Wheat Market Analysis Report for 7/22/2010
September Wheat finished 8 1/4 higher at 596 1/2, 12 3/4 up fromthe low and 13 1/2 off the high. December Wheat closed 8 3/4 higher at 627 1/2. This was 12 1/2 off the high and 13 1/4 up from the low.
Wheat was the leader to the upside over soybeans and corn again today. Traders are said to be nervous about the extent of crop losses in Europe, Canada and North Africa, and this has generated steady, substantial buying by funds and commission houses. Today’s gains took the December contract to its highest level since December 2nd, 2009, although prices retreated from the early highs into mid session and into the close. Traders said that the market was boosted by a lower dollar and continued concern over the drought in Russia. Adding to the recent negative production news were reports that rains have slowed wheat planting in Argentina. The Buenos Aires Grains Exchange said today that if rains continue, this year’s planted area could be lower than expected. Planting was 79% complete as of Thursday according to the exchange versus 99% at the same point last year when a drought reduced planted area to its lowest level in decades. The exchange says that, for now, it is keeping its planted area forecast unchanged at 4.2 million hectares. This week’s export sales came in near expectations but below the average total needed each week to reach the USDA’s export projection. Net sales came in at 382,100 tonnes. Sales need to average 431,000 tonnes each week to reach the USDA forecast. Wheat posted a substantial gain versus corn today in moderately active trade by spreaders.
December Oats closed down 1 1/2 at 264. This was 6 off the high and 1 up from the low.
Soybean Complex Market Recap for 7/22/2010
August Soybeans finished up 3/4 at 1016, 10 off the high and 7 1/4 up from the low. November Soybeans closed 1 higher at 979 1/2. This was 11 1/2 off the high and 7 1/4 up from the low.
August Soymeal closed 3.1 lower at 300.2. This was 1.7 up from the low and 5.4 off the high.
August Soybean Oil finished up 0.64 at 38.9, 0.33 off the high and 0.76 up from the low.
November soybeans saw 2-sided trade overnight and again in the day session. The trend overnight was higher, but during the day session it was lower. Spreaders reported moderately active trade in the meal/soy oil spreads today and in soybean/corn spreads with one analyst noting that today was an adjustment day after the soybean and corn markets ran out of fresh positive price news. In fact, one analyst expressed concern over recent forecasts of South American soybean production that have the 2010/11 Brazilian crop at 70 million tonnes or higher. The USDA currently projects Brazil’s 2010/11 crop at just 65 million tonnes. The analyst noted that if the higher private estimates are correct, this could raise next year’s world ending stocks well above the record level of 67.76 million tonnes that the USDA projected on its July supply and demand report. Traders said that today’s early gains stemmed from a sharp rally in crude oil and a lower dollar. They added that gains in soybeans were limited by a lower than expected monthly crush estimate and the South American supply outlook. Old crop export sales in soybeans continue to run ahead of the USDA’s export projection for 2009/10. Net soybean sales came in at 111,800 tonnes for the current marketing year and 1,115,400 for next year for a total of 1,227,200. This takes cumulative sales to 101.5% of the USDA forecast for 2009/2010 versus a 5 year average of 99.7%. Net meal sales came in at 100,400 tonnes for the current marketing year and 35,400 for next year for a total of 135,800. Meal sales need to average 119,000 tonnes each week to reach the USDA forecast. Net oil sales were just 900 tonnes for this year. Oil sales need to average 10,000 tonnes each week to reach the USDA forecast. The USDA also announced a sale of 110,000 tonnes of soybeans to South Korea this morning for 2010/11 delivery. The Census Bureau estimated the US crush rate for June at 129.2 million bushels, about 2-3 million below trade expectations. Soy oil stocks were estimated at 3.547 billion pounds, up slightly from 3.468 billion at the end of May.
Corn Market Commentary for 7/22/2010
September Corn finished 3 1/4 lower at 376 1/2, 2 1/2 up from the low and 10 1/2 off the high. December Corn closed down 3 1/4 at 390 1/4. This was 10 1/2 off the high and 2 1/4 up from the low.
December corn pushed higher overnight and on into the first minutes of the day session today, but the market sold off over the remainder of the day, pushing below the overnight lows prior to the close. Traders said that early support came from a sharply sharply higher crude and lower dollar as well as a surge in wheat to start the day. However, ideas that this week’s hotter weather may not be as damaging as first thought, appeared to generate profit taking by specs. Basis levels eased at the Gulf today in light demand. This week’s export sales were slightly ahead of expectations in corn at 614,100 tonnes for the current marketing year and 540,900 for next year for a total of 1,155,000. Japan was the biggest buyer in old crop and China was the biggest buyer in new crop at 304,800 tonnes. As of July 15, cumulative corn sales stood at 102.0% of the USDA forecast for 2009/2010 versus a 5 year average of 97.8%.
September Rice finished up 0.155 at 10.135, 0.035 up from the low and equal to the high.
After reading today’s commentary, 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 an analysis of the factors that influenced price activity, a recap of any reports released that day, a rundown of each commodity’s traded price activity, and a look ahead at the next day’s schedule. 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.
Andy Waldock circulates this blog. Andy Waldock is a financial advisor, trader, analyst, broker and asset managerfor Commodity & Derivative Advisors, located in Sandusky, Ohio. For that reason, Andy Waldock may have positions for himself, his customers, or his family in any commodity future market discussed. The blog is meant to develop a dialogue and educate those with an interest in the commodity future markets. The commodity markets employ a high degree of leverage and commodity trading may not be suitable for all investors. There is considerable risk in investing in commodity futures. If you are interested in reading other circulated articles, commenting on his writings or subscribing to Andy’s blog, please visit http://blog.commodityandderivativeadv.com, or if you have any questions, please call 1-866-990-0777.
