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.
Grains Post Overnight Gains
Jan 07, 2013
Grains found buying support overnight as bargain hunting following weeks of selling lifted prices from six-month lows. Soybeans were the leader to the upside posting a 9-cent gain, while corn and wheat were up 4 cents.
Fund selling has been heavy in recent weeks helping fuel the price selloff in recent weeks. The market continues to bank on strong production out of South America this year with the soybean crop expected to be record large, cutting into US export business. However, year-to-date US soybean export commitments stand at 84% of the annual target by USDA, which suggests that weekly export sales for the remaining 8 months of the marketing year need to average 179,000 MT a week to meet USDA’s forecast. Last week, sales totaled 434,000 MT. Furthermore, strong domestic crush margins in the US should underpin demand
In wheat, we still expect US export business to continue to pick up in the latter half of the marketing year as foreign competitors have limited supplies. In addition, the widespread drought in the US Plains continues to pose a risk for the winter wheat crop.
In their long-range weather outlook, Planalytics calls for a warmer and drier pattern in the next 90 days for much of the Western Cornbelt, bringing little relief for the drought. For Nebraska, Iowa, and western Kansas, the precipitation deficit combined with existing drought severity suggests wheat will remain in stress for much of season. Meanwhile, improved snowpack for New Mexico, and precipitation across Oklahoma and Texas suggests a relatively better season.