Soybeans Reach New Heights

Soybeans reached new heights overnight with front month July briefly touching $11.10 a bushel. Corn and wheat were mostly unchanged in rather directionless trade. In outside markets, crude oil was unchanged while equity futures and the US dollar drifted lower.

On Wednesday, grains got a boost as problems with South America’s crops continue to mount. Yesterday, weather forecaster Lanworth pegged Brazil’s corn crop at 75 MMT, off 5% from their previous estimate citing issues associated with the second season corn crop.

Also, exporter association ANEC said Brazil’s soy exports would be 57 MMT this year vs USDA’s 59.5 MMT, while corn exports would be 23 vs 30 MMT as previously predicted. A drop in Brazil’s corn crop is stimulating demand for feed wheat from Asia. Indonesia has bought over 1 MMT of feed wheat this year, while Thailand has locked in close to 2 MMT. That compares to limited shipments a couple of years ago.

In crude oil., traders await guidance from today’s OPEC meeting in Vienna. Saudi Arabia promised on Thursday not to flood the oil market with extra barrels as OPEC entered a heated debate about production policy, with Iran insisting on the right to raise output steeply. Several OPEC sources said Saudi Arabia and its Gulf allies would propose to set a new collective ceiling in an attempt to repair OPEC's waning importance and end a market-share battle that has sapped prices and cut investment. Failure to reach any deal would revive market fears that OPEC's largest producer Saudi Arabia, already pumping near record highs, may raise production further to punish rivals and gain additional market share.

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—Kevin McNew