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.
Corn Finds More Strength Overnight
Apr 09, 2013
Grains were mixed in overnight trade with corn posting a 5 cent advance while wheat and soybeans had modest declines of 2-cents a bushel.
In the wheat market, US winter wheat conditions improved this week as USDA’s crop condition rating showed 36% of the crop in good-to-excellent condition, versus last week’s reading of 34%. However, current ratings are still well below last year’s rating of 61% and on par with ratings in 2011 when wheat yields ended up at 43.7 bushels per acre on the US average as compared to 46.3 in 2012. Internationally, wheat crops in Russia and Ukraine are also starting to show stress. Russian analyst SovEcon said crop conditions there fell in the last week, and although they are pegging the crop to be 83 to 89 MMT, up from last year’s tally of 71 MMT, it is well below official forecasts from Russia's agriculture ministry at 90 to 92 MMT. Agriculture consultancy UkrAgroConsult on Tuesday cut its forecast for Ukraine's 2013 wheat harvest by 4 percent to 20.23 MMT due to a lower-than-expected yield caused by a late spring.
In corn, weekly export inspections cam in art 10 MB well below last week’s 19 MB and the lowest in 7 weeks. But, lower prices especially for new-crop corn have some industry analysts looking for resurgence in export demand. Chinese corn imports are expected to reach between 6-7 MMT in the 2013/14 marketing year beginning Oct. 1, according to estimates by three major industry analysts, surpassing a previous record of 5.2 MMT in 2012/2013. So far, China has already booked 1.3 MMT of US new-crop corn. USDA’s April WASDE report to be released on Wednesday is expected to show ending stocks at 812 MB up from 632 MB last month after the higher stocks report last week.
For soybeans, weekly export inspections came in at 15 MB off slightly from last week’s total of 16 MB. However, with total exports already standing at 1,192 MB it will only take about 7.3 MB per week for the remainder of the year to reach USDA’s annual projection of 1,345 MB. While bean prices rallied hard on Monday as concerns about China’s bird flu waned, overnight trading was weaker on thoughts feed demand could be slowing. New Hope Group, China's largest animal feed producer, said that its business had indeed been hurt by the bird flu outbreak as poultry consumption in China has taken a hit. Also, the Chinese Grain and Oilseed Information Center expects Chinese soybean imports for 2012-13 to fall for the first time in 9 years.