Soybean prices are trying to reverse higher this morning, on the heels of data suggesting demand is still strong for tightening old crop supplies.
The May crush report from the National Oilseed Processors Association showed 138.3 million bushels run through plants last month, beating trade guesses. Our projections show the figure keeps crush on track to meet USDA's latest forecast for the marketing year, which was raised in Tuesday's crop report to 1.66 billion bushels.
The government also boosted its outlook on exports, which was confirmed by this morning weekly totals as well. Total old and new crop sales came in at 36.9 million bushels, well above the number traders were looking for. Old crop business accounted for 15.6 million bushels of the total. That takes total commitments for the marketing year to 1.352 billion bushels, above USDA's latest forecast of 1.35 billion.
After a slow-down in May, Chinese demand for soybeans from the U.S. is brisk, thanks to low availability of supplies from drought-stricken South America. China bought 27 million bushels total this week.
Wheat demand was also better than expected at 15.9 million bushels. While that's a little below the weekly rate forecast by USDA for the marketing year, it's in line with average for this early in the season. USDA this morning also announced the sale of 3.7 million bushels of soft red winter wheat to China, under its separate daily reporting system for large purchases. China always imports some high quality wheat it can't produce locally, and that business is expected to be better this year due to poor growing conditions.
Wheat prices were also moving higher on the export news.
Corn prices continued to rally this morning, with July back above $6, but the cause certainly wasn't the weekly export sales total. In fact, sales were a marketing year low, just 6.7 million bushels, with old crop accounting for about half the amount. The weak trend of late supports USDA's decision on Tuesday to lower its projected total for the 2011 crop marketing year that ends Aug. 31.
CIF basis at the Gulf was up six cents yesterday to a four-week high, as even the few exporters who want corn are having to bid up the price to compete against ethanol plants, where production is up despite higher costs. USDA raised its forecast of corn used for ethanol to 5.05 billion bushels, offsetting the drop in exports.