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 Rally Off of Lows
Mar 21, 2013
Beans rallied in the overnight session adding 10 cents to nearby May futures, while corn and wheat took a breather from recent gains, posting 3-cent and 5-cent losses, respectively.
Soybean prices seem to have found a near-term bottom as concerns about Brazil’s shipping delays support ideas of strong near-term demand for US soybeans. However, as of yet no significant business has been reported by China for US beans and eventually Brazilian beans will have to come onto the market, leading to price weakness, especially with a recovery in US supplies in 2013/14. On that front, weather forecaster Lanworth projected US soybean plantings at a record 81.3 million acres this spring, up from 77 million in 2012.
For corn, prices have rallied off of their lows from March 7th, gaining 40 cents a bushel on ideas of improved demand from the ethanol sector. Valero Energy said on Wednesday it will soon have all 10 of its plants back online and operating at or close to capacity. Data from the US Energy Dept on Wednesday showed an increase in weekly ethanol production of 12,000 barrels/day to 809,000 bpd as more US plants come back online. However, global buyers continue to shun US corn, as Taiwan rejected all offers and made no purchase in a tender for 23,000 MT of U.S.-origin corn and 12,000 MT of U.S.-origin soybeans. Prices were said to be too high.
In wheat, a strong surge in prices on Wednesday helped erode some of the discount to corn. In the US cash market average bids of buyers for SRW wheat versus corn went from a 37-cent a bushel discount of wheat on Tuesday, to a 26-cent discount on Wednesday with the strength in the wheat market. A week ago it traded as low as a 46-cent discount. However, announced export business has been largely going to foreign competitors. On Wednesday, Algeria made a large 350,0000 MT purchase of French wheat, while smaller tenders went to India. Jordan, Bangladesh and Iraq all have wheat tenders pending.
WEEKLY EXPORT SALES
CORN: 92,200 OC / 183,300 NC (expected 0 to 250,000 MT for OC / 50,000 to 400,000 MT for NC)
SOYBEANS: 107,800 OC / 234,000 NC(expected 300,000 to 600,000 MT for OC / 150,000 to 400,000 MT for NC)
WHEAT: 484,500 OC / 88,800 NC (expected 450,000 to 800,000 MT for OC / 100,000 to 320,000 MT for NC)