Market News

Strong close ahead of USDA numbers

Soybeans were sharply higher on fund and technical buying, along with spillover from corn. There was no real fresh news but there is talk of new export demand, especially from China. In any event, the trade’s getting ready for Wednesday’s USDA supply, demand and production update, and analysts see increases for production and ending stocks. Ahead of the report, the average estimate for the crop is 3.094 billion bushels with an average yield of 42.0 bushels per acre and ending stocks are seen at 181 million bushels. Soybean meal and oil were sharply higher on spillover from beans and pre-report position squaring.

Corn was sharply higher on fund and commercial buying, with several months limit up. Ahead of the open, Mexico bought 261,200 tons of 2011/12 U.S. corn and if Russia does limit exports as expected, it could mean more global feed demand for U.S. corn as a replacement for Russian feed wheat. According to Dow Jones Newswires, Moscow could limit exports to 24 million tons with the limit held in place by a floating export tariff. The trade sees a slight reduction in the production estimate against a big increase in ending stocks. The average guess for the crop is 12.492 billion bushels with an average yield of 148.9 bushels per acre while ending stocks are pegged at 795 million bushels. Ethanol futures were higher.

The wheat complex was higher, with most up sharply, on fund and speculative buying, along with spillover from corn. Chicago was the leader on reports Russia will limit grain exports, as soft red winter is a competitor with Russian wheat for the global feed market. Kansas City was watching rainfall totals across the Southern Plains with a drier pattern in the near term forecast. Minneapolis was up modestly, following the lead of the other pits. On average, analysts see USDA making a small month to month reduction in domestic ending stocks while raising the global supply. European wheat was higher thanks to short covering and pre-report position squaring. Ukraine’s Ag Ministry reports 86% of the expected grain area has been harvested with the running total at 43.7 million tons and Kazakhstan’s Ag Ministry states 90.2% of their crop is harvested with the total at 24.1 million tons. Yield and total production in both nations are up sharply thanks to better growing weather. Japan bought 129,163 tons of milling wheat (44,785 tons Canadian western red spring, 31,558 tons U.S. hard red winter, 29,040 tons Australian standard white, and 23,780 tons U.S. western white).

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