Commodity Blog

Commodity Prices – Soybean

Corn posted the biggest advance in more than a week on the anticipation of returning demand for the US supplies. According to the report of the US Department of Agriculture, the US exports of corn totaled 1.763 million metric tons in the week ended October 13, the highest level since March. Total sales for delivery before August 31 were 5 percent above the sales in the same period of the previous year, being at the highest level in four years. Settlement for corn jumped from $6.38 to $6.50 per bushel by 23:38 GMT today on CBoT.

The forecasts of good weather drove soybeans down. Dry weather in Brazil and rains in Argentina should boost harvest. The problems of Europe and the resulting worries also weighted down the oilseed. Soybean prices retreated from $12.2525 to $12.2350 per bushel today on CBoT.

The European crisis also caused the drop of rubber to the lowest level in 14 months. The leaders of European nations will discuss the situation in Europe at the summit this weekend. Some economists argue that the bailout fund will be boosted. Yet others speculate that the politicians won’t be able to reach an agreement and such speculation weight the commodity down. January future fo delivery of rubber slumped as much as 4.4 percent to 25,445 yuan ($3,985) per ton in Shanghai.

The lack of positive news from the European Union spurred the return of the downward rally in commodities. Significant drops are seen in the cocoa and soybean futures. The decline was also notable for speculative precious metals — silver and gold.

Investors wait for the European officials to agree on the Greece bail-out plan and its implementation. It’s a very important step, as with the failure of Greece or any other eurozone members the global financial climate would severely deteriorate, sending all markets (except several safe haven assets, like the US dollar and the Japanese yen) crumbling.

Cocoa was in an uptrend during the last two days and has now lost a half of its gain. Soybeans haven’t really stopped falling and now demonstrate the strongest decline since Friday. Both these agriculture commodities depend heavily on the state of the global economy. As a considerable part of their recent growth can be attributed to speculative buying, these positions are now getting closed by the traders to cover up losses in more “serious” markets — stocks and bonds.

Cocoa December futures fell from $2,704 to $2,654 per 10 metric tons as of 16:38 GMT on ICE today with an intraday low at $2,630. Soybeans November futures declined from $1,260.50 to $1,238.50 per 5,000 bushels on ECBOT.

Agricultural commodities declined today as the negative effect of yesterday’s monetary policy statement of the US Federal Reserve continued to affect markets today. The Fed announced its plan to replace the short-term securities with the longer-maturity debt and spoke about the ”significant downside risks” for the US economy. China’s Purchasing Managers’ Index fell to 49.4 in September from 49.7 in August, reinforcing the pessimistic sentiment among traders.

The Standard & Poor’s GSCI Index slumped as much as 5.2 percent. Silver, copper and crude oil were the major contributors to the decline. The Thomson Reuters/Jefferies CRB Index of slid 4.4 percent to the lowest level in nine months.

December contract for delivery of corn slipped $0.3575 (5.2 percent) to $6.50 per bushel by 13:15 on CBoT, the biggest decline since October 1. November futures for delivery of soybean fell $0.375 (2.8 percent) to $12.83 per bushel, following the drop to $12.81, the lowest price since March 15. Futures for delivery of wheat in December dropped $0.33 (4.9 percent) to $6.3375 per bushel, the biggest fall since June 30.

Signs of slowing global economy had a negative impact on markets. Copper and agricultural commodities were among losers.

Europe with all its problems is the main source of market pessimism. Finance ministers of Finland, Germany and the Netherlands will meet today to discuss Finland’s demand for collateral in a bailout for Greece. The Italian Senate will discuss the austerity plan, while the nation’s biggest union has called a strike.

The Standard & Poor’s GSCI Index of 24 commodities fell as much as 2.1 percent.

Some analysts think that copper may still rebound as supplies decline amid strike at mines and other problems.

December futures for delivery of corn dropped as much as $0.1325 (1.7 percent) to $7.4675 per bushel by 10:00 on CBoT. Futures for delivery of soybeans in November slipped $0.2775 (1.9 percent to $14.18 per bushel in Chicago. Futures for delivery of wheat in December subtracted 0.1775 (2.3 percent) to $7.5775 per bushel. Contract for delivery of copper in three months fell 1 percent to $8,870 per metric ton, the lowest intra-day price since August 25, before trading at $8,890.25 at 15:32 on LME.

Gold futures retreated from the record, showing the biggest drop in 7 weeks, after COMEX boosted margin requirements. CME Group Inc. (owner of COMEX) increased margin required to trade gold contracts by 22 percent. As a result, traders liquidated their positions en masse. The situation reminds the one with the silver earlier this year, when the increase of margin requirement put an end to the impressive rally of silver and caused a hit to the precious metal, from which it still hasn’t recovered. Gold looks too strong to fall in a same way. Moreover, the margin increase occurred when the yellow metal had a clearly bullish trend, while silver was caught by the CME decision during a correction. Still, caution is advised. December futures for gold delivery fell $32.80 (1.8 percent) to $1,751.50 by 13:39 on COMEX.

Corn, soybeans and wheat gained today as the US Department of Agriculture cut its forecast for harvest. The USDA decreased its estimates compared to July predictions because of excessively hot weather in parts of the US. Estimates for corn were lowered by 4.1 percent, for soybeans by 5.2 percent and for spring harvest of wheat by 5.2 percent. December futures for delivery of corn rose $0.255 (3.7 percent) to $7.14 per bushel as of 13:40 on CBoT. November futures for delivery of soybeans gained $0.3025 (2.3 percent) to $13.3175 per bushel. Contract for delivery of wheat in December advanced $0.1375 (1.9 percent) to $7.33.

Most commodities declined today, reacting to the downgrade of the US credit rating by Standard & Poor’s on Friday, while gold posted a new record, rising above $1,700.

All three major agencies (Moody’s Investor Service, Fitch Ratings and Standard & Poor’s) signaled about possible downgrade of the US credit rating in the future, while S&P actually cut the rating one step to AA+ and kept the outlook on ”negative”. This move erased any optimism that had remained on markets and caused a drop of most commodities. Gold, on the other hand, took its chance and jumped to yet another record.

The MSCI All-Country World Index of stocks dropped 1.1 percent. The S&P GSCI index of 24 commodities fell as much as 2.8 percent.

December futures for delivery of gold gained $49.90 (3 percent) to $1,701.70 per ounce as of 9:06 on COMEX after earlier it reached the all-time high of $1,718.20. Futures for delivery of corn in December fell 14 cents (2 percent) to $6.8775 per bushel at 10:16 on CBoT. Contract for delivery of soybeans in November went down $0.2025 (1.5 percent) to $13.1575 per bushel. September contract for for delivery of crude oil slipped as much as $3.28 (3.8 percent) to $83.60 per barrel by 11:43 on NYMEX.

Soybeans extended the longest rally since August on concerns that adverse weather may hurt crops in the US. The National Weather Service predicted that temperatures will be 12 degrees Fahrenheit above normal for five days starting July 16 in the Midwest. November futures for delivery of soybeans added $0.02 cents (0.1 percent) to $13.8175 per bushel at 10:30 on CBoT.

Gold retreated from the record as Federal Reserve Chairman Ben Bernanke spoke today, indicating that the Fed won’t add more stimulus for the US economy. Earlier the precious metal jumped to a record as Fitch Ratings downgraded Greece’s credit rating. August futures for delivery of gold gained $4.10 (0.3 percent) to $1,589.60 as of 12:46 on COMEX after reaching the all-time high of $1,594.90 per ounce.

Sugar posted a biggest drop in eight weeks today on the forecast that production in Brazil will be bigger than previously estimated. Prices climbed 24 percent in the last month on concerns about output. October futures for delivery of raw sugar slumped as much as 0.0122 (4 percent) to $0.2902 per pound by 14:00 on ICE, posting the biggest drop since May 19. Yesterday, the price reached the highest level in five months of 0.3133 cents.

Corn and soybeans gained on the speculation that hot weather in the US may hurt crops. Temperatures in the southern Great Plains are 12 degrees Fahrenheit above normal. Heat can cause stress for crops that received too much rain last month. December contract for delivery of corn gained $0.1975 (3 percent) to $6.8025 per bushel by 13:15 on CBoT.

Crude oil rose for the second day on hopes that Greece’s Prime Minister George Papandreou will win a confidence vote today. The Prime Minister intends to continue budget cuts, but to implement austerity measures he need support from the parliament. The US crude oil inventories fell by 100,000 barrel, according to the estimates of analysts before the government report today. July futures for crude oil delivery traded at $93.40 per barrel on NYMEX.

Corn, soybeans and wheat fall as the US economy showed signs of weakness and the European debt crisis worsened.

The inflation slowed and the industrial production increased less than predicted in the US. The production ethanol dropped 3.8 percent last week, the biggest decline since April. Ethanol is produced mainly from corn.

Problems in Greece intensified as protesters went on demonstrations against the planned wage cuts and tax increases. The austerity measures are required to receive new portion of the bailout that was planned last year. Greece’s Prime Minister George Papandreou may resign from his office.

December futures for corn delivery slipped $0.15 (2.2 percent) to $6.70 per bushel as of 11:24 on CBoT. November futures for soybean delivery fell $0.03 (0.2 percent) to $13.6075 per bushel. Futures for wheat delivery in September slid $0.0225 (0.3 percent) to $7.5975 per bushel by 9:34.

Corn and wheat gained today as heavy rains in the US slowed planting and are expected to decrease output. Soybeans declined.

The High Plains Regional Climate Center informed that precipitation in parts of Illinois, Indiana and Ohio was two times the average amount in the past month. Fields in the Mississippi River delta area are experiencing floods. The US Department of Agriculture reported that the rate of corn planting was about a half of the previous year’s pace as of May 8, while wheat sowing also lagged.

Soybeans performed totally different even as US crops were also threatened by bad weather. There are plenty of supplies from other countries, especially from Brazil, where record harvest is expected.

July futures for corn delivery rose $0.155 (2.3 percent) to $6.975 per bushel by 13:15 on CBoT. July futures for wheat delivery gained $0.0875 (1.2 percent) to $7.365 per bushel. July futures for soybean delivery dropped $0.03 (0.2 percent) to $13.265 per bushel.