September soybeans spill the beans

Weekly Grains Outlook

Soybeans (CBOT:ZSU14)

Soybean Fundamental Support: The soybean market closed the first trading day of the week on a positive note with the September contract leading the way higher. As anticipated, the Pro Framer tour was garnering a lot of the trade’s attention but it really didn’t seem to have a big impact on the markets direction today. Old crop beans and meal continued to be bid up as the market awaits the onslaught of this year’s crop.

There aren’t many beans left to find and that is forcing flat price higher which is then spilling into the September contracts. This strength in the September contract seemed to spill into the different contracts today. With new crop bean harvest to begin within a few weeks, we don’t look for this strength to last long and once the bridge to new crop is crossed, we look for the market to weaken dramatically. Today’s weekly export inspections show that the U.S. shipped out 2.1 million bushels of beans last week.

Cumulative exports have now reached 1.588 billion bushels. Weather continues to be viewed bearish as the current forecast is for four shots of rain to hit a majority of the bean growing area over the next two weeks. If the rain materializes as forecast, it will go a long way to help finish out the crop. On the international front, Abiove the vegetable oils association out of Brazil reported that Brazil will export 45 million tonnes of beans in 2014 up from their July estimate of 44 million tonnes. Tonight’s crop rating increased bean good-to-excellent by 1 point to 71%. This is the third highest for this week on record.

Allendale still looks for beans to fall to the $9.50 area when the fall low is scored and would recommend not chasing rallies and for producers to sell into a price rally if it were to occur. September options go off the board on Friday.

 

Wheat (CBOT:ZWU14)

Wheat Fundamental Support: Wheat finished lower today as a lack of fresh news has opened the door to selling as the Russia/Ukraine situation did not see any escalation over the weekend. Russia’s “humanitarian” mission failure did not spark any additional reactions from either side.

We are conducting our annual yield survey and early results for spring wheat yields have been better than average. This is information the futures market has appeared to have already deciphered. These results are released Sept. 3.

Export inspections this morning were better than trade estimates. With global tension still running high, we wouldn’t expect to see many buyers not take delivery of US wheat. We still expect to see this market trade sideways with bounces being sold nearing the August highs and support nearing the July and August lows.

The market is watching any escalation in fighting between Russia and Ukraine as a reason to cover some shorts but we are not finding this strength gaining much backing as every bounce we have seen has been sold. Fund interest did not change much in these markets as of Friday’s commitment of traders reports did not show much of a change. We need to watch for large macro factors that would shift fund interest to cover shorts. At this point, continue to look for sideways markets as there is a lack of fresh news to push the market.

  • Wheat inspections were 596.675 within trade estimates of 400-525,000 tonnes
  • Ratings for spring wheat came in 2% lower at 68%
  • Jordan tenders for 100,000 tonnes of hard wheat  

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