Grains and oilseeds higher ahead of USDA numbers: February 8, 2010

Soybeans hit one and a half week highs on technical and speculative buying, along with short covering and some outside market direction. The Dow was down for most of the trading day but the dollar was lower and gold and crude oil were higher. Analysts expect USDA’s monthly supply and demand update to show ending stocks down from January with the average estimate at 219 million bushels, compared o 245 million a month ago. USDA will also be reporting updated international ending stocks and production projections with the report due out at 7:30 AM Central. Bean oil hit three week highs and meal was up on spillover from beans and position squaring ahead of the USDA numbers.

Corn was higher on fund and technical buying, in addition to short covering and spillover from beans. Demand has increased after the recent losses, especially on the end user side and there is some talk that March has bottomed out at $3.50. Even with a probable reduction from the Ag Department, the trade expects fairly large ending stocks in the USDA update. The average pre-report estimate is 1.748 billion bushels, compared to January’s figure of 1.764 billion. Ethanol futures were higher.

The wheat complex was higher on technical buying, short covering and the lower dollar index. Analysts see U.S. ending stocks steady to a little smaller than the previous month’s report. Ahead of the report, the average projection is 973 million bushels, compared to 976 million in January’s update. Those fundamentals remain very negative with a large supply and weak demand, which should be reflected in the new supply and demand estimates. Snowfall’s a negative, giving cover to the dormant hard and soft red winter crops. Iraq bought 400,000 tons of wheat from Canada. FO Licht estimates 2009/10 world wheat production at 675.5 million tons, up 1.5 million from January on a better than expected crop in the Black Sea region. Russia, according to Dow Jones Newswires, will be building a new grain export terminal on their second largest Black Sea port of Tuapse. The terminal’s expected to have an annual capacity of 2.4 million tons.