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.
Chinese Soybean Auction Supports the Market
May 14, 2014
Corn futures had a very quiet overnight session, trading unchanged to a penny lower. Ethanol crush numbers will be out today and it will be important to see how a falling ethanol crush margin is impacting weekly production. Since April 4th ethanol crush margins in Iowa have collapsed nearly 50%, driven lower by falling ethanol and DDG prices. Last week the ethanol crush margin averaged $2.91 per bushel which was the lowest figure since February.
The Chinese government sold 92% of soybeans offered in a state auction on Tuesday. The average price was $680 per tonne and well above the floor price established by the government for the sale. Old crop prices may find support from this sale during the day session as Chinese demand has been a concern given negative crush margins and a huge quantity of soybeans imported during the month of April. Old crop soybean traders will be looking towards NOPA crush numbers, released Thursday at 11AM central time. This report will show crushings during April and be closely watched following the USDA raising their crush expectation by 10 million bushels in the May USDA report.
The wheat complex moved a bit lower in the overnight session with Chicago Wheat declining 5 ½ cents and Minneapolis Wheat shedding 2 ¾ cents. Despite some selling in the overnight session, concerns about the planting pace for spring wheat will continue to keep the market on edge. Weather in North Dakota and Minnesota has spring wheat well behind pace only showing 34% planted compared to the five year average of 58 percent planted. Although we have a three day window of planting, which producers are currently taking advantage of, the 6-10 day forecast is showing more moisture for the Spring Wheat areas which could slow the pace even further as we approach crop insurance deadlines at the end of May and beginning of June.