Soybean Complex Market Commentary for 8-5-10
September Soybeans ended up 5 1/2 at 1034 3/4, 19 3/4 off the high and 17 3/4 up from the low. November Soybeans closed up 4 3/4 at 1029. This was 18 up from the low and 20 off the high.
August Soymeal settled up 2.1 at 313.6. This was 4.6 up from the low and 5.4 off the high.
August Soybean Oil finished down 0.1 at 41.26, 0.71 off the high and 0.36 up from the low.
November soybeans soared to start the day, but eased into early afternoon before surrendering most of the day’s remaining gains into the close. Traders said that the initial gains were sparked by the rally in wheat and a surge in export sales for soybeans with some support also credited to continued hot and dry conditions in the southern Midwest and Delta. Meal gained on soy oil on the day with oil finishing lower in line with modest losses in crude oil. This week’s export sales came in above trade expectations in soybeans at 6,000 tonnes for the current marketing year and 1,168,100 for next year for a total of 1,174,100. China cancelled 172,400 tonnes of old crop soybeans, but added 799,500 tonnes in new crop. The USDA also announced a fresh sale of 455,000 tonnes of soybeans to China for delivery during the 2010/11 crop year. This was not included in the weekly total. The USDA announced another fresh sale of 111,500 tonnes of soybeans to an unknown destination for 2010/11. This was also not on the weekly report. As of July 29, cumulative soybean sales stand at 25.4% of the USDA forecast for 2010/2011 (new crop) versus a 5 year average of just 15.4%. Sales need to average 488,000 tonnes each week to reach the USDA forecast. Net meal sales came in at 132,800 tonnes for 2009/10 and 2,200 tonnes for next year for a total of 135,000. Sales need to average 130,000 tonnes each week to reach the USDA forecast. Net oil sales came in at 64,800 tonnes for old crop and 2,000 for new crop for a total of 66,800. Sales need to average 4,000 tonnes each week to reach the USDA forecast. Brazil’s crop supply agency, Conab, lowered its estimate of their 2009/10 soybean crop to 68.47 million tonnes from their previous estimate of 68.71 million. The new estimate is still a new record large soybean crop for Brazil. Weather remains hot and dry in the Delta, raising concern over crop stress there.
Corn Market Review for 8-5-10
September Corn ended up 3 1/4 at 403 1/2, 21 3/4 off the high and 8 up from the low. December Corn settled up 3 at 418. This was 8 up from the low and 21 off the high.
December corn rallied late in the overnight session following even sharper gains in wheat. This was followed by new highs to the start of the day session. However, the corn market eased into early midsession before erasing the remainder of the day’s gains prior to the close. Traders said that selling in soybeans and late selling by funds in corn helped to pressure the market along with a late wave of selling by spreaders versus wheat. Funds had been heavy buyers earlier in the day. Drought in Russia has resulted in a ban on grain exports by that country. This will include feed wheat, including existing contracts, and traders say this should shift demand to corn due to its lower cost and greater availability. This week’s net weekly export sales for corn came in at 472,200 tonnes for the current marketing year and 821,900 for the next marketing year for a total of 1,294,100. As of July 29, cumulative corn sales stand at 9.0% of the USDA forecast for 2010/2011 (next) marketing year versus a 5 year average of 9.6%. Sales need to average 791,000 tonnes each week to reach the USDA forecast. Brazil’s crop supply agency, Conab, increased its estimate of their 2009/10 corn crop to 54.38 million tonnes versus 53.46 for their July estimate.
September Rice settled down 0.1 at 10.93, 0.37 off the high and equal to the low.
Wheat Market Review Report for 8-5-10
September Wheat finished up 60 at 785 3/4, equal to the high and 61 3/4 up from the low. December Wheat settled up 55 3/4 at 811 1/4. This was 57 1/4 up from the low and 4 1/4 off the high.
December wheat soared to limit up overnight and into the start of the day session. After pulling back from the highs after the open, the December contract spent the remainder of the session trading just below the highs. The nearby September contract led the gains today with the December wheat contract also gaining on deferred contracts. Russia’s announcement that it will temporarily ban exports due to the ongoing drought confirmed reports from earlier in the week. Cash traders indicate that this will affect existing sales of grain and grain products and that exports will be banned from August 15th to December 31st. One analyst noted that Russia itself does not have a complete handle on the final supply of wheat other grains, and it may not have a fully developed plan on how to dampen the food inflation that is the government’s main concern. This week’s export sales were strong again at 854,600 tonnes. The USDA also announced a fresh sale of 110,000 tonnes of hard red winter wheat to an unknown destination for delivery in the 2010/11 crop marketing year. This was not included on the weekly total. As of July 29, cumulative wheat sales stand at 34.0% of the USDA forecast for 2010/2011 versus a 5 year average of 34.9%. Sales need to average 410,000 tonnes each week to reach the USDA forecast. Traders in Europe indicate that wheat exports from Bulgaria are up despite a lower crop there this year with 150,000 tonnes currently being loaded. Egypt has announced that it will buy 60,000 tonnes of wheat per month to make up for the shortfall in Russian sales.
December Oats settled up 1 1/4 at 294 1/2. This was 4 3/4 up from the low and 15 off the high.
After reading today’s recap,traders might want to take a peek at the commercial traders momentum. The Commercial Trader momentum can be tracked by using the Commodity Futures Trading Commission 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 overvalue and it should be sold just as well as end line users know when they should be stocking up at low prices. Therefore, trader should be able to incorporate this valuable information into their future market education.
The daily commentaries provide a rundown of any reports released that day, a recap of each commodity’s traded price activity, an analysis of the factors that influenced price activity, and a look ahead at the schedule for the next day. Market commentaries for wheat, soybeans, corn, gold and silver are provided by CME Group. The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
This blog is reported by Andy Waldock. Andy Waldock is a financial advisor, analyst, broker, asset manager and traderfor Commodity & Derivative Advisors, located in Sandusky, Ohio. Therefore, Andy Waldock may have positions for himself, his customers, or his family in any commodity future market reviewed. The blog is meant for educational purposes and to develop a discussion among those with an interest in the commodity future markets. The commodity markets may not be appropriate for all investors due to the high degree of leverage. There is considerable risk in investing in commodity futures. If you are interested in reading other circulated articles, commenting on his publications or subscribing to Andy’s blog, please visit http://blog.commodityandderivativeadv.com, or if you have any questions, please call 1-866-990-0777.