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Serving: Central

Market wrap: larger rice supply

China has imported three times as much cotton as it did by this time last year.


Bearish news: World rice supply is now expected to increase by 17 million tons. Production in the United States is expected to increase by 22 million to 24 million hundredweight. Planting progress improves production potential. The rumor is more rice acres will be planted than USDA has estimated.

Rice market prices have a technical rally from oversold conditions. Traders are expecting this situation to be temporary. It does provide a selling opportunity.

Export sales remain slow as Vietnam prices remain significantly lower than prices in the United States. Vietnamese rice is quoted at $365 per ton. Pakistan rice is $375 per ton, while Thailand rice is $480 per ton.

Bullish news: Weekly export sales of 69,000 tons were above market anticipation. Political unrest in Thailand may limit rice exports from that nation for some time. That political problem has pushed U.S. rice prices higher. Total use for U.S. exports and domestic consumption is expected to increase 6 million tons. Weekly shipments were over 50,000 tons.


Bearish news: Soybean and palm oil prices have been eroding on Asian markets. India has 18 million tons of domestic oil seed in storage. Brazilian soybean prices dropped to 20 cents below U.S. prices. Brazilian exports surged this week. Soybean prices have been dropping in China. Prices in the United States dropped below the 50-day moving average on technical charts.

Increasing world supply and increased production potential in the United States are a heavy burden on prices. World supply increased 20 million tons in a year to 66 million. Soybean crush dropped 100 million bushels. Soybean crush of 132 million bushels is below expectations.

Weekly soybean export sales of 474,000 tons did not meet market anticipation. Ending stock estimates for the U.S. soybean crop have reached a bearish number of 365 million bushels exceeding market expectations.

Bullish news: Deliveries included zero meal contracts, 91 soy oil contracts and 65 soybean contracts for the week. Soy-diesel use increased 700 million bushels. Export inspections were 28 percent higher than last week at 8.47 million bushels. South American soybean production is expected to drop next season.


Bearish news: Weekly export sales of 940,000 tons did not meet market expectations. Export inspections of 38.5 million bushels met market expectations. China sold 800,000 tons of corn from government reserves into their domestic markets limiting our exports.

Warm wet weather in the forecast is good for production. Increased production potential is bearish for prices. Our corn crop is now 87 percent planted. Fifty-five percent of corn is emerged — the five-year average is 40 percent. The crop rating of 67 percent good to excellent is way above average.

Bullish news: Corn fundamentals are improving as demand increases in Asia. China bought 300,000 tons not reflected in USDA reports this week. The rumor is that China has imported a total of 15 corn contracts of 55,000 tons each — that total would be 845,000 tons. Deliveries of 318 contracts in one day were positive.

USDA supply estimates were reduced 161 million bushels from last month. Ending stock estimates for the United States are down to 1.74 billion bushels. Ethanol use is up 200 million bushels to 4.66 billion. That is one-third of the U. S. crop.

Ethanol prices are rising and feed use is increased worldwide. China is increasing production of hogs and chickens. Corn use is expected to increase 2 percent.


Bearish news: Asian wheat market prices are weakening. Deliveries of U.S. wheat were 104 contracts and less than other countries. Exports to the Middle East and North Africa are strong but Russia, Europe and Australia have most of that business. India shipped 400,000 tons to Bangladesh ending an export ban in dispute. India wheat buying is down 3.5 percent below last year. Export inspections of 12.5 million bushels are down 50 percent in a week.

Ending stocks of wheat in the United States are expected to increase to the highest level since 1988 at 1 billion bushels. World supply is expected to increase by 5 million tons to 198 million. India anticipates record production of 81 million tons. Wheat is 79 percent planted. Winter wheat conditions ratings of 66 percent good to excellent are bearishly above the average of 47 percent.

Bullish news: Weekly export sales of 485,000 tons met expectations. Commercial traders have been holding wheat in storage as prices near support levels.


Bullish news: Weekly export sales of 382,000 bales were above market expectations. U.S. production is predicted to reach 16.7 million bales. World production of 114 million bales is expected. These numbers are higher than last year but not enough to keep supply from tightening.

Retail sales of cotton apparel have increased for seven consecutive months. China has imported 1.7 million tons of cotton this year. That is three times the amount imported by this time last year. China has added 800,000 tons of cotton to their import quota.

Bearish news: Cotton trading remains in a consolidation range. Planting progress is creeping ahead of the five year average. Production estimates are about equal to use estimates in USDA reports. Ending stock estimates were increased 100,000 bales to 3.1 million.

Traders with short positions have been buying to cover those positions when prices move higher. Traders have been taking profits from buy contracts. European economic news has turned bearish. The value of their euro has declined relative to dollars, making U.S. cotton expensive in Europe. Indian farmers have increased cotton planting.


TAGS: Rice
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