticipate soybean supplies to reach 3.5 billion bushels after the next harvest.

Soy oil prices are under pressure. Malaysia is putting more palm oil into the world vegetable oil markets. Palm oil prices are usually less expensive than soy oil and will substitute in many uses. Soybean deliveries of 1,000 contracts filled the pipeline this week.

Bullish news: Outside markets support soybeans as currency values, energy prices and equity markets stabilize. South America is selling soybeans, but China is yet buying from the United States, 120,000 tons this week. Weekly export sales were strong at 792,000 tons. China alone has bought 21.5 million tons this year.

Continued political unrest in Argentina is a major bullish factor. Argentine soybeans are not yet in the world export pipeline.

Poultry on feed in the United States increased 2 percent as Asian flock size is also increasing. The demand for soy meal in poultry rations is growing with flock size.


Bearish news: Despite strong export demand, 750 contracts were cancelled in one day. Traders expect corn supplies in the United States to increase, reaching 15 billion bushels by the end of this year. Export inspections down 28 percent at 28 million bushels.

South Korea cancelled 110,000 corn contracts as prices increased then bought 55,000 tons over the weekend. China has sold 4 million tons of corn reserves into domestic markets to stem inflation. They sold another 800,000 tons this week.

Rain in the forecast has slowed corn planting, but progress so far exceeds all previous records. Corn is 68 percent planted. Over 20 percent of corn has emerged, over twice the average.

Bullish news: China bought 115,000 tons of U.S. corn this week. The rumor is China purchased 10 cargoes (500,000 tons) of U.S. corn. That is the first time in 4 years that China imported corn instead of exporting corn. Corn prices in China are double the prices in the United States.

The corn market seems to have run out of sellers temporarily. Corn has been temporarily oversold. The oversold condition corrected with strong export demand. Weekly export sales went over 1.4 million tons.

Ethanol production has increased 32 percent over last year. Rising gasoline prices reflect higher demand increasing ethanol use and corn prices.


Bearish news: Wheat export sales have pulled back recently as dollar values increased relative to other world currencies. Total export sales remain behind the pace needed to meet USDA predictions. Traders are concerned about private estimates of U.S. wheat supplies reaching a record 3 billion bushels within this calendar year.

Wheat markets have been pulled higher by rising corn market prices. Wheat supplies remain heavy worldwide. Production is down but this crop will meet supply needs and add to stored supply. North American production potential is increasing.

Wheat planting is 60 percent complete. The wheat crop rating 68 percent good to excellent is near a record and way above the 48 percent average.

Bullish news: Wheat volatility diminished as European and Asian prices moved up slightly. Wheat is following corn higher, but that situation could be temporary considering the debt crises in Europe. Weekly export sales were above market anticipation at 468,000 tons stalling the negative price trend.

Stripe rust reported in winter wheat is price bullish. European and Asian production are down and weather is not production favorable as rain is below average. Australia has plenty of time to plant wheat but weather has been too dry through the week.


Bearish news: Rice is oversold but the trend remains lower. Demand is slow with Vietnam and Thailand exporting rice while dollar values rise. Asian rice supplies are pressuring world market prices.

Rice planting progress in the United States exceeds previous progress records. At this pace, total rice planting may exceed estimated planting intensions. Rice planting and emergence progress is putting pressure on domestic prices. Rice planting is 75 percent complete and emergence is above average. Weekly export sales of 25,000 tons were disappointing.

Bullish news: High corn prices supported rice market moves to the upside. Shipments were above market anticipations at 65,000 tons. Most bearish news has been factored into the markets short term.


Bullish news: India, the second largest cotton exporter, has stopped registering cotton for export to encourage production of grain, reducing food inflation. Chinese cotton acres have decreased 2.5 percent and some estimates expect a 5 percent reduction eventually.

Cotton planting progress has slowed and world supplies are decreasing daily. Consumer confidence increased and textile demand followed. Indian and Chinese economies are growing at a rate of 15 percent and textile demand is growing faster in those nations than in North America.

Bearish news: Cotton markets have moved into a consolidation pattern. Traders hold a record number of buy positions in cotton. Cotton markets are overbought and vulnerable to profit taking as traders could liquidate buy positions at anytime. There are over a million bales registered for delivery. These could fill the pipeline quickly.

Weekly export sales of 215,000 bales were below the smallest trade estimate of 250,000 bales. Despite growing demand in Asia, Chinese and Indian inflation fighting measures are bearish along with the debt crisis in Europe. China increased interest rates, reducing the money supply and limiting imports. Cotton is most vulnerable to this development. Cotton planting in the United States is 26 percent complete.


TAGS: Outlook
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