After beginning the week strongly, corn futures slipped lower as the Tuesday trading session passed. Weather concerns are probably providing considerable support at this juncture, since forecasts imply the central U.S. will remain dry during the weeks just ahead. Moreover, growing dryness in Brazil and Argentina are raising questions about the forthcoming South American harvest. However, one other fact of life in recent weeks has been the poor rate of American corn exports as well as talk of slowing demand from the domestic ethanol industry. Thus, having the weekly Export Inspections report show only a modest improvement from the low figure posted last week seemed to undercut CBOT futures. March corn ended the Chicago session having risen 1 cent to $7.28 1/2; December posted a similar advance, to $5.90/bushel.
Traders were reportedly buying soybean futures in response to growing worries about prospects for the Argentine crop Tuesday. The weather over its main bean growing area recently shifted from too wet to too dry, thereby threatening to curtail yields substantially. And in contrast to the slowness of American corn sales, soybean exports have proven very strong lately. For example, the weekly Export Inspections report stated last week’s soybean total at about 48 million bushels, whereas forecasts averaged in the 35-45 million range. Talk that China will continue buying U.S. beans aggressively over the short term apparently encouraged bulls in the Chicago pit as well. March beans jumped 22 1/2 cents, to $14.51 3/4, at the end of the Tuesday CBOT session, while March soyoil jumped 0.75 cents to 52.43 cents/pound and March meal surged $7.2 to $421.6/ton.
The Export Inspections report appeared quite supportive of the short-term wheat outlook, since the stated 21.9 million-bushel result topped pre-report estimates in the 10-17 million range. Nevertheless, prices at the various exchanges turned downward Tuesday morning and ended the day substantially lower. One might blame forecasts of rainfall over the Southern Plains, but the seeming market reaction appeared greatly exaggerated. We tend to agree with wire service sources suggesting the reversal was technically driven, especially after seeing the failure by the March CBOT contract to top the pivotal $8.00/bushel level early in the day. Nearby futures may need to consolidate recent gains before making another run at that level. March CBOT wheat settled 11 1/2 cents lower at $7.79 1/4, while March KCBT wheat tumbled 13 cents to $8.30 3/4 and March MGE futures dove 8 1/4 cents to $8.64 1/4 per bushel.