Wheat Market Finds Support from New Exports
Jan 23, 2014
Grains found modest support overnight, with wheat an unlikely leader to the upside with a 5-cent advance. Corn also advanced a healthy 3 cents a bushel while beans lagged behind on a 2-cent gain.
In wheat, low prices have helped spawn more interest from international buyers. Overnight, Taiwan bought 73,400 MT of US milling wheat with most of the volume going to dark northern spring and hard red winter varieties. Saudi Arabia and Ethiopia also announced tenders overnight for wheat, with the Saudi tender looking for as much as 660,000 MT. Also supporting wheat is the polar plunge hitting the U.S. Midwest this week, which poses a slight risk of freeze damage to about 15% of the region's soft red winter wheat crop, primarily in parts of Missouri and Illinois.
For soybeans, the market continues to find stiff resistance from ongoing rains in Argentina. In South America, showers scattered through central Argentina overnight but were most notable in southern Cordoba, far northeast Buenos Aires, and southeast Entre Rios. Looking ahead, weather models seem to be in agreement for a wetter forecast late in the 6 to 10 and 11 to 15 day periods, although Cordoba may again be short-changed in spots. Regardless, this would limit stress to less than 1/4 of the belt. In the U.S. cash market, basis levels have been coming under pressure in the past two days especially in export sensitive areas as concerns about slowing Chinese demand limits grain buyers’ appetite.
In corn, the news has been limited of late, although Wednesday morning brought a new sale to Japan. USDA announced that Japan had bought 105,664 MT of US corn for new-crop 2014 delivery. However, overnight Taiwan's MFIG corn purchasing group rejected all offers and made no purchase in a snap tender to buy 60,000 MT of corn from the United States. The lunar new year holidays start in Asia next week so China and other countries will be on holidays late in the week, which is likely to keep any new export news fairly limited. Domestically, corn basis has been mixed with river terminals backing off since the start of January as a weaker demand from China has slowed buying interest. Ethanol plants as a group are holding up fairly well, but some plants have been on the decline in recent days with competing export buyers backing off.