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US Cash Grain Review: Grains Suffer, Soybean Prices Stronger4 hours ago
SUPERIOR, Neb. (Dow Jones)--Further divergence occurred between grain/oilseed prices on the U.S. cash market this week, with additional appreciation in the value of soybeans, juxtaposed against multi-month lows for corn/wheat.
"Soybeans were pretty much the brightest star in the market...but the rest of the galaxy just tried to avoid being sucked into a black hole, after Tuesday's surprising USDA reports," said Farm Futures' Arlan Suderman.
National farm-gate soybean prices still managed to eke out gains of about 18 cents per bushel during the period - even threatening three-week highs - despite the issuance of what was generally construed as a very bearish USDA grain stocks and acreage report.
"The market has rallied strongly off of the lows posted early on Tuesday," said Doane Agricultural services. "Despite a larger than expected June 1 stocks figures [597 million bushels], old-crop soybean supplies are tight."
August CBOT soy futures ultimately closed with gains of 26 cents, although interior bean basis lost an average of 5 1/2 cents during the week, responding to indifferent domestic demand and a 41% increase in reported country movement.
"Commercial elevators do not want to be holding open inventory in today's volatile market, and are selling soybeans as soon as they buy them. This is keeping many processors in supply," said Iowa commodity trade advisor Karl Setzer. "Soybean processors also know that within a few weeks they will have a fresh supply of new soybeans. Most are willing to go hand-to-mouth until then."
Export basis bids for beans were regionally diverse, dropping about 20 cents at the Louisiana Gulf, while rising 15 cents in the Pacific Northwest, a CIF market that sources much of the U.S. soy purchased by China.
"The world's largest soy importer shocked the market earlier this week with the purchase of two loads of old crop beans, but trade is expected to slow down when the [Chinese] government starts releasing some of its huge reserves," said the CME Group.
Cash corn prices dove to late-2008 lows, after the government reported that farmers managed to seed their second-largest cornfield on record, despite troubling planting weather this spring.
"The lesson to be learned from the past two spring planting seasons is this - U.S. farmers will plant every acre of corn they intended to plant, regardless how poor the conditions might be. And if the weather is exceptionally favorable, they will plant even more corn than originally intended," said Rich Balvanz of AMS Commodities. "Spring weather conditions have no longer have a bearing on farmers' ability, or willingness, to plant a corn crop."
Mild late spring/early summer weather has had a great bearing on the condition of the U.S. corn crop however, boosting government crop condition ratings.
"From my vantage point...the crops look really good and record yields are a real likelihood, unless the weather changes," said analyst John Roach.
July CBOT corn futures settled 38 1/2 cents lower on the week.
The plunge in market prices had a predictable impact on cash corn movement, causing a 15% decrease in receipts at Midwestern corn terminals surveyed by CBOT.
"Farmers were holding tight," said Farm Futures analyst Bryce Knorr.
Elevator bids for U.S. wheat plunged about 28-43 cents this week, amid heavy harvest pressure, news of surprisingly large spring seedings of wheat, and a 34% drop in export sales. Commercial inventories of wheat leaped nearly 17%, as combines began to bring in the 2009 hard/soft red winter crop as far north as Nebraska and Ohio.
"While wheat harvest in starting to wind down in southern parts of the state, those in the north and east are still in full swing as we approach the Fourth of July weekend," said the Kansas Wheat Commission.
The week's 6-7% decline in farmgate wheat prices was directly attributable to falling futures, as interior basis actually strengthened by averages of almost 2-6 cents.
"Test weights and protein are normal to below in much of Kansas," said Spectrum Commodities analyst Louise Gartner. "Farmer selling has reportedly been slower than normal."
While spot winter wheat prices only backed off to two-month lows, the cash-value of hard red spring wheat approached two-year lows, returning to levels last seen in late summer of 2007.
Like corn and soybeans, a recent turn toward good growing weather has also placed pressure on the HRS market.
"The spring wheat crop looks about as good now, as one could hope for, especially after a late plant," said Country Hedging analyst Joel Fitch.
Export basis for U.S. wheat varied widely this week, with CIF premiums for SRW dropping 10-20 cents at the Louisiana Gulf, despite gains of up to 5-10 cents in hard wheat values.
All U.S. grain exchanges - and many cash markets - will be closed Friday, in advance of Saturday's annual Independence Day holiday.
USDA meteorologist Brad Rippey said hot, dry weather is currently advancing the ripening of winter wheat and rapid development of spring-sown crops in the Pacific Northwest, but is also increasing drought stress on summer crops across the Deep South.
Meanwhile, showers and thunderstorms across central portions of the Great Plains are generally benefiting row crops, but are also hampering the winter wheat harvest.
"Hot, dry weather associated with an upper-level ridge of high pressure will dominate the drought-stricken western Gulf Coast region," said Rippey. "Around the periphery of the ridge, showers and thunderstorms will spread from the Southwest to the Plains, eventually reaching the southern Corn Belt and the interior Southeast by early next week."
-By Gary Wulf, Dow Jones Newswires; Gary.Wulf@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=8nLUSqR%2B15oQ%2FMg2D03oHg%3D%3D. You can use this link on the day this article is published and the following day.
By Gary Wulf
Of DOW JONES NEWSWIRES
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