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.
Soybeans Eclipse $15 Amid Tight Supplies
Apr 16, 2014
Soybeans moved sharply higher in the overnight session with front-month May futures gaining 17 cents a bushel and new-crop November up 8. Wheat was also higher with a 3 cent advance, while corn was fractionally lower.
Yesterday brought bullish news for beans with NOPA monthly crush figures being released. For the Month of March, US crushers used 153.8 MB which was above trade expectations of 146.1 MB going into the report. With tight stocks and strong exports, the strong crush number suggests even more tightness going forward. While some imports have occurred of late to help alleviate tightness, it seems the US is well shy of reaching the 65 MB import projection to keep stockpiles from disappearing altogether by the end of the marketing year. Some crushers are boosting their basis sharply in recent days with +50K or higher becoming the norm across much of the Midwest with 2 weeks left until first notice day on May beans.
For wheat, prices were weaker on Tuesday for the first time in three sessions, but recovered some of the losses overnight. Damage from the freeze in the southern Plains is still being debated. Oklahoma State agronomist Jeff Edwards said "Most of Oklahoma spent at least four hours below freezing last night and some areas spent an extended period of time below 28F. While temperatures in the wheat canopy might have remained slightly higher than reported air temperatures, they were still probably low enough to result in significant injury to wheat." In Ukraine, the situation is getting worse and more and more operators are challenging the ability of the country to properly produce and export grains. But no concrete impact can be observed for the moment.
In corn, the market continues to be somewhat of a follower of the wheat and soybean market. However, its own fundamentals remain supportive with export activity exceptionally strong, and ethanol margins running high. Today will bring the latest EIA ethanol production figures which should continue to show robust production for the ethanol producers.