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 Slide on South American Rains
Jan 21, 2014
Soybeans soldoff sharply in overnight trade with front-month March down 20 cents a bushel and falling below $13 for the first time in a week. Corn also followed in sympathy giving up 2 cents a bushel, while wheat was bucking the trend, holding on to fractional gains in the night session.
U.S. soybeans eased on Tuesday, falling further from last week's three-and-a-half week top as forecasts of rains in Argentina eased concerns over yield losses arising from dry weather. Rains fell in Argentina over the weekend, and there are two possible rain events in the cards over the next 4 days. Brazil weather looks favorable as well. However, on the demand side US beans continue to be a hot commodity with both old and new-crop sales to China lighting up in the past week. Year-to-date US export sales total 1.52 billion bushels, 2% more than USDA's export estimate for all of 2013-14, with 7 months to go in the marketing year. Will cancelations start to show up or are we going to get higher exports than projected and possibly bullish movements in beans? On Friday, Informa lowered their 2014 US soybean planting forecast to 81.3 million acres from their previous forecast of 81.9 million acres. If realized, this is sharply higher than last year’s plantings of 76.5 million.
In corn, Friday brought unexpected business to the US with Egypt buying 204,000 MT for old-crop delivery. On Monday, another South Korea feed group bought 60,000 MT of US corn. South Korean importers have in past weeks made substantial purchases of U.S.-origin corn originally destined for China, where imports are being disrupted by a dispute about non-approved genetically-modified grains. Informa’s corn plantings estimate for 2014 came in at 93.3 million acres, higher than their previous estimate of 91.8 million, but well below the 95.4 million planted by US farmers in 2013.
For wheat, export business seems to be picking up around the world as prices have eroded in recent weeks. A South Korean feed group bought 118,000 MT of optional-origin feed wheat overnight. Bangladesh bought 50,000 MT of wheat from Thailand. And, heavy-hitter China is rumored to be seeking cargoes for April shipment. While the world wheat business still remains highly competitive in the face of large world stocks, it could be encouraging for market bulls to see a rash of new export activity to help reverse the recent price slide.