Apr 16, 2014
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Cash Grain Insights

RSS By: Kevin McNew, AgWeb.com

Kevin McNew is President of Grain Hedge and Geograin. McNew was raised on a farm in central Oklahoma and received his bachelor’s degree from Oklahoma State University, and master’s and Ph.D. degrees in Economics from North Carolina State University. For over a decade, he was a Professor of Economics at the University of Maryland and Montana State University, focusing on commodity markets. He has received numerous academic awards for his research and outreach work, and was (and still is) widely regarded for boiling down complex economic issues into easy-to-understand concepts for applied life.


Cold Weather Threatens US Plains Wheat

Apr 15, 2014

 Grains were mostly lower overnight following Monday’s rally. Nearby May soybeans was the exception, gaining 8 cents a bushel, while corn and wheat lost 2 cents each.

Cold temperatures across the southern Plains poses a threat to the wheat crop. According to Oklahoma State agronomist Jeff Edwards, wheat in Oklahoma ranges from just past jointing to late boot and if forecasts are correct wheat injury is likely. Given the limited moisture and limited time prior to harvest, Edwards thinks, it is not likely that the crop will recover from a complete loss of tillers. In Monday’s Crop Progress report, USDA saw ratings slip slightly, going from 35% good to excellent last week versus 34% good to excellent this week for the winter wheat crop.

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In corn, plantings got underway this past week with 3% of the corn crop planted according to USDA. That’s up from 2% last year, but behind the 5-year average pace of 6%. Export inspections for corn were strong, totaling 1.44 MMT, which was above the 1.350 MT upper end of trade expectations going into the report. It was also the highest weekly total going back to 2008.

For soybeans, export inspections were on the low side of trade expectations. Actual inspections came in at 267,000 MT versus analyst expectations of 325,000 to 450,000 for the week. Soybean cash basis bids are mostly steady at elevators and processors around the U.S. Midwest, a touch firmer on the Mississippi River.   

Wheat Skyrockets on Ukraine Tensions

Apr 14, 2014

 Wheat jumped higher in the night session reacting to escalating tensions between Ukraine and Russia over the weekend. At the end of the overnight session, wheat was up 15 cents a bushel while corn and soybeans gained 4 and 6 cents, respectively.

Ukraine has given pro-Russian separatists a Monday deadline to disarm or face a full-scale anti-terrorism operation with full force. This has raised the risk of military conflict, with the market building in a premium for potential trade disruptions or production issues down the line. In the case of wheat however, Ukraine farmers planted their winter wheat and face little constraints, but the same is not true for spring planted corn where farmers are reported to be facing resource constraints. However, trade has not been noticeably impacted. Indeed, Russian agricultural consultancy SovEcon has raised its 2013/14 grain export forecast due to more active March shipments than previously expected, it said on Monday.  Global wheat prices have been rising in recent months on concern over grain supplies from the Black Sea, triggered by Russia's annexation of the Ukrainian region of Crimea. Russia’s exports have been higher caused by global price growth and a weakening rouble. Russian wheat was the lowest offer in a tender from Iraq’s state grains board to buy at least 50,000 MT of wheat to be sourced from the United States, Canada, Australia, Ukraine or Russia.

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In corn, South Korea's largest animal feed maker Nonghyup Feed Inc has purchased 193,000 MT of optional origin corn and 65,000 MT of optional origin feed wheat in a tender which closed on Monday.     The tender had sought September/October arrival. In Ukraine, a grains conference on Friday suggests that production there could fall sharply in the coming year with analysts looking for a 23-24 MMT crop as compared to 31 MMT last year.

For beans, export activity has been mostly quiet of late with most business occurring for new-crop delivery. At least one soybean cargo defaulted on by Chinese importers was sold by Japan's Marubeni Corp, three sources said, as slowing demand and tightening credit in the world's top importer hits oilseed trade. One Tokyo-based source with direct knowledge of the situation said Marubeni incurred a loss of $4 million on 4-5 soybean cargoes which were defaulted on by Chinese buyers as they could not get letters of credit.


Chinese Crushers Default on Bean Purchases

Apr 10, 2014

 Grains were weaker overnight following Wednesday’s volatile trade from the latest round of USDA supply and demand data. In the night session, beans were down 10 cents while wheat and corn gave up 3 cents a bushel.

USDA’s supply and demand report released on Wednesday showed tightening US corn and soybean carryout. For corn, USDA raised US exports by 125 MB, which led to an equal decline in ending stocks at 1,331 MB, and below trade estimates going into the report of 1,403 MB. For soybeans, exports were raised by 50 MB over the previous forecast in March, but imports were raised 30 MB to a record high level of 65 MB if achieved. These adjustments, combined with a 5 MB drop in crush cut into the US carryout by 10 MB from the March forecast, and now stands at the razor thin mark of 135 MB.  

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While the markets were spurred on immediately after the report, prices quickly eroded as sell triggers were reportedly hit and farmer selling was said to intensify. May corn breached below the $5 mark but managed to inch above it in the night session. Overnight there was chatter that several Chinese soy crushers were going to announce a default on soybean export deals in the wake of poor margins in China and this morning it was confirmed. Chinese importers have defaulted on at least 500,000 MT of U.S. and Brazilian soybean cargoes worth around $300 million, the biggest in a decade, as buyers struggle to get credit amid losses in processing beans. Three companies in the eastern province of Shandong had defaulted on payments for shipments as they were unable to open letters of credit with banks.

For wheat, prices continue to be dogged by ample world supplies. World wheat carryout increased from 183 MMT to 186 MMT in the latest supply and demand report. Also, logistics problems in Canada seem to be waning as CN Rail announced it would be meet the government target to move 500,000 MT of grain for the week in Western Canada. In the drought stricken US Plains, the weather looks dry over the coming days with only a modest chance of a rain even towards the beginning of next week. The next month should be critical for crop development there.

WEEKLY EXPORT SALES (in thousand metric tons)


OC Actual

OC Expected

NC Actual

NC Expected

















Corn Bookings Exceed USDA Annual Forecast

Apr 08, 2014

 Grains were subdued overnight as traders wait on a delayed Crop Progress report this afternoon and the next WASDE report to be released on Wednesday. Corn and wheat fell 2 and 4 cents, respectively, while nearby May beans were unchanged in the night session.

On Monday, USDA failed to release their first Crop Progress report of the season, instead pushing the report to today at 3 PM CST. However, state offices in the Plains gave some key data on crop conditions there. Oklahoma and Texas saw another week of lower winter wheat conditions as both states fell by 2% in their good to excellent ratings as compared to last week. Kansas sees its winter wheat crop at 29% good to excellent while Oklahoma rated its crop at 15% good to excellent. Texas saw a modest improvement going from 11% last week to 13% this week.

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In beans, prices have been under pressure of late as traders look for an end to the strong export surge for old-crop delivery. News of a vessel of Brazilian soybeans arriving in the US Gulf over the weekend pushed prices down on Monday and have nearby May hovering around support at $14.60. On Monday, USDA announced a 120,000 MT sales of new-crop 2014/15 soybeans that were sold to China.

For corn, Monday saw a strong showing for export inspections with 1.3 MMT as compared to expectations of 1.00 to 1.25 MMT going into the report. China, the world's second-largest corn consumer, has signed an agreement with Brazil to allow imports of corn from the South American country, the Chinese quarantine authority said on Tuesday. Brazil is the 2nd largest exporter of corn in the world market next to the US, who stands to lose business from trade restrictions on US GMO corn. However, in the near term US corn export bookings for old-crop have exceeded what USDA has penciled in for the entire year, with 5 months remaining in the marketing year. Total export commitments for the marketing year stand at 41.3 MMT versus USDA’s annual forecast of 41.2 MMT, which seems to suggest WASDE export forecasts will need to be revised higher.

Brazil Beans Arrive in US Gulf

Apr 07, 2014

 Grains started the week on a quiet note with wheat and beans advancing 6 and 3 cents a bushel while corn slipped 2 cents a bushel.

Over the weekend, A bulk shipment of Brazilian soybeans arrived at the U.S. Gulf Coast on Saturday, one of several South American cargoes that will be imported this season to alleviate tight supplies in the world's top soy producing country.  The Ocean Life, a 75,000-tonne capacity vessel that was loaded at Brazil's Santos port in mid-March, entered the Southwest Pass shipping channel at the mouth of the Mississippi River early on Saturday morning, according to Reuters shipping data. USDA’s FAS shows US export sales so far this marketing year a MMT, much larger than what the USDA’s WASDE report shows as the annual export expectation of 41.6 MMT.

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For wheat, traders will be looking forward to the first USDA crop progress report for all key growing states to get a sense of crop conditions. In Oklahoma, Texas and Kansas the state offices there have shown poor conditions over much of the region.  Over the weekend, very light showers were reported in the Western Plains, which will provide only limited relief to the wheat crop there, where the drought has been severe.

In corn, China has still not approved a gene-modified strain of corn known as MIR162, the government said on Friday, prolonging a ban that has seen nearly 1 MMT of the U.S. grain turned away from Chinese ports since November.  Asked if its biosafety panel had made a final decision, the agriculture ministry said it was still evaluating materials related to the strain that had been submitted late last year by developer Syngenta.  In the US, Midwest weather looks to see warmer and drier patterns starting on Tuesday and into the weekend which could help get some seeding going in the Southern reaches of the Midwest.  Even as far north as Minneapolis, temperatures are expected to reach 70 degrees by Wednesday.


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