Sep 18, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


February 2013 Archive for 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.

 

Corn Resilient in the Face of Lower Beans and Wheat

Feb 26, 2013

Corn prices inched higher in the overnight session adding to Monday’s gains while soybean and wheat price continued to erode. As of this writing, Corn is up 4 cents, while soybeans and wheat are down 3 cents.

For corn, fresh export business on Monday helped keep corn from following beans and wheat lower. USDA announced export sales of 127,000 metric tons of corn for delivery to unknown destinations. Of the total 50,800 tons is for delivery during the 2012/2013 marketing year and 76,200 tons is for delivery during the 2013/2014 crop year.

tradeonlineorbyphone

In the soybean market, prices continue to slide after briefly touching the $15 level last week. Overnight, nearby March traded as low as $14.37 but managed to recover back to the $14.50 area. Brazil continues to see active harvest progress, with 28% of the crop harvested as of Feb. 22, up from 19% a week earlier. Monday USDA announced a 120,000 MT sale of soybeans to China for new-crop 2013/14 delivery.

In wheat, beneficial rains have put the wheat market on the defensive as prices reach their lowest level since June. Monday, the Kansas Ag Statistics Service said on Monday that the crop was rated 23% good to excellent as of Feb. 24, up from 20% a month ago. This second snow storm bearing down now on the Plains should help to improve crop conditions further.  Overnight, there was export business as Japan bought 50,000 MT of SRW wheat for feed and Taiwan was looking to buy 96,000 MT of wheat from the US in a tender. Current price levels give the US a distinct edge in the market as US SRW wheat is quoted around $285 a ton, FOB, while India's state-run PEC Ltd last week received the highest bid at $312 per ton in its tender. The cheapest quality of Australian standard wheat is being offered at around $310 a ton. 

Bean Prices Stabilize But for How Long?

Feb 25, 2013

Grain prices were mixed overnight with soybeans gaining 4 cents while wheat prices were down 4 cents. Corn was mostly unchanged.

Soybeans started Sunday’s session sharply lower, trading down to $14.53 but managed to recover those losses by Monday morning and post a positive gain. Brazil’s dock strike has seemed to come to an end as government officials and laborers met over the weekend and dock workers called off their strike. Ports in Brazil have 192 vessels waiting to load oilseeds and grains, more than double last year’s number of 90. The Brazilian soybean harvest is 27 percent complete, ahead of last year’s 20 percent pace. Although China was in the market last week for US beans, it seems likely that their buying will turn to bountiful South American supplies in the coming weeks.

hedgeyourgrain

For corn, CFTC data on Friday showed large speculators added to their short positions cutting their overall bullish bet to the lowest level in eight months. Improved moisture in the Western Cornbelt in recent weeks, combined with an outlook for bumper supplies in the coming 2013/14 crop year will make it difficult for prices to regain their highs of recent months.

Wheat prices continue to be pressured by improved precipitation in the Plains. Last week’s storm dumped a foot of snow in key areas of Kansas and Oklahoma last week, and a second storm system is hitting the region again this week expected to bring another foot of snow.  But, demand strength from export business may keep prices from pushing significantly lower. Friday’s USDA export sales report showed a robust week of nearly 700,000 MT of US wheat sales, compared to 400,000 to 600,000 MT expected by analysts.

Beans Catapult Higher Overnight

Feb 22, 2013

 Soybean futures eclipsed the $15 mark and traded as high as $15.16 on nearby March futures in the overnight session continuing to hold 20-cent gains. Wheat and corn prices followed, but were up only 3 cents a bushel.

The soybean market found new buying enthusiasm deliveries of about 7 million metric tons are held up at ports in Brazil. Chinese soy crushers boosted purchases from the U.S. this week on concern that a possible strike in Brazil by dock workers will disrupt shipping. Yesterday, USDA reported 130,000 MT sales of soybeans to unknown destinations. Some insiders are saying China has bought up to 500,000 MT of soybeans this week in private deals.

stop paying so much to trade

For corn, traders continue to look ahead to the spring corn crop. USDA on Thursday gave a surprisingly small corn plantings number at 96.5 million while many analysts expect acreage of 98 to 99 million. Even so , USDA’s normal weather expectation would build out next year’s ending stocks to around 2 billion bushels and push US average prices into the $4.80 area.  China’s feed mills bought at least 120,000 metric tons of corn from the U.S. this week, the first purchases this year.

In wheat, winter storm Q dropped 1.5 to 2.5 inches of precipitation in the last 48 hours across key growing areas of Oklahoma and Kansas. Export business seems to show signs of picking up. On Thursday USDA reported the private sale of 110,000 MT of SRW wheat to unknown  destinations.

Wheat Pressured on Storm Q Relief for Plains

Feb 21, 2013

 Grains were lower overnight as wet weather continued in the Midwest and Plains from massive Winter Storm Q.  Wheat prices were off 5 cents while corn was down 2 cents. Soybean prices posted a 4-cent loss.  

For wheat, Winter Storm Q continues to provide heavy snow and moisture to key Plains regions that have been locked in widespread drought. Yesterday, precipitation accumulations totaled 0.5 an inch as snow fall of 6 inches were fairly typical. This morning finds heavy snow continuing to blanket much of the region which should add to the totals from yesterday. On the export front, Egypt bought US soft red winter wheat on Wednesday at $296.75 a ton.

Greencomputer

In soybeans, prices have stalled out unable to take out key resistance in the $14.95 region for nearby March futures. On the fundamental front, soybean prices have been supported this week by dry weather in Argentina and threat of labor strife by Brazil’s dock workers.  Port workers there plan to walk off the job on Friday morning and again Tuesday afternoon, and threaten to prolong their work stoppage if the government’s planned port regulations reform is implemented. Crop forecaster Lanworth on Wednesday said it expects U.S. soybean production to rise to 3.465 billion bushels in the 2013/14 crop year, based on average yield of 43.1 bushels per acre.

For corn, nearby prices continue to be pressured by lack of any noticeable demand base. New-crop futures also continue to sink lower as traders look for a large increase in corn plantings this spring. Good moisture levels in the Eastern Cornbelt combined with attractive prices have some expecting a 99 million acre crop this spring, the biggest in nearly 80 years. USDA’s Ag Outlook Forum begins today and should provide some guidance to the market about potential crop size based on USDA economist expectations.

Soybean Comeback Continues

Feb 20, 2013

Soybean futures continued their climb back adding 12 cents overnight on top of the 45 cent gain from Tuesday.  Corn and wheat however were fractionally lower.

Soybeans continued to get a boost from dry weather in Argentina along with continued demand strength. On Tuesday,  China bought  120,000 MT of old crop soybeans  and USDA’s weekly export inspections showed 40 MB for the week, up nearly 10 MB from last week and more than four times the level required to hit USDA’s annual forecast.  In South America, shipping delays are said to be 30-40 days and Argentine farmers are said to be holding onto beans as a hedge against inflation and the rapidly devaluing peso. All this could keep the US bean market in play longer than the market has been factoring in.

Greencomputer

For wheat, Winter Storm Q is hitting the central Plains today with snow accumulations expected of a foot or more in drought-stricken areas. Tuesday’s wheat export numbers came in at a better than expected rate of 30 MB for the week, up 10 MB from last week and above trade expectations of 15 to 20 MB. Export tenders are being floated by Egypt and Japan, with the US likely to win some of the business.

In corn, weekly exports totaled just  9.5 MB, down MB from last week and well below the more than 20 million needed to hit USDA targets. The USDA Outlook Forum on Thursday and Friday this week will provide non-survey based forecasts of new-crop plantings and ending stocks for 2013/14. Both are expected to be large. 

Soybeans Sharply Higher Overnight

Feb 19, 2013

Soybean prices got a boost as weekend weather in Argentina turned out to be disappointing.  Rains over central, eastern and northern Argentina were somewhat below expectations going into the weekend and while some areas did get a significant amount of rain, it was not the widespread coverage that the models were forecasting. Traders also are looking for China to return from its holiday in a buying mood after prices have fallen sharply over the last week during the Chinese New Year.

stop paying so much to trade

For wheat, Winter Storm Q is expected to hit the central Plains and Midwest on Thursday bringing up to a foot of snow which would help drought stricken areas.  Areas from Northern Kansas to North Dakota look to get fairly significant precipitation.

In corn, nearby March Futures are hovering at the key $7 benchmark. Overnight it traded briefly as high as $7.03 but was unable to hold the gains. Lack of significant demand signs keeps the corn market from having significant follow through to the upside at the moment. 

Grains Rebound Overnight

Feb 15, 2013

 Futures markets found support overnight as weeks of selling finally seemed to come to an end. After 10 straight days of lower closes, corn starts the trading session in positive territory with a 6-cent advance. Nearby bean and wheat futures were also up 6 cents.

Corn futures traded above $7 on the front month March contract. News of ethanol plants coming online again has helped reverse the trend of lower prices in weeks. But lackluster export demand should continue to keep prices on the defensive. Thursday’s weekly export sales were 225,400, up from the previous week, year-to-date sales are lagging last year’s total at this time of year by 53%. In comparison, USDA’s official export estimate for the year shows a 42% expected drop in exports.

stop paying so much to trade

In wheat, export sales were robust with a total of 706,000 tons, but several weeks of solid business will be needed to get traders excited about the prospects of improved wheat export business. In the US Southern Plains, there is a slim chance of precipitation today in Oklahoma and Kansas, but beyond that the 5-day forecast looks to continue the dry spell.

For soybeans, export business was noticeably lower than expectations on Thursday as numerous cancellations left old-crop bean sales at a deficit for the week. Weather in South America continues to be favorable as harvest there begins to pick up. Brazil’s harvest is 12% complete, above the five-year average of 7%.

Markets are closed on Monday for the President’s Day Holiday.

Grains Continue Bearish Stance

Feb 12, 2013

Overnight, corn and wheat prices continued to grind lower with nearby March corn dropping below $7 a bushel for the first time since January 10th. Wheat also pushed lower by 3 cents a bushel hile soybeans were higher on the overnight advancing 5 cents.

Weather in South America continues to be favorable as dryness in Brazil helps farmers there get a good start on harvest, while much needed moisture in Argentina should help snap the dryspell that has plagued the crop for the past month. With China on holiday for the rest of the week, export news remains quiet giving market bears little resistance in moving prices lower.

stop paying so much to trade

For corn, USDA gave their long-term 10-year crop forecast on Monday showing a sharply higher level of stocks for the coming marketing year.  Although USDA’s data is largely based on trend assumptions   (i.e., 163 bushel yield) which one could argue is unrealistic in light of extreme drought conditions in the Western Cornbelt, the lack of any significant bullish news has kept prices on the defensive. On the ethanol front, there was some hope for corn, with talk that four ethanol plants will reopen.

In wheat, today looks to bring good chances of precipitation to parts of the southern Plains. Areas of North Central Oklahoma and Kansas are looking for 2 to 4 inches of snow mixed with rain today.  Since October when the crop was planted, this region has accumulated only about 1 to 2 inches of precipitation versus a normal level of 9 inches during this time of year.

Soybean Rout Continues

Feb 11, 2013

 Soybean futures pushed lower overnight giving up 20 cents a bushel adding to the losses from Friday’s sell-off. Corn and wheat prices were off 3 cents a bushel.

Although Friday’s USDA report was hardly bearish on the data alone, the soybean market turned decisively bearish following its release as conditions in South America continue to improve.  The latest forecasts show Brazil having drier weather in the 6- to 10-day day outlook which should help early harvest beans. Furthermore, Argentina, which has been persistently hot and dry in recent weeks, is expected to see widespread rains.  With China on holiday for the week, it will be interesting to see whether they are a big buyer of US beans or South American beans on their return to business.

stop paying so much to trade

In corn, prices continue to grind lower as demand side prospects seem grim even with tight old-crop ending stocks.  The Renewable Fuels Association reported 20 of the nation's 211 ethanol plants have ceased production over the past year, including five in January. Most remain open, with workers spending time performing maintenance-type tasks. But ethanol production won't likely resume until after 2013 corn is harvested in late August or September.  On Friday, USDA left their corn used for ethanol unchanged at 4,500 MB even though it appears overall production is lagging the number needed to reach USDA’s projection.

Nearby wheat continues to hold above the $7.50 area of support even as other grains have taken out their key support of recent weeks.  USDA cut US ending stocks thanks to an improvement in feed use numbers. But, export numbers were left unchanged which could lead to future revisions as poor exports are showing limited signs of improving. In the Plains, weekend moisture in Oklahoma and Kansas was disappointing as a storm system produced only about a 0.10 inch of precipitation in key growing areas. The next chance for precipitation is on Tuesday as snow and sleet are expected over the region. 

Rain Forecasts Pressure Grains Overnight

Feb 06, 2013

Grain futures fell in the overnight session as weather models showed more precipitation coming for parched Argentina and the US Plains. Soybeans led the way lower, falling 10 cents while corn and wheat were off 5 cents. 

 
The weather outlook for the next 6 to 10 days calls for 1 to three inches of rain to fall over large sections of central, eastern and northern Argentina. These areas have been particularly dry of late so timely rains, if realized, could help improve crop conditions.
 
stop paying so much to trade
For wheat, much needed moisture is expected in Oklahoma and Kansas over the coming days. Rainfall is expected to be heaviest in Kansas with 0.50-0.75 inch of rainfall in the western half of the wheat belt, and 0.75–1.25 inches in central Kansas. Oklahoma is also expected to receive 0.50 to 1 inch of rain.
 
In corn, prices pushed lower over night taking out recent support in the $7.24 area. Sluggish demand for exports and continued weak ethanol crush margins keep the demand side of the corn market tame. Ag Processing Inc in Hastings, Nebraska  is the latest plant to close on weak conditions. On Friday, USDA is expected to increase their forecast of ending stocks for corn. An average of analysts' estimates pegged the U.S. corn stocks for the 2012/13 marketing year to total 618 MB, up from their forecast of 602 MB in January. 
 

Beans Close in on $15

Feb 04, 2013

Grains posted positive gains overnight with soybeans leading the markets to the upside on a 12-cent advance. Corn and wheat prices followed with modest 1-cent and 4-cent gain, respectively.

Beans moved higher as patchy rains in Argentina have done little to stem the hot and dry conditions plaguing the crop there. The outlook for the next 5 days shows little chance of significant rainfall in key growing areas of Argentina, instead rains look to be more on the western edge of Argentina where crop production is limited.

stop paying so much to trade

In wheat, Egypt bought 60,000 tons of US SRW wheat over the weekend. In addition, Russia is considering a proposal to suspend a 5% grain import duty until Aug. 1, 2013 which would allow more imports from the EU. Growing conditions in the Plains continue to be bleak. While precipitation seems likely over the next week for the Delta region, much of the HRW wheat territory will likely not see any significant moisture.

agbiz0201

For corn, prices continue to slowly inch up reaching their highest level in 7 weeks. But, the lack of any real demand stimulus from exports or the ethanol sector has kept prices from catapulting higher. Even with concerns of dry conditions in Argentina, chances are they will still produce a record-large crop keeping US exports out of the global marketplace in the last half of the marketing year.

Log In or Sign Up to comment

COMMENTS

Receive the latest news, information and commentary customized for you. Sign up to receive Dairy Today's eUpdate today!

 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions