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 Steady Overnight, But Can It Last?
Jan 22, 2014
Beans were having a hard time holding on to gains in the night session following Tuesday’s 36 cent pummeling. Corn and wheat continued to buck the bearish bean trend posting 2 cent gains in the overnight session.
Soybeans fell hard on Tuesday thanks to widespread rains in Argentina over the extended weekend, as well as an outlook for more rain events over the remainder of the week. After a period of hot and dry weather, rains in Argentina are a welcome change during this critical crop development time. Adding to the negative tone was rumors that a bean sale to China had been switched from US to South America. Weekly export inspections were the only bright spot on Tuesday but did little to slow the slide, as weekly exports came in above expectations at 56.6 MB for the week, as compared to 55 to 55 MB expected.
In corn, the market has been able to hold on to modest gains in the wake of the bean decline. But, sharply higher prices in the near-term seem unlikely as worries about slowing sales to China persist; China imported 637,045 MT of U.S. corn in December, down 19% from November, official customs data showed, as Beijing has been rejecting U.S. cargoes due to the presence of an unapproved genetically-modified strain. Weekly export inspections came in at 29.8 MB versus trade expectations of 20 to 25 MB. Only 137,000 bushels were headed for China this week. Corn basis was weaker in eastern rail markets and at a river terminal on the upper Mississippi. The softer tone in basis and sluggish futures resulted in a fairly quiet day in the cash corn market on Tuesday.
For wheat, export inspections on the week were disappointing with only 15.5 MB as compared to expectations of 17 to 22 MB going into the report. Overnight tender activity seemed fairly quiet although Algeria bought 500,000 MT. Purchases covered both April and May and the origin of the wheat was optional but France was thought most likely to supply some of it.