The Grain Hedge Team provides a macro-focused daily view of the world’s grain markets. Kevin McNew received a bachelor’s degree from Oklahoma State University and his master’s and Ph.D. degrees in Economics from North Carolina State University. He spent 10 years as a Professor of Economics with the University of Maryland and Montana State University focusing on commodity markets and is widely regarded for his ability to boil-down complex economic situations into easy-to-understand concepts for applied life.
Beans Get Spooked By China
Dec 12, 2013
Grains continued to selloff in the overnight session with soybeans once again posting the biggest losses giving up 5 cents following Thursday’s 20-cent slide. Corn and wheat were down 3 cents in night trading.
A strong weekly export sales report on Thursday morning was muted by concerns over China potentially cancelling US bean business following more cancelled corn cargoes. Although it is speculative at this point in time, with a looming record crop from South America on the horizon, it could be a possibility that China will play the GMO card to keep prices in check. Domestically, soybean deliveries to crushing facilities continue to be strong with dump lines at several key plants in the WCB reported to have 3 or more hours of wait time. Not surprising, basis levels at crush plants on the whole have been weaker in recent days, while river elevators continue to bolster strong premiums for immediate shipments.
In South America, recent showers in Argentina's farm belt helped growers seed their 2013/14 soybean crop on what is expected to be a record 20.45 million hectares, the Buenos Aires Grains Exchange said on Thursday. Western areas of the Pampas agricultural belt that had been in need of moisture received rain earlier this week and farmers there are reported to be 66% planted, up 8% over the last week.
In corn, a bill introduced by Senator Diane Feinstein calls to eliminate the corn ethanol mandate by the EPA. Ethanol experts said the EPA's proposed cuts, and backing for ethanol among many lawmakers, discounts chances that the bill would move forward anytime soon. Traders expect China to continue their strict checks for an unapproved strain of GMO corn into early next year as Beijing seeks to curb cheap imports and support domestic corn prices. Trade flows are being disrupted as exported look to move cargoes to countries that will not turn them away.
For wheat, price continue to be pressured by sluggish US export sales and more pressure from India who is reported to be putting 2 MMT of supplies on the world market in coming months.