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 Take Lower Turn Overnight
Dec 12, 2013
Grain markets were weaker overnight with soybeans leading the complex lower, down 7 cents towards the end of night trade. Corn and wheat drifted down by 2 cents in relatively quiet trade.
China announced another load of US corn was rejected after it found strains of GM traits not approved by the government. This load of 59,000 MT brings the total rejected by China to 180,000 MT in the past month. Overnight Taiwan bought a small load (23,000 MT) of US origin corn and 12,000 MT of US soybeans. On the domestic front, ethanol continues to be a bright spot with production surging last week to 944,000 BPD, the largest weekly figure since January 2011. Crush margins were $4.04 per bushel, the highest crush margin going back to January 2007. As a result, ethanol plants continue to aggressively bid spot corn. Since 12/3, ethanol plant basis is up + 1.2 cents compared to the national average of gain of + 0.5 cents.
In wheat, Egypt’s GASC announced it had bought 300,000 MT of French and Romanian wheat. French farm office FranceAgriMer raised its estimate of soft wheat exports leading to a cut in projected 2013/14 ending stocks. FranceAgriMer pegged wheat stocks on June 30 at 2.4 MMT, down 500,000 MT from its November forecast. Overnight, the US did a deal with a Japan trading house that acquired 132,780 MT of food quality wheat.
For beans, the market continues to be choppy as near-term demand for US soybeans is at a blistering pace, but expectations of another record-large South American crop keep prices in check. Overall soybean planting is moving along at a good pace and under ideal weather. As of early December 60% of the SA crop had been planted and heavy rains for Argentina in November with drier weather in December helped aid planting and development. The latest crop estimate for Brazil puts it at 90.7 MMT estimated by Confab, as compared to USDA’s forecast of 88.8 MMT.