Soybeans surged to new highs before the morning break, filling a key chart gap on better than expected old crop sales last week. July blew through a gap on the nearby chart at $15.345 after the news, though the contract settled back below April highs as trade halted until 8:30.
Futures added to gains from earlier in the overnight session thanks to a surprisingly strong export sales report. USDA reported another 6 million bushels of old crop deals, with 7.5 million bushels shipped out. Total shipments are now just 35 million bushels from USDA's current forecast for the entire marketing year, which still has more than three more months to run. Total commitments, which include both actual shipments and outstanding sales still on the books, are at 1.65 billion bushels, 3% more than USDA's 1.6 billion bushel forecast for the year.
Mexico led the list of old crop buyers, and while China has stopped buying old crop soybeans, it locked up another 8.5 million bushels last week. USDA also announced the sale of another 4.4 million bushels of new crop to China later, under its daily reporting system for large purchases. Those deals should show up in next week's tally.
Soybean meal sales were also strong at 186,300 metric tons for old crop, taking year-to-date deals to record levels for this time of year. Argentina has had trouble shipping out meal because farmers there are holding tight to soybean inventory as a hedge against inflation caused by a weak peso. Year-to-date soybean meal commitments are up 5.4% compared to last year, with shipments 7.5% higher.
Corn prices also rallied into the morning break, led by a good week of old crop export business. July futures is trying to post a reversal off its 200-day moving average, and 2013 sales of 20 million bushels helped thanks to strong buying from South Korea. Just 8.5 million bushels of new sales are needed every week to meet USDA's current forecast, which the agency upped to 1.9 billion bushels May 9. Shipments were also strong at 45.6 million bushels, also above the rate needed to meet the USDA crop year projection. Year-to-date commitments are already at 93% of USDA's forecast for the year.
Wheat sales were the only disappointment from the weekly report, with just 12.9 million bushels of new sales put on the books, split between old crop and new. Still, USDA's target for the 2013 crop could be achievable, depending on how discrepancies between the USDA record keeping system and official Census Bureau data are reconciled.
Nonetheless, today's report plays into the market's narrative that U.S. wheat is priced out of the reach of many customers around the world, helping originations out of the Black Sea dominate trade into the North Africa and the Middle East.