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 Traded Lower in the Overnight
May 16, 2014
Corn futures are trading 1-2 cents lower this morning on light news. New crop corn futures are technically oversold but the rapid pace of planting across the heart of the grain belt has worked to pressure prices this week. Expectations are for Monday’s crop progress report to show another strong week of corn planting in the western corn belt, with the eastern corn belt showing some weather delays. Moving forward, emergence and crop conditions will drive prices as planting pace is slightly ahead of the 5 year average.
Soybeans are down 2 cents on the July contract while trading unchanged on the new crop November contract. Yesterday’s NOPA crush report showed the largest April crush in five years but given the trade reaction this is being viewed as confirmation of strong crush rather than fresh bullish news for the soy complex. The Chinese will hold more state soybean auctions next week, with 1.3 million tonnes to be offered in two separate auctions. Typically these Chinese auctions have a negative impact on U.S. prices, but the auction held earlier this week actually seemed to support old crop soybean futures. In that auction, 92% of the soybeans offered were sold and at a much higher average price than the trade was expecting. This has worked to quell some trade concerns about domestic Chinese demand for soybeans.
Wheat traders will be watching a tender by the Egyptians for 55,000 – 60,000 that will be closing this afternoon. That tender is for wheat delivered June 20 – 30 and will be an important gauge of export demand for U.S. wheat. Yesterday’s export sales report showed just 55,000 tonnes of old crop U.S. wheat sold, the second lowest weekly quantity since January. Considering large world ending stocks the U.S. wheat market may need to see lower prices before international demand returns. The next area of technical support sits at $6.70 - $6.75 for July Chicago wheat futures.