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.
Bean Prices Tumble below $14 Overnight
Mar 12, 2014
Nearby soybean prices tumbled below $14 for the first time since the end of February, as front-month May futures gave up 26 cents in overnight trading. Corn was also lower giving up 1 cent a bushel, while wheat was firmer adding 4 cents to Tuesday’s close.
In soybeans, rumors of China canceling South American bean purchases has put a bearish slant back on the bean market. Weakening crush margins for Chinese processors is said to be reducing the demand for soybeans. In Brazil, bean basis has slumped 25-30 cents in three days. On the production front, the Rosario Grain Exchange estimated the Argentine crop at 54.7 MMT, down slightly from their previous estimate of 55.0 MMT but still higher than USDA’s projection of 54.0 MMT. Goldman Sachs lowered its forecast of US soybean plantings in 2014 to 81 million acres vs previous forecasts of 83 million acres, but still well above actual plantings in 2013 of 76.5 million acres.
For corn, the Rosario Grain Exchange increased their forecast of the Argentine corn crop to 22.7 MMT but that is lower than the USDA forecast of 24.0 MMT. Farmer selling in the U.S. is said to be slowing after two weeks of active deals on higher prices. Gulf basis levels continue to hold up after falling in the first part of March. In international deals, a South Korea feed buyer rejected all tenders to buy 60,000 MT of corn.
In wheat, dry weather in the Plains continues to support the market as does the unrest in Ukraine. USDA's weekly state crop reports showed wheat condition ratings improved in Kansas and Texas but crop conditions declined in Oklahoma. The best chance for showers in the Plains wheat will be in OK this weekend, while the rest of the belt lacks significant rains in the next 2 weeks. This will keep soil moisture shortages a concern in over half of the hard red winter wheat belt. , Ukraine's agriculture minister said on Tuesday that most of the spring grain area in Crimea is unlikely to be sown this year due to a lack of fuel caused by turmoil in the region. Grain output in Ukraine's Crimea region totaled 765,000 MT in 2013, or 1.2% of Ukraine's overall harvest. The government had said the harvest could reach 1.2 million MT of grain in 2014.