Soybean Complex Market Review for 6/24/2010

August Soybeans ended down 6 1/4 at 939 3/4, 12 off the high and equal to the low. November Soybeans closed down 11 1/2 at 912. This was 15 3/4 off the high and 1 1/4 up from the low.

August Soymeal closed up 0.3 at 279.8. This was 2.1 off the high and 1.3 up from the low.

August Soybean Oil finished down 0.42 at 37.33, 0.11 up from the low and 0.61 off the high.

November soybeans pushed below yesterday’s lows to start the day session and then followed up with a new round of lows for the day prior to the close. The new crop November contract lost substantial ground to the July contract on the day. Today’s break took the November contract to its lowest level since June 14th. Soy oil followed soybeans lower while meal saw mixed results into early afternoon. Traders said that improved weather outweighed a modest drop in the dollar late in the session. Some forecasters have added moisture in the Midwest on Sunday and Monday and again later next week, but the 6-10 day is still dry. This week’s export sales came in just above trade expectations for soybeans and in line with expectations for meal and oil. Net sales for soybeans were 308,300 tonnes for the current marketing year and 233,000 for next year for a total of 541,300. Net meal sales were 35,100 tonnes for this year and 41,500 for next year for a total of 76,600. Net oil sales were 45,500 tonnes for the current marketing year and none for the next marketing year for a total of 45,500. The Census Bureau released its monthly crush report for May this morning with total crush at 133.8 million bushels which was in line with expectations. Cumulative crush for the season has reached 78.5% of the total USDA forecast for the season as compared with 76.6% last year and 76.2% as the 5-year average after 9 months of the marketing year. Soy oil stocks were pegged at 3.450 billion pounds, up from 3.354 billion pounds in April.

Wheat Market Review for 6/24/2010

September Wheat ended  up 1 3/4 at 477 1/2, 6 1/4 off the high and 3 up from the low. December Wheat closed up 1 3/4 at 504 1/4. This was 5 1/2 off the high and 3 up from the low.

December wheat continued in the directionless pattern seen during most of this week. Drier weather and forecasts for more of the same into the weekend is considered beneficial as harvest gains momentum, but the recent rains in the northern Midwest may require more extensive drying time according to one analyst. Some forecasters have added scattered light to moderate rains in the Midwest on Sunday and Monday, but the 6-10 day forecast is still dry. December wheat was again stronger than corn and soybeans on a relative basis today and traders said that support came from quality concerns and recent rains in soft red winter wheat harvest areas along with another strong weekly export sales number. Net export sales for wheat came in at 720,600 tonnes, well above the high end of trade expectations. The biggest sale was for 244,500 tonnes to an unknown destination. Sales need to average 374,000 tonnes each week to reach the USDA forecast. Traders report that an Israeli firm bought about 60,000 of Black Sea origin feed wheat. Tunisia bought 50,000 tonnes of wheat from a previously announced tender. This continues the recent trend toward stepped up demand for wheat from North Africia and the Middle East.

December Oats ended  down 1/2 at 276 1/2. This was 4 up from the low and 4 3/4 off the high.

Corn Market Recap for 6/24/2010September Corn finished down 1 3/4 at 353 3/4, 2 3/4 up from the low and 3 3/4 off the high. December Corn closed down 1 at 364 1/2. This was 4 off the high and 3 up from the low.

December corn saw 2-sided trade today with a marginal gain overnight, followed by a dip below yesterday’s lows to start the day session. The market then pushed to higher on the day into late morning, followed by a retreat to near the middle of the day’s trading range into the close. Traders said that weather was a factor with a cool down expected in much of the Midwest starting on Sunday and cooler weather extending into the 6-10 day timeframe. Some forecasters have added light to moderate rain on Sunday and Monday, but coverage is not expected to be general. This week’s export sales were again above 1 million tonnes and above trade expectations. Net sales for corn were 1,123,400 tonnes for the current marketing year and 332,300 for next year for a total of 1,455,700. Sales need to average 136,000 tonnes each week to reach the USDA forecast. This week’s corn sales included 230,000 tonnes sold to China for 2009/10 delivery and another 60,000 tonnes for 2010/11. Total sales to China thus far total 885,100 tonnes for 2009/10. Traders are starting to look forward to the USDA’s June 30th Planted Acreage report. Over the past 10 years, the USDA’s acreage number has increased by an average of 1.03 million acres between the March Planting Intentions report and the June report. Weather in China is also a market factor according to traders and some forecasts call for more dry weather in northern growing areas which would add to the stress already experienced by the corn crop in that growing area.

September Rice closed down 0.2 at 10.34, 0.03 up from the low and 0.26 off the high.

The Commercial Trader momentum in the corn and wheat markets are currently positive, but the soybean Commercial Trader momentum is negative.  We track this through the Commodity Futures Trading Commissions Commitment of Traders reports. Our idea is that, in a value driven commodity futures market, no one knows fair value like the people who produce it or, have to use it. In fact, it is precisely their sense of value that provides the commodity market’s rhythmic meanderings that swing traders love so much. Let’s face it, producers know when their product is overvalued and it should be sold just as well as end line users know when they should be stocking up at low prices. Therefore, Commercial traders appear to be expecting higher prices on corn and wheat but lower prices on soybeans and we should be able to incorporate this into our commodity trading system. 

Andy Waldock circulates this blog.  Andy Waldock is a broker, asset manager, trader, and analyst.  As a result, Andy Waldock may have positions for himself, his family, or his clients in any market discussed. The blog is meant for educational purposes and to develop a discussion among those with an interest in the commodity markets. The commodity markets employ a high degree of leverage and may not be suitable for all investors. Investing in the futures could result in substantial risk.

The daily commentaries provide an analysis of the factors that influenced price activity, a recap of any reports released that day, a review of each commodity’s traded price activity, and a look ahead at the next day’s schedule.  Market commentaries for soybeans, corn, wheat, gold and silver are provided by CME Group.