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.
Markets Give Back Gains Overnight
Jan 17, 2014
Grains were lower overnight taking a break from the recent runup, especially in beans which is on track for its largest weekly gain since November. Just before the break in night trading, corn and wheat are down 3 cents a bushel while nearby beans are off 6 cents a bushel.
Soybeans have seen excellent export sales data in the past day. Thursday’s weekly export sales reported -showed an impressive 1,226,000 MT of soybeans purchased, which compared to expectations of 750,000 to 1,050,000 MT. Also on Thursday USDA announced new sales of 465,500 MT to China: 60,000 MT for old-crop 2013/14 and 405,500 MT for 2014/15. While demand side news is positive, South America’s crop gets closer to maturity as farmers in Brazil’s top two producing states of Mato Grosso and Parana start harvesting. In Mato Grosso the soybean harvest is approximately 2-3% complete with the most advanced harvest in the western regions of the state. In Parana, the soybean harvest is less than 5% complete and most of the advanced harvest is also in the western regions. The results are mixed so far with early maturing beans in Parana coming in with low yields, while farmers in Mato Grasso reporting better than expected yields.
In wheat, Egypt’s GASC announced they had bought 295,000 MT from France, Russia, Ukraine and the US. The US deal involved 60,000 MT of SRW wheat at $264.75 per MT. Overnight, Japan made a snap tender to buy Canadian spring wheat. India's state-run trading company MMTC has issued an international tender to sell and export 120,000 MT of Indian milling wheat. Indian state trading firms including MMTC, STC and PEC have issued large numbers of international tenders in past months to reduce India’s huge state wheat stocks after a bumper crop.
For corn, Thursday’s export sales report was well above expectations at 821,000 MT as compared to 300,000 to 550,000 MT expected by trade analysts. However, there remain lingering effects of China backing out of US corn purchases. Thursday, USDA announced the cancellation of 126,000 MT of previous sales. Overnight, Taiwan's MFIG corn purchasing group bought 60,000 MT of corn to be sourced from the United States. Large volumes of U.S. corn are being taken by Asian importers after China rejected many U.S. shipments .