Soybeans — Bearish news: The prospect of a record soybean crop in Argentina and Brazil. Current estimates are 120 million tons up from 116 million. South American beans are competitively priced.
China has increased interest rates and some Chinese banks have suspended lending. This action will reduce soybean imports.
The dollar value relative to other currencies has risen. Higher dollars reduce demand for U.S. products.
The proposal to limit bank investment in commodity markets is bearish. If money going into the markets is limited, prices will take a significant fall.
Palm oil prices are down 7 percent for the year. This price drop pressures soy oil and soybean prices.
Market traders recommend selling on rallies. The trend is lower prices. Traders are taking profits.
Bullish news: Potential increased exports as prices drop. Export demand for soybeans remains at a record high. Export sales are at 90 percent of USDA forecasts where 70 percent is average. Weekly exports were strong at 42 million bushels.
Bearish news: USDA increased the corn crop production estimates over 13 billion bushels. That estimate increased world carryover estimates and United States carryover estimates substantially.
Feed use is down significantly. The current United States cattle crop is the smallest since 1950. Beef production will be lower for three years. Beef supplies will become tight as a result of the reduced population in breeding herds. It might be a good time to stock up on meat.
Corn exports were down 10 million bushels for the week. Last week 20 million bushels were exported. The previous weekly exports of 1.6 million tons were a season high.
Corn export sales are near 52 percent of USDA export forecasts. The average for this week is 56 percent of that forecast. Corn exports are 4 percent behind average.
Some private sources estimate corn acres were over 90 million last season. That estimate if true would be a 3 million acre increase.
Bullish news: USDA will update corn production estimates in March. Late harvest and inclement weather may cause cuts in the production forecasts.
Farmer selling of corn remains light. As transportation pipelines that have been clogged with soybeans become available. Corn export demand could increase quickly. Lower prices stimulate demand.
Bearish news: The ever-increasing carryover estimates of world wheat supplies. World wheat supplies are at a record high. Wheat use is lagging behind USDA projections.
Demand for United States wheat is limited because of world supply and dollar values. U.S. wheat is not competitively priced compared with wheat from Europe or the Asian Black Sea region.
The oversupply situation is getting worse as inventories continue to increase. World supply is the highest in 50 years. Improved exports did not stimulate trader buying.
Fund traders have stopped buying wheat. Trend traders are increasing sell positions and now have more short than long positions in wheat. The trend is down.
Bullish news: Acres planted to wheat in the United States are down significantly. Winter wheat planting intentions were already down. A significant amount of winter wheat did not get planted because of inclement weather.
World winter wheat plantings are lower than last year. Lower prices are expected to reduce spring wheat plantings worldwide.
Export demand for wheat took a bullish but temporary jump last week to 825,000 tons.
Bearish news: Total exports for the year remain below estimates. The price of United States rice is greater than rice from Thailand and Vietnam. The Philippines continue buying rice from Thailand. India is not yet buying rice.
The White House has proposed a $4 billion cut in USDA’s crop insurance program. This comes on top of a $6 billion cut implemented last year. The cut will amount to a $10 billion cut in 10 years, but most of it will come out in the next five years.
Bullish news: The oversold condition in rice markets has been mostly corrected. The support price of $140 was broken through but prices have come up above that level again.
Rice export sales hit 190,000 tons exceeding market expectations. The increased sales probably reflect lower prices. Rice farmers have donated tons of rice to Haiti.
Bearish news: Chinese cotton imports are down nearly 28 percent from this time last year. International sources predict world cotton production to increase 9 percent in 2010.
Traders are taking profits from buy positions in cotton. The price has penetrated the 70 cent support level.
Falling corn and soybean prices diminish the need for cotton to buy acres next season. Traders expect new lows in cotton pricing.
Bullish news: United States cotton production estimate was cut to 12.2 million bales. That is the lowest production level in 24 years. The new carryover estimate is 4.3 million bales, a 6 year low.
Exports of 335,000 bales were above anticipations. Cotton exports exceed USDA forecasts by 4 percent.