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.
Soybean Basis Jumps
Jun 13, 2014
Grains are finding technical strength following two days of hard selling. Corn is up 3 cents, soybeans up 7 cents, and Chicago wheat is up 2 ½ cents coming into the morning trade break.
NOPA crush numbers will be out on Monday and are expected to show 126.984 million bushels of soybeans crushed during May. This would be down roughly 5 million bushels from the 132.6 million bushels crushed during April. The USDA raised their 2013/14 soybean crush estimate in the June USDA report by 5 million bushels following several months of stronger than expected crushings.
The results of Egypt’s wheat tender were announced yesterday following the market close. In that sale Egypt purchased 180,000 tonnes of wheat for July delivery from Romanian and Russian traders. No signs yet of international interest in US what even after a month of declining U.S. futures.
US dried distiller grain prices have continued to move lower following China’s plan to suspend new US DDG imports. Prices in Iowa are now around $155 per ton, well off the $200 - $215 prices seen before the Chinese announcements. Most concerning for US DDG exporters is China’s decision to re-export any shipments containing MIR-162 corn. This situation is still developing, but will continue to be a negative factor for old crop corn demand.
July soybeans sold off 37 cents in the last two days following the June WASDE report. The cash market has responded to the sharp drop in prices by lifting basis to attract any remaining grain out of the farmer’s bins. The U.S FOB gulf soybean basis climbed 6 cents on Thursday alone, but the Gulf wasn’t the only place basis has jumped. In the last two days we have seen the National soybean basis average jump 7 cents, with the largest gains focused on Nebraska, Iowa, North East Kansas and Eastern South Dakota. Soy crushing plants have increased their bid 10 ¾ cents in the same time period.