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.
Positive Export Sales for Corn and Beans
May 30, 2014
In the overnight grains were mostly unchanged with corn up 1 ½ cents, soybeans up ½ a cent and wheat down 2 cents.
Old crop soybean sales were reported at 60,030 MT this morning, at the high end of expectations. Accumulated export sales for the year now sit at 1.681 billion bushels, well above the 1.600 projected by the USDA for the marketing year. Many traders look for export sale revisions in the June 11th, USDA report. Considering old crop ending stocks are already just 130 million bushels, it could be a volatile day for old crop beans. New crop soybeans saw large sales of 821,100 MT in this morning’s report with China the largest reported buyer. Meal and soy oil sales came out in-line with expectations.
It was a very large week for old crop corn sales, with the USDA reporting 621,300 MT sold. This was well above trade expectations and should work to firm July corn futures. With July futures 50 cents off their highs and technically oversold, end users should view this as a buying opportunity.
Net cancellations of 52,400 MT were reported for old crop wheat, well below trade expectations for the week. This will only work to firm trade opinions that U.S. wheat has priced itself out of the world market. Just this morning a Ukrainian private analyst expected the 2014/15 Ukrainian wheat harvest to grow 1.2 million tonnes from last year’s harvest.
China had a state corn auction Thursday the 29th to help ease their tight domestic supply situation. In the auction the government sold 1,848,558 tonnes for an average price of $350 per tonne. Of the 3.5 million tonnes offered 52.6 percent of the corn was sold.
This morning it was announced that China will lower their reserve requirement to free up more cash for banks to make loans. This reserve requirement is targeted toward certain banks that will be able to qualify if the proportion of loans to smaller-sized firms and the farming sector compared to their total lending meets certain levels. On April 16th China lowered the reserve ratio which only applied to rural banks to help lift the agricultural industry. The lowering reserve requirements should help the agricultural industry to access capital, which has been more difficult for crush facilities recently.