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 Sales Disappoint
May 08, 2014
Coming into the morning trade break corn is down 5 cents, wheat is down 6 cents and front month soybeans are up 4 cents. Some bull spreading looks to be taking place in soybeans, as the November contract is trading unchanged. Early driver in today’s action will be the export sales report just released.
The export sales report showed very weak corn exports, a change in the recent trend of exceptional corn sales and inspections. Corn disappointed expectations with 161k MT of old crop sales compared to the markets expectations of between 500-800k MT. This week’s corn sales were down 83% from last weeks reported number and will likely weigh on corn prices in the early part of the trade today. Wheat beat analyst expectations by booking 320k MT but wasn’t far off from the high side of the trade guess at 300k MT. Soybeans avoided cancellations today with 40k MT booked for old crop which was the best old crop sale in three weeks.
Showers will be scattered throughout central and western corn-belt for the next few days, with the eastern corn-belt avoiding precipitation until Tuesday next week. These showers should slow the pace of planting corn and soybeans which was lagging the five year average in Mondays report by 13% and 6% respectively.
Soybeans were supported in the overnight session by better than expected Chinese imports during the month of April. The 6.5 million tonnes imported during April was better than trade expectations, which looked for imports to decline from March. This should be a short term boost to soybean prices, as just next week the Chinese government will begin selling soybeans from state reserves.In this morning’s export sales report China was a net canceler of U.S. soybeans by 200 tonnes.
New crop soybean prices will be focused on tomorrow’s USDA report which will project 2014/15 carryout for the first time. Analysts expect the USDA to project ending stocks at 307 million bushels for the 2014/15 marketing year, up sharply from current marketing year stocks of just 135 million bushels. Domestic soybean acres will be the largest factor driving a larger carryout, but the Brazilian crop could pose a threat to U.S. demand into the new marketing year. This morning the Brazilian government raised their estimate for the recently harvested crop to 86.57 million tonnes, up 500,000 tonnes from their previous estimate. Although this figure is still well below the 90 million tonnes projected coming into South American planting, it shows that Brazil will remain a competitive exporter into the 2014/15 marketing year.