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April 2013 Archive for Cash Grain Insights

RSS By: Kevin McNew, AgWeb.com

Kevin McNew is President of Grain Hedge and Geograin. McNew was raised on a farm in central Oklahoma and received his bachelor’s degree from Oklahoma State University, and master’s and Ph.D. degrees in Economics from North Carolina State University. For over a decade, he was a Professor of Economics at the University of Maryland and Montana State University, focusing on commodity markets. He has received numerous academic awards for his research and outreach work, and was (and still is) widely regarded for boiling down complex economic issues into easy-to-understand concepts for applied life.


Planting Delays Spur Market Recovery

Apr 30, 2013

Grains found mild support overnight after a limit move in the corn market on Monday pushed prices to their highest level since the March 28 Stocks report. Corn was up 2 cents a bushel, while soybean prices were up 5 cents a bushel. Wheat prices came under pressure, losing 6 cents.

In corn, USDA planting progress report showed only 5% complete, just 1% higher from a week ago.  This matches the slowest since 1984, when farmers also had completed just 5% of their corn planting and in that year acreage fell 2% from the USDA’s March Planting Intentions report. However, growing season weather is still the biggest driver for final yield but for the near-term traders will likely react with a bullish bias to the planting delays occurring. Looking at the weather, heavy rainfall and snow are expected this week across the western U.S. Midwest and eastern Plains. There is a big storm system starting Tuesday which will spread in intensity and coverage by Thursday and linger into the weekend. As a result, planting should continue to be stalled which should remain supportive for the corn market.

gh planting pace

gh planting pace

For wheat, the Wheat Quality tour kicks off today in Kansas and continues through Thursday. Kansas State agronomist Jim Shroyer said to the tour participants that Central Kansas looks pretty good thanks to spring precipitation but he expects to  see freeze damage in some south-central areas around Great Bend, KS, including Pratt, Barton and Rice counties. He noted that in western Kansas, west of Jetmore and Quinter, KS, the wheat goes downhill in a hurry and speculated that some fields will not be harvested. Shroyer said that area of Kansas reminds him of 1989, when the state’s winter wheat struggled after the big U.S. drought of 1988. Internationally, South Korea purchased 48,900 MT of U.S.-origin milling wheat.

stop paying so much to trade

For soybeans, export business continues to remain quiet while domestic crushing plants bid up basis levels to draw out beans from farmers. A key processor in Decatur was up 10 cents on basis on Monday.

Grains Rally Overnight on Wet Weather Outlook

Apr 29, 2013

Corn was up 10 cents a bushel on the overnight session as wet weather continues to plague corn planting. Soybeans found modest support posting a 2-cent gain while wheat was up 6 cents a bushel.

In corn, planting delays are starting to get the attention of the market as last week’s slow pace of only 4% planted combined with a wet and cold weather outlook for this put added pressure on getting the crop planted in a timely fashion. Weather models show a prolonged major rain event is likely to affect most of the Midwest, as well as the eastern portions of the central Plains over the next several days, with coverage around 75% over these areas and the rainfall amounts range from 1-4 inches. USDA’s planting progress report this afternoon is likely to show limited sowings of 8 to 10%.

stop paying so much to trade

In wheat, the Wheat Quality tour begins this week which should provide key information on the state of the hard red winter wheat crop in Kansas and parts of Oklahoma. Early season drought along with severe cold snaps in the past month has likely put the crop below par but the extent of the damage remains unclear. Over the weekend, Egypt announced that they may reach 70% self-sufficiency in wheat production this year because of an expected boost in the local harvest. Egypt usually imports around 10 MMT of wheat a year but this year the state says it will buy only around 4 to 5 MMT from abroad, hoping to get the rest from local production.

For soybeans, near-term demand from domestic soybean crushers has helped keep nearby prices moving higher. Last week, crushing plants saw an average 4-cent gain in basis while the rest of the soybean buyers posted a 3-cent loss on average. However, new-crop beans may see more pressure as corn planting delays could signal more soybean acres as farmers switch from corn to beans.

Soybean Basis Feels Effects of Domestic & International Markets

Apr 19, 2013

It was a tale of two markets this week in the cash soybean market.  Domestic end users were sharply lower on basis as soybean crushing plants begin to cut back production in anticipation of future lower prices, while river markets continue to be bolstered by strong international demand. For the week, U.S soybean basis fell 5 cents a bushel while corn basis continued to tow the line at unchanged.

In the corn market, sluggish export demand keeps basis levels stagnate although still mostly holding up at lofty levels. Ethanol processors did bid up basis this week by 1-cent a bushel on average as ethanol processing margins continue to hold up at their highest levels of the marketing year. However, at the Gulf spot corn basis was unchanged as US export business continues to be non-existent.   Basis levels at river terminals averaged a 1-cent loss.

spotcorn 2013 04 19


For soybeans, the average US spot soybean basis was down by 5-cents a bushel, but this masked the divergence across the two key sectors. At the Gulf, export basis levels bucked the broader trend which helped push basis levels along the lower river system higher. Upper river terminals are starting to run into flooding issues which is beginning to cause some stoppages of deliveries and limiting basis gains there. For crushing plants, double-digit losses in the Eastern Cornbelt were fairly widespread, while Western processors were down only slightly or even stronger. 

spotsoy 2013 04 19

?Beans Find Strength Overnight

Apr 16, 2013

 Soybean prices found buying strength overnight as nearby May futures climbed 14 cents helping recover some of the steep losses from Monday’s session. Corn and wheat prices were up fractionally in the overnight session.

On Monday, USDA’s first planting report for the corn crop showed only 2% of the crop planted  as cool temperatures and storm systems continue to delay the planting season for most farmers.  Normally, 7% of the crop has been planted by this time. The outlook for the remainder of the week shows continued cold. In Iowa temperatures are not expected above 60 degrees in the 5-day outlook with rains likely on Wednesday and Thursday, keeping planting limited for the next week. Weekly export inspections of 14.7 MB were in line with the expected 10-16 MB, but still lag the pace needed to hit USDA targets for the season.


For winter wheat, crop conditions were unchanged on average for the week with 36% of the crop in good to excellent condition. However, recent freeze damage in the Plains has yet to be fully assessed and producers are starting to make decisions on abandonment of the crop. Kansas is likely to get hit by another hard freeze as temperatures are expected in the low 20s on Thursday.  

In soybeans, weekly soybean export inspections were poor at 4.8 MB versus the expected 12-17 MB Bird flu continues to be a problem in China as there have been 63 human cases reported with 14 human deaths. A Bloomberg survey estimated 2013 Chinese soybean imports may fall to 58.0 MMT due to bird flu. The March NOPA crush came in at 137.08 MB, versus 136.3 MB in February and trade estimates of 136.8-140.0 MB.  Safras e Mercado said that the Brazilian soybean harvest is 82% complete versus 76% a week ago, 85% a year ago and the 5 year average of 78%.

Corn Finds More Strength Overnight

Apr 09, 2013

Grains were mixed in overnight trade with corn posting a 5 cent advance while wheat and soybeans had modest declines of 2-cents a bushel.

In the wheat market, US winter wheat conditions improved this week as USDA’s crop condition rating showed 36% of the crop in good-to-excellent condition, versus last week’s reading of 34%.  However, current ratings are still well below last year’s rating of 61% and on par with ratings in 2011 when wheat yields ended up at 43.7 bushels per acre on the US average as compared to 46.3 in 2012. Internationally, wheat crops in Russia and Ukraine are also starting to show stress. Russian analyst SovEcon said crop conditions there fell in the last week, and although they are pegging the crop to be 83 to 89 MMT, up from last year’s tally of 71 MMT, it is well below official forecasts from Russia's agriculture ministry at 90 to 92 MMT.  Agriculture consultancy UkrAgroConsult on Tuesday cut its forecast for Ukraine's 2013 wheat harvest by 4 percent to 20.23 MMT due to a lower-than-expected yield caused by a late spring.


In corn, weekly export inspections cam in art 10 MB well below last week’s 19 MB and the lowest in 7 weeks. But, lower prices especially for new-crop corn have some industry analysts looking for resurgence in export demand.  Chinese corn imports are expected to reach between 6-7 MMT in the 2013/14 marketing year beginning Oct. 1, according to estimates by three major industry analysts, surpassing a previous record of 5.2 MMT in 2012/2013. So far, China has already booked 1.3 MMT of US new-crop corn. USDA’s April WASDE report to be released on Wednesday is expected to show ending stocks at 812 MB up from 632 MB last month after the higher stocks report last week.

For soybeans, weekly export inspections came in at 15 MB off slightly from last week’s total of 16 MB. However, with total exports already standing at 1,192 MB it will only take about 7.3 MB per week for the remainder of the year to reach USDA’s annual projection of 1,345 MB.  While bean prices rallied hard on Monday as concerns about China’s bird flu waned, overnight trading was weaker on thoughts feed demand could be slowing. New Hope Group, China's largest animal feed producer, said that its business had indeed been hurt by the bird flu outbreak as poultry consumption in China has taken a hit. Also, the Chinese Grain and Oilseed Information Center expects Chinese soybean imports for 2012-13 to fall for the first time in 9 years.  

Grains Find Firmer Footing Overnight

Apr 02, 2013

Two days of dramatic selling leading to nearly a dollar off the corn price and 70 cent losses in soybeans have seemed to come to an end as prices showed modest recoveries overnight. Corn was up 5 cents a bushel while soybeans added 10 cents a bushel in the overnight session.  Wheat was higher by 7 cents a bushel.

The first USDA crop progress report of the season showed poor conditions for the US winter wheat crop, with only 34% of the crop rated in good-to-excellent condition versus 58% last year and the worst rating since 2002. While Southern Plains states like Kansas and Oklahoma have showed modest improvements in crop conditions thanks to February and March moisture, they still remain well below normal at 31% and 27%, respectively. Conditions in Nebraska and South Dakota are even worse at 10% and 2%, respectively. Overnight, Taiwan issued a tender to purchase 82,330 MT of milling wheat to be sourced from the United States.


In corn, early planting has been hampered by cold and wet conditions across much of the Midwest. In the deep south, Mississippi farmers had sown 44% of corn as of Sunday, in line with average, but well behind the 60% a year ago, when the US enjoyed near-ideal planting conditions. The Brazilian Trade Ministry said Brazil exported 1.6 MMT of corn in March versus 2.29 MMT in February and 278,300 MT in March 2012. Safras e Mercado said that 54% of the Brazilian 1st corn crop has been harvested versus 59% a year ago and that planting of Brazil’s 2nd corn crop is virtually complete. The Parana corn harvest is 59% complete versus 51% a week ago. Japan is said to be looking for 700,000 MT of corn for April/June shipment and South Korea for 1.1 MMT of corn for August/Sept shipment.

For soybeans, weekly export inspections of 16.3 MB were down from 18.5 MB last week. Shipping delays in Brazil (over 56 days in Paranagua and almost 42 days in Santos) continue to disrupt availability from Brazil. China was thought to have bought 1-2 cargoes of US beans off the PNW for immediate shipment.



Grains Slide Lower Overnight

Apr 01, 2013

Nearby corn futures continued to move sharply lower overnight after Friday’s USDA stocks report triggered a limit-down move of 40 cents. In Sunday’s overnight session May corn futures were off 37 cents a bushel, while soybean futures fell 17 cents a bushel. Wheat prices lagged the other grains, but were off 7 cents a bushel as well.

USDA’s quarterly corn stocks numbers came in shockingly higher than expected with all inventories totaling 5.399 billion bushels, compared to trade estimates of 5.013 billion bushels.  Implied corn usage for the Dec-Feb quarter tumbled 27% from a year earlier, the smallest corn consumption for that period since 2002.  For new-crop , USDA pegged plantings at 97.282 million acres, up from 97.155 million in 2012 and the most in 77 years.


In soybeans, stocks came in on the high side of expectations totaling 999 MB, but plantings were 77.1 million acres which was at the low end of analyst estimates, and off from last year’s final acreage number of 77.2 million.

For wheat, stocks in all positions were at 1.23 billion bushels versus expectations of 1.18 billion bushels while plantings for wheat came in at 56.4 million acres, on par with analyst expectations. Overnight, trade news was limited although India again announced another export tender to sell 65,000 MT of wheat as the country continues to move massive stock piles into the global market. Egypt also announced they are looking for a better domestic crop this year which could help reduce their import needs in the future.

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