Trade started on the positive side today as light fund buying surfaced on every complex. This was the result of several factors, including reductions to South American crops and an increase in export loadings of corn and soybeans. There are now thoughts we could surpass yearly export projections if our current loading pace continues. Advances were capped the U.S. planting pace and crop progress which are both at or ahead of normal.
More attention is being given to weekly export sales reports. Ever since talk began surrounding possible tariffs on U.S. soybeans to China, purchases by China has dropped off. In fact, Chinese buyers have went as far as cancelling sales already on the books. At the same time China has been booking new crop soybeans. We have also seen other buyers show up for U.S. offerings, and keep our total sales at an elevated volume.
We are starting to see more interest in U.S. corn exports. The United States currently has a record 725 million bu of unshipped corn sales on the books. This is a 38% increase from a year ago. The question in the market now is if this corn will all get shipped or if we will see cancellations similar to what has taken place in soybeans recently. Given the tighter world corn reserves, it is less likely buyers will wash out of those bookings.
We are seeing more and more estimates released on what crops might be planted on uncommitted acres this year. One problem with these is what numbers are being used when determining which crop is more economical, mainly yields. Some forecasters are using yields that are distorting projections, including some soybean yields in the 60 bushel per acre range. These distorted yields are giving trade the indication that soybean returns are much higher than they really are.
July corn futures finished today’s session 2 cents higher at $4.04 , July soybeans gained 5 cents at $10.30 , and July wheat in Chicago rallied 14 cents at $5.21 .
For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at email@example.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.
Market Commentary provided by:
|Karl Setzer, CTA|
Grain Solutions Team Leader
West Bend, IA 50597