Afternoon Recap by Bob Burgdorfer

Soybeans charge higher on strong crush, China GDP

Published on: Apr 16, 2014

April 16, 2014

China added to ongoing bullish reactions from a big increase in the March soybean crush.

Corn futures fell to a two-week low as forecasts for warm, dry weather in the Midwest should allow for rapid advances in spring planting.

Wheat futures were lower as concerns about frost damage to the winter wheat appeared to wane.

Soybeans rose to set a new nine-month high in early trading, but gains were pared by the close.

On Tuesday, the National Oilseed Processors Association reported the March soybean crush at 153.84 million bushels of beans, much more than expected, and up 8.6% from February and up 12% from a year earlier.

That surge in domestic use coupled with better-than-expected soybean exports this year put more focus on the low level of U.S. soybean supplies. Higher prices for soybeans and soymeal will either slow usage or prompt soybean imports. Last week a cargo of Brazilian soybeans were imported to the U.S. Gulf Coast and trade sources said more shipments were expected.

U.S. soybean exports also have been a bright spot this year, with USDA's weekly sales last week at 10.6 million bushels for old- and new-crop business slightly better than expected. On an annual basis, old-crop sales are nearly 3% more than what USDA had forecast.

Soybean harvest in Argentina should progress under clear skies the next 10 days, while rain could impede portions of Brazil's harvest, Commodity Weather Group said.

In Chicago, May soybeans closed up 17-1/2 cents at $15.18-1/4. The May peaked at a contract high of $15.22-3/4. November closed up 8-1/4 at $12.37-1/4.

What to Look For – These high prices could encourage more imports from South America, which is harvesting now. USDA will release weekly exports on Thursday morning with analysts surveyed by Reuters expecting old-crop sales from a minus 3.67 million bushels to an increase of 3.67 million. New-crop estimates ranged from 6.43 million to almost 12.9 million.

Corn closed at its lowest in about two weeks as the forecasts for dry weather next week provided some assurances for rapid planting progress after the slow start last week.

While the tensions between Russia and Ukraine continue to be watched, spring planting is of more immediate interest to analysts, farmers, processors and traders. Midday forecasts by Commodity Weather Group showed broad swatches of dry weather the next two weeks in the Midwest along with above-normal temperatures, both of which should be ideal for planting.

Corn planting was 3% done last week, which was about as expected.

Chicago May corn closed down 6-1/4 cents at $4.97-1/2 and new-crop December was down 4-1/4 at $4.99.

What to Look For – Official and anecdotal reports from the Midwest on how spring planting is progressing. USDA on March 31 predicted farmers will plant nearly 91.7 million acres this year, but widespread market talk has said those acres will increase in subsequent reports. Weekly USDA export sales on Thursday were forecast to show numbers similar to last week's, with the Reuters' estimates ranging from 21.7 million to 33.5 million for old crop and 0 to 5.9 million for new.

Hard red winter and soft red winter wheat finished lower on Wednesday to give up much of Tuesday's gains as fears eased about frost damage to the crops in the Plains and Midwest.

News of frost Monday and Tuesday in the winter wheat areas in Kansas, Oklahoma and Texas sent futures higher then.

Winter wheat came out of winter dormancy in weak condition because of drought. USDA crop reports late on Monday rated winter wheat 34% rated good to excellent, 34% fair, 20% poor and 12% very poor.  That was slightly worse than the previous week. More than half of the Texas and Oklahoma wheat was rated poor to very poor.

May SRW wheat closed down 13-3/4 cents at $6.88 and July down 14-1/2 at $6.95-1/2. May HRW wheat dropped 11 cents to $7.54-1/2 and July fell 10-3/4 to $7.60-3/4.

What to Look For – The crop in the Plains needs rain and warm weather. The latest 11- to 15-day forecast was wetter for the central and southern Plains. Thursday's export sales report is expected to show an increase in old-crop sales, while estimates for new-crop business ranged from a decrease to an increase.

Afternoon Recap by Bob Burgdorfer

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