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.
Morning Markets: Beans Advance
Dec 19, 2013
Grains were mostly lower in overnight trade with corn and wheat posting 2 cent losses while beans were bucking the trend with a 3-cent advance in the front-month January contract.
Wheat continues to sink to new lows, adding to its 7th day in a row of lower trade. All tolled prices have given up about 10% in the last 3 weeks as global surpluses continue to pressure the market. Overnight, Germany, the EU’s second largest producer and exporter, was projected to see higher production in 2014 as plantings are up 2.5% from last year. On the bullish side, Brazil flour millers are looking to the US for HRW wheat supplies as Argentina was unable to deliver on contracted supplies for January. Argentina's 2013/14 wheat crop should come in at 9 MMT, up from a previous forecast of 8.5 MMT, the Agriculture Ministry said on Thursday in its monthly crop report.
In corn, the China export cancellations continue to weigh on the market, but at the same time export business for the US continues to be brisk. Weekly sales totaled 872,000 MT, above analysts’ expectations and announced sales in the last three days have totaled 575,000 MT. However, there is some belief in the trade that some of this business is not really new deals, but just re-signing old Chinese purchases to South Korea.
For soybeans, exports were disappointing at 495,000 MT well off from the range of 700 to 900,000 MT expected by analysts. India is expected to see a decline in soybean production according to an industry trade group there. Production last year in India was 11 MMT, with the trade group looking for a decline to 9.5 MMT, which will also lead to lower soymeal exports into the world market. In the US cash market, basis levels are mostly flat, with end users seeing high deliveries on contracted bushels. Some dump lines at processors in the Midwest are as long as 4 hours.