Corn Continues Higher to Start the week
Jan 13, 2014
Corn found modest follow through buying overnight following Friday’s big rally. In the night session corn was up 2 cents and wheat was up 3 cents. Soybeans drifted lower giving up 5 cents a bushel.
Friday provided a big surprise in corn when USDA revised lower their final US corn production number for 2013. Thanks to a 2 bushel per acre yield drop, corn production came in at 13.925 BB, far below analyst expectations of 14.066 BB. As a result, carryout stocks for 2013 were slashed to 1.631 BB, below the trade estimate going into the report of 1.861 BB. Overnight, South Korea's largest feedmaker Nonghyup Feed Inc. purchased 137,000 MT of U.S.-origin corn originally destined for China where imports are being disrupted by problems with non-approved genetically-modified grains. NOFI has also delayed imports of a further 180,000 tonnes of corn imports to free up storage space for the 137,000 tonnes, which are new purchases and not switches of previous deals into U.S. origin.
For soybeans, production and stocks were marginally higher in Friday’s report and although beans were carried higher by the bullish enthusiasm in corn, it seems like traders will return to assessing conditions in South America, which seem to be poised for a record-large crop. Soy harvesting is picking up speed in Brazil's top producing state Mato Grosso, and farmers in No. 2 state Parana have started their field work, local farm agencies said on Friday. Mato Grosso farmers have harvested 1.9 percent of their soybeans, above the 1 percent collected a year earlier, the state's farm institute IMEA said in its first report of the 2013/14 harvest season. Harvesting has progressed the most in the western part of Mato Grosso, where 8.4 percent of soybeans planted have been collected. Farmers prioritized early soybean planting this year, even with less than ideal rains. That gives them time to plant a second crop of corn, cotton or more soy. Early planted soy usually has comparatively low yields, and the very first beans planted got irregular rainfall. A farmer in Mato Grosso's Sapezal municipality said productivity would improve as the harvest progresses.
In wheat, Friday’s report showed higher US stocks but smaller US winter wheat seedings for 2014. The US acreage for winter wheat for harvesting in 2014, at 41.9 million acres, is 3% lower than last year, which points to a diminished supply of US wheat in 2014/15. Some traders think the negative reaction in wheat may be a bit overdone, but near term lacks any strong demand stimulus. Egypt’s GASC tendered for more wheat on Friday, but the US is unlikely to garner any of the export business.