Wheat higher on short covering, lower dollar

Soybeans were mostly lower on speculative and technical selling, along with the lower crude oil. Contracts started firm, but just couldn’t follow through due to the increasingly bearish supply and demand outlook; the now expired March was the only contract closing with gains. The trade continues to keep close watch on the expected record South American crop with weather looking favorable for late crop development. Brazil’s Vegetable Oils Industry Association (ABIOVE) pegs that nation’s new soybean crop at 67.6 million tons, up 2.4 million from its early February guess, with exports at 28.8 million tons and the crush at 32.9 million. China bought 220,000 tons of U.S. beans ahead of the open, initially announced as for 2009/10 delivery but later switched to 2010/11. Soybean oil hit two week lows on profit taking and spillover from crude oil. Meal was mostly lower following the lead of beans with losses limited by product spread adjustments. The National Oilseed Processors Association’s monthly crush report is out Monday at 7:30 AM Central. The crush is pegged at 144.5 million bushels with bean oil stocks placed at 2.786 billion pounds. The crush would be down from January while stocks would be up on the month.

Corn was lower on technical and fund selling, in addition to the lower beans and crude oil. Corn’s fundamentals remain negative with a large supply, some uptick in ethanol use and fairly slack export demand. South Korea bought 116,000 tons of 2009/10 corn which was considered routine. Losses were limited by continued concerns over early planting delays ahead of March 31’s USDA prospective plantings report. Additionally, most contracts have managed to hold above last month’s lows. Ethanol futures were lower. Malaysia bought 60,000 tons of South American corn at $225 per ton.

The wheat complex was higher on short covering, technical buying and the lower dollar. When the dollar goes down, it lowers the price of U.S. goods on the export market. However, U.S. wheat is more expensive than wheat from competing exporters and the available world supply is large. In any event, fundamentals may be negative, but traders continue to hold a very large net short position, potentially setting the stage for more sideways movement. Minneapolis had additional support from concerns over hard red spring planting delays. European wheat was mixed, mostly firm, in consolidation trade; May Paris was up .4% and May London was .8% higher.