Today's USDA acreage report has corn acreage up 2% over last year. Not as much as was expected, creating upward price pressure.
Corn prices have been dropping steadily over the last couple weeks.
Corn progress is excellent, ranking near the upper end of recent years.
Despite the fact that this is one of the largest plantings for corn as well as its excellent progress today's market still reacted to the USDA report with a 10% jump in price.
Market direction at this point is hard to predict. Weather and crop progress will be the driving factors over the next month.
Soy acreage is up 2% over last year at a record high of 78.9 million acres.
U.s. government is reviewing the extension of a $1/gallon biodiesel tax credit. In 2004 when this credit was first enacted the U.S. produced 25 million gallons of biodiesel. In 2008 the U.S. produced 700 million gallons. Currently soybeans account for about 90% of the biodiesel produced in the U.S. With one bushel of soybeans producing 1.5 gallons of biodesel, that's 467 million bushels of soybeans going to fuel production or 14% of the expected 2010/2011 production. Investors are holding positions with the hope that if the credit is passed there should see a bump in the market.
Crude pricing has been fairly steady in the mid-$70s.
China's soyoil imports from the U.S. are already at 80% of last year's total. This is due to a quality issue with Argentina's soyoil.
What does this all mean...There is enough near term supply uncertainty to continue to support the current soybean price levels.
Last Wednesday Statistics Canada released a report that Canadian farmers planted or intended to plant a record canola area, an increase of 10.5% from a year ago. But the report proved to be inaccurate because it was conducted between May 25 and June 3 and didn't reflect the true effect of the rain and wet conditions in Canada. Best guesses at this point is that the acreage planted will be equal or down 8% from last year.
The spreads between soybean oil and canola oil have almost doubled in the last three weeks.
Looking forward spreads between soybean oil and canola oil will remain high through the summer.
Coconut Oil prices have firmed up over the last couple weeks due to short supplies.
The upcoming monsoon season will slow down the collection of coconuts, putting upward pressure on coconut oil pricing.
Palm oil pricing has been increasing steadily, helping to firm up coconut oil pricing.
Expect coconut oil pricing to stay firm over the next month or two.