DTN Comments
GENERAL COMMENTS GOOD MORNING! China has already bought huge amounts of
U.S. soybeans, but they are not done yet it seems. Obviously, they need the
soybeans, but there is a political side to this too. Trade missions will travel
the U.S. in the next month to buy U.S. goods in a good faith showing to do what
they can to lower the huge trade deficit the U.S. has with China. Soybeans and
wheat are on their shopping list, among other agricultural commodities. U.S.
dollar values continue to struggle because of uncertainty over U.S. economic
growth. Rain across most of the Corn Belt will drag out final harvest
completion, but will not affect total corn tonnage much at all.
BULL SIDE BEAR SIDE
1) China's latest trade mission will 1) It could be that recent purchases may
keep bullish enthusiasm for soybeans. already be part of that venture.
2) USDA's soybean export sales are 2) Some traders believe China will
100 to 150 million above USDA's goal. cancel some U.S. purchases later.
3) The U.S. white winter wheat crop 3) All winter wheat ratings were mostly
rating continues to drop. stable on the report yesterday.
4) Producers are still slow sellers of 4) Sales of both usually pick up some
soybeans; not much more corn either. towards the end of the calendar year.
MORE COMMODITY-SPECIFIC COMMENTS
SOYBEANS Soybean oil futures, following the lead from Malaysian palm
oil, established new contract highs yesterday. This held soybean futures in
positive territory on the close, with the JAN contact finishing a volatile
trading session 1 1/2 cents higher at $7.80. MAY, JUL, and AUG contracts were
up six to seven cents as traders continued to narrow the bull spreads that were
pushed so far out of line two weeks ago. Export shipments at 36.3 million
bushels were deemed "light" by the speculative crowd because they were down
sharply from the 55.6 million last week, but they were still more than twice
what is needed to meet the latest USDA export projection for 2003-04. The
announcement early yesterday that China had bought 563,000 metric tons (20.7
million bushels) was discounted by some thinking it was just confirmation of
last week's rumors. Call it what you will, but that alone pushes total sales
for the year over 650 million bushels after only 11 weeks of this marketing
year, leaving just 240 million left to sell the rest of the year. That is an
extremely bullish condition, proving once again, that rationing has not begun.