Sep 18, 2014
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January 2014 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.

 

Beans gain ground overnight

Jan 31, 2014

 Corn was slightly weaker overnight following Thursday’s sharp gains on booming exports. Front-month March beans were up 3 cents while wheat posted fractional gains in the night session.

Thursday’s export sales report showed astonishing high corn business for the week as old-crop sales topped 1.8 MMT, well above expectations of 750,000 MT at the high end. In addition another large sale of 127,000 MT was announced Thursday morning to an unknown destination. FOB corn basis offers at the Gulf held on Thursday following strong gains earlier in the week. Japan remains in the market for spring shipment corn and the Gulf remains short corn which is helping to support river market basis levels. Some ethanol plants are also showing signs of bumping up basis especially as more snow is expected in the coming week which could limit farmer deliveries.

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For soybeans, weekly export sales of 865,000 MT came in on par with trade expectations of 750,000 to 1,050,000 MT. However, the surprise in the numbers may have been the lack of any significant cancellations, with China being rumored to have cancelled US bean exports for South American origins. However, reports of bird flu in China may curb some demand, as well as the Lunar New Year celebration that has begun and will last the next week, cutting back on Asian business. Cargill announced on Thursday it would idle its Raleigh, NC facility this spring amid reduced demand for soymeal.  

In wheat, positive export sales helped wheat bounce off of its lowest level in over 3 years. US export sales for the week totaled 795,000 MT, well above expectations of 300,000 to 500,000 MT going into the report. In Australia, drought has been persisting for some time giving some concerns about wheat planting in another 4 months. Furthermore, meteorologists are starting to predict the threat of an El Nino later in the year, which would be linked to dryness in eastern Australia.  Overnight export tender business was quiet, with Lebanese government's grains buyer looking to purchase 25,000 MT of milling wheat.

Corn exports crush expectations

Jan 30, 2014

 Soybeans sold off further losing 4 cents in the overnight session following Wednesday’s sharp decline. Wheat managed to come back 4 cents and corn was up 2 cents.

For beans, harvest continues to be in the early phases in Brazil, but the first vessel of new-crop Brazilian beans was loaded yesterday at the Port of Paranagua. Average yield reported by a private firm for farmers in Mato Grosso was 47.3 bushel per acre. The weather in Mato Grosso is favorable for harvesting and farmers are working up to 20 hours a day to get the beans out of the fields. On the export front, China was rumored to have canceled 300,000 to 400,000 MT of US beans, which also is pressuring the bean market.

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In wheat, the market was off sharply on Wednesday following some penetration of key support on the technical charts. However, fundamentally, the US wheat market has not seen much in the way of big sales after big deals by Saudi Arabia and Egypt went mostly to foreign interests. Winter kill continues to be an issue in the US, with frigid temps expected to persist over the next week. But, it will be difficult to maintain that concern in the market in the face of large global supplies. Overnight, Jordan tendered for 100,000 MT of milling wheat.

For corn, good export activity of late has helped underpin the corn market. Along with regular buyers like Japan and Mexico, non-traditional buyers of Egypt and Spain have also bought significant quantities of US corn.  Corn export premiums at the Gulf were steady to firm on strong demand, with rival exporters charging more for their corn than the US. March and April premiums are up 10 or 15 cents a bushel this week.

WEEKLY EXPORT SALES (in thousand metric tons)

 

Actual

Expected

Corn

1,943.6

550-750

Soybeans

865.8

750-1,050

Wheat

796.9

300-500

 

 

Brazil Soy Crop Seen Bigger than USDA

Jan 29, 2014

 Grains were lower overnight in relatively quiet trade. Corn and beans were down a penny, while wheat gave up 2 cents in the night trade.

In beans, a USDA attaché has raised its estimate of Brazil’s soybean crop to 89.5 MMT, above USDA’s official forecast of 89 MMT. The attaché also raised its forecast of Brazil soy exports to a record 46 MMT topping USDA’s official figure of 44 MMT. However, "uncertainty persists in transportation logistics and global market prices," it said. "Transportation and logistical improvements from 2013 to 2014 are marginal and hence these improvements are expected to proffer only marginal relief," the report said.  A drier trend in parts of the country's crop belt in recent weeks has had little negative impact, the attaché said. "Parts of Brazil have experienced irregular rains in late December and early January.  The mild disruption in precipitation does not appear to have had any significant impact on production," the report said.

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In wheat, the US got a small chunk of the Egypt wheat deal announced on Tuesday. Egypt’s GASC bought 240,000 MT of wheat with most of it going to Russia, but the US getting a 60,000 MT deal for SRW wheat. France was shut out of the deal after the GASC lowered its moisture content requirement on the wheat to 13%, which could hamper any future deals for France. In the US cold temps continue which has been giving some mild support to the wheat market due to some chances of winterkill.

For corn, political unrest and icy cold weather is hampering the Ukrainian corn market. Ukrainian exporters are finding it difficult to get supplies as farmers there face logistical problems from ice and cold weather. Adding to the problem is the resignation on Tuesday of Ukraine’s Prime Minster and the ongoing political unrest. Currency values there are at a 4-year low against the dollar and farmers are holding grains back as a hedge against the risk. Slowing exports out of Ukraine should help the US cause in moving corn. In the US, basis levels found some support on Tuesday at key river terminals as Gulf basis levels inched higher. 

Can Surging Bean Exports Save this market?

Jan 28, 2014

Grains were mixed overnight with wheat up 3 cents a bushel, while corn and beans were unchanged to modestly lower.

Soybeans continue to lack conviction on price direction. Monday brought impressive exports with weekly inspections totaling 73.8 MB versus trade expectations of 50 to 58 MB. Also helping support the market was an announcement on Monday by USDA that a private firm had sold 183,000 MT of new-crop delivery beans to unknown destinations. However, a record-large South American crop continues to weigh on the market. Soybean premiums at the Gulf were weaker on Monday as Brazilian soy is offered at a steep discount to old-crop US beans. There continues to be Chinese interest in new-crop US soy, but sales have dropped off from the torrid pace of recent weeks. Next week is the Lunar New Year holiday, which will keep a lid on Chinese demand.

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In wheat, Saudia Arabia bought 715,000 MT of wheat on Monday with optional origin sources at the discretion of the sellers. Some of the wheat could come from the US but Europe, Australia, and Canada are part of the mix too. Late Monday, Egypt’s GASC announced another round of tenders to buy wheat. However, a moisture requirement of less than 13% could limit French wheat in the deal. Also supporting the market is on the ongoing winter freeze in the Midwest, although the overall risk seems limited to small sections of SRW wheat areas.

In corn, weekly exports were at 28.7 MB, at the high end of expectations of 23 to 28 MB. Also on Monday, USDA announced an old-crop sale of 119,888 MT to unknown destinations. This adds to the 370,000 MT of old-crop sales announced on Friday. River logistics in the US continue to be a struggle. Navigation on the Illinois is getting extremely difficult. Shippers are not able to assemble tows of more than 6 or 8 barges due to heavy ice accumulation, industry sources said. Two urea barges that were taking on water near Havana, Illinois, late last week were determined to have had their hulls damaged by gorged ice. 

Beans Struggle with SA Crop Looking Stron

Jan 27, 2014

 Corn was under modest pressure overnight while the bean and wheat market posted slim gains in the night trade.

Beans continue to be conflicted between positive demand in the export market, and an outlook for record large South American supplies hitting the market in coming weeks. In Brazil, ships are beginning to lineup to move the record large crop. On Friday, there were already 39 ships waiting at the No. 2 grain exporting port Paranagua and 11 in the top exporting port of Santos. A Brazilian export firm expects exports there to reach 2.5 MMT in February as compared to only 959,000 MT in the same month last year. However, in the US demand has not really shown signs of faltering yet. Friday’s export sales showed an impressive week of 1.6 MMT for old and new-crop deliveries. Also, U.S. exporters shipped a record amount of soymeal last week as farmers in Argentina, the top exporter of the animal feed, hoarded soybeans amid a plunging peso. U.S. exporters loaded out 398,591 MT of soymeal, primarily to Asian destinations such as South Korea, Thailand and the Philippines. That was the biggest weekly shipment based on records dating back to 1990, according to U.S. Agriculture Department data released on Friday.

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In corn, news continues to be limited to give the market something to be bullish about. However, Friday’s Cattle on Feed Report did show higher than expected cattle numbers. According to USDA Jan 1 inventory numbers were 95% of last year versus analyst expectations of 93.8% of last year going into the report. Corn basis levels saw modest support on Friday at export points as well as a few interior processors.  

For wheat, weekly export sales announced on Friday were not much to give the market a boost. Weekly wheat exports for old crop were at 421,400 MT, and were within expectations. Brazil was a big buyer of HRW with 112,500 MT. Overnight, an outlook for more bitter cold weather in the US, continued to lend mild support as the potential for some winter kill was possible.

Soy Exports Crush Expectations

Jan 24, 2014

 Soybeans came under selling pressure overnight with front-month March futures giving up 10 cents a bushel. Corn and wheat were down 2 in the night session.

Pressure from the upcoming South America crop continue to weigh on beans. Yesterday, the Buenos Aires Grain Exchange estimated Argentina's upcoming 2013/14 soybean harvest at 53.0 MMT, compared with 48.5 MMT last year.  Planting by Argentine farmers progressed by 2% during the week, according to the report, with 98.4% seeded as of Thursday.  Recent rains helped growers get their seeds into the ground during the week, it said. The rains were much needed after an extremely hot, dry December slowed planting and stunted development of young soy plants.  Overnight, a widespread area of thundershowers favored much of Cordoba, southern Santa Fe, southern Entre Rios, and north-central/eastern Buenos Aires with 1 to 3" totals common. This was very helpful for corn/soy and will limit additional crop stress to only 10 or 15% of the belt for now.

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For corn, news has been limited to get the markets out of their sideways trend of the past 6 weeks.  Overnight, China said they would keep rejecting U.S. corn shipments containing an unapproved genetically modified strain at least until the end of March, shrugging off pressure from Washington to swiftly approve the variety developed by crop chemicals giant Syngenta AG. Under Chinese regulations, the earliest approval of the  genetically modified MIR 162 strain could be late March, when the agriculture ministry's biosafety committee holds its annual meeting. If no decision is made, the next review would be in June. On a more positive note, exports are saying the US corn prices are now fairly competitive against rival countries. US corn prices are now at a discount to Ukraine for March on out. The regulars like Japan have been booking springtime shipments. Demand from Egypt, which normally buys from Ukraine, has also been strong, they say.  Overnight, a group of Israeli private buyers has purchased about 90,000 MT of corn which can be sourced optionally from the Black Sea region or the United States in an international tender.

In wheat, the market found support yesterday from a large Saudi tender of 600,000 MT and frigid temperatures in the Eastern Cornbelt which could put at risk some of the US SRW wheat crop. Overnight, Libya bought 30,000 MT of wheat from the Baltic Sea region.

WEEKLY EXPORT SALES (in thousand metric tons)

 

Actual

Expected

Corn

693.4

250-650

Soybeans

1,673.1

300-625

Wheat

429.4

300-600

 

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.

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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.  

Beans Steady Overnight, But Can It Last?

Jan 22, 2014

 Beans were having a hard time holding on to gains in the night session following Tuesday’s 36 cent pummeling. Corn and wheat continued to buck the bearish bean trend posting 2 cent gains in the overnight session.

Soybeans fell hard on Tuesday thanks to widespread rains in Argentina over the extended weekend, as well as an outlook for more rain events over the remainder of the week. After a period of hot and dry weather, rains in Argentina are a welcome change during this critical crop development time. Adding to the negative tone was rumors that a bean sale to China had been switched from US to South America. Weekly export inspections were the only bright spot on Tuesday but did little to slow the slide, as weekly exports came in above expectations at 56.6 MB for the week, as compared to 55 to 55 MB expected.

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In corn, the market has been able to hold on to modest gains in the wake of the bean decline. But, sharply higher prices in the near-term seem unlikely as  worries about slowing sales to China persist; China imported 637,045 MT of U.S. corn in December, down 19% from November, official customs data showed, as Beijing has been rejecting U.S. cargoes due to the presence of an unapproved genetically-modified strain. Weekly export inspections came in at 29.8 MB versus trade expectations of 20 to 25 MB. Only 137,000 bushels were headed for China this week. Corn basis was weaker in eastern rail markets and at a river terminal on the upper Mississippi. The softer tone in basis and sluggish futures  resulted in a fairly quiet day in the cash corn market on Tuesday.

For wheat, export inspections on the week were disappointing with only 15.5 MB as compared to expectations of 17 to 22 MB going into the report. Overnight tender activity seemed fairly quiet although Algeria bought 500,000 MT. Purchases covered both April and May and the origin of the wheat was optional but France was thought most likely to supply some of it. 

Beans Slide on South American Rains

Jan 21, 2014

 Soybeans soldoff sharply in overnight trade with front-month March down 20 cents a bushel and falling below $13 for the first time in a week. Corn also followed in sympathy giving up 2 cents a bushel, while wheat was bucking the trend, holding on to fractional gains in the night session.

U.S. soybeans eased on Tuesday, falling further from last week's three-and-a-half week top as forecasts of rains in Argentina eased concerns over yield losses arising from dry weather. Rains fell in Argentina over the weekend, and there are two possible rain events in the cards over the next 4 days. Brazil weather looks favorable as well. However, on the demand side US beans continue to be a hot commodity with both old and new-crop sales to China lighting up in the past week. Year-to-date US export sales total 1.52 billion bushels, 2% more than USDA's export estimate for all of 2013-14, with 7 months to go in the marketing year. Will cancelations start to show up or are we going to get higher exports than projected and possibly bullish movements in beans? On Friday, Informa lowered their 2014 US soybean planting forecast to 81.3 million acres from their previous forecast of 81.9 million acres. If realized, this is sharply higher than last year’s plantings of 76.5 million.

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In corn, Friday brought unexpected business to the US with Egypt buying 204,000 MT for old-crop delivery.  On Monday, another South Korea feed group bought 60,000 MT of US corn. South Korean importers have in past weeks made substantial purchases of U.S.-origin corn originally destined for China, where imports are being disrupted by a dispute about non-approved genetically-modified grains. Informa’s corn plantings estimate for 2014 came in at 93.3 million acres, higher than their previous estimate of 91.8 million, but well below the 95.4 million planted by US farmers in 2013.

For wheat, export business seems to be picking up around the world as prices have eroded in recent weeks. A South Korean feed group bought 118,000 MT of optional-origin feed wheat overnight.  Bangladesh bought 50,000 MT of wheat from Thailand. And, heavy-hitter China is rumored to be seeking cargoes for April shipment. While the world wheat business still remains highly competitive in the face of large world stocks, it could be encouraging for market bulls to see a rash of new export activity to help reverse the recent price slide.  

Markets Give Back Gains Overnight

Jan 17, 2014

 Grains were lower overnight taking a break from the recent runup, especially in beans which is on track for its largest weekly gain since November.  Just before the break in night trading, corn and wheat are  down 3 cents a bushel while nearby beans are off 6 cents a bushel.

Soybeans have seen excellent export sales data in the past day. Thursday’s weekly export sales reported -showed an impressive 1,226,000 MT of soybeans purchased, which compared to expectations of  750,000 to 1,050,000 MT. Also on Thursday USDA announced new sales of 465,500 MT to China: 60,000 MT for old-crop 2013/14 and 405,500 MT for 2014/15. While demand side news is positive, South America’s crop gets closer to maturity as farmers in Brazil’s top two producing states of Mato Grosso and Parana start harvesting. In Mato Grosso the soybean harvest is approximately 2-3% complete with the most advanced harvest in the western regions of the state. In Parana, the soybean harvest is less than 5% complete and most of the advanced harvest is also in the western regions. The results are mixed so far with early maturing beans in Parana coming in with low yields, while farmers in Mato Grasso reporting better than expected yields.

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In wheat, Egypt’s GASC announced they had bought 295,000 MT from France, Russia, Ukraine and the US. The US deal involved 60,000 MT of SRW wheat at $264.75 per MT.  Overnight, Japan made a snap tender to buy Canadian spring wheat. India's state-run trading company MMTC  has issued an international tender to sell and export 120,000 MT of Indian milling wheat. Indian state trading firms including MMTC, STC and PEC have issued large numbers of international tenders in past months to reduce India’s huge state wheat stocks after a bumper crop.

For corn, Thursday’s export sales report was well above expectations at 821,000 MT as compared to 300,000 to 550,000 MT expected by trade analysts. However, there remain lingering effects of China backing out of US corn purchases. Thursday, USDA announced the cancellation of 126,000 MT of previous sales.  Overnight, Taiwan's MFIG corn purchasing group bought 60,000 MT of corn to be sourced from the United States. Large volumes of U.S. corn are being taken by Asian importers after China rejected many U.S. shipments . 

Beans Higher on Demand Strength

Jan 16, 2014

Corn and wheat were fractionally higher in overnight trade, while beans were trying to hold on to a 3-cent gain after being up as much as 6 cents in the night session.

Wednesday brought more positive fundamentals for beans with China buying 106,000 MT of new-crop 2014 US soybeans. Also bullish was the NOPA crush report which showed total beans being crushed at a record high 165.384 MB versus trade expectations of 160 to 165 MB. In South America, recent weather models show wetter for Argentina for early next week. The rain event this weekend will important for Argentina as the corn crop there is reaching the pollination stage.

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In corn, weekly ethanol production was lower with total supply for the week reaching only 868,000 BPD, off 51,000 BPD from last week and the lowest total since October.  At river terminals, basis levels have been off thanks to higher farmer deliveries and barge rates inching up from logistics problems.   River logistics north of Cairo, Illinois, remain a mess. The Illinois River has problems with ice buildup and lock repairs at LaGrange, while low water on the mid-Mississippi and restricted navigation around Thebes, Illinois, are slowing movement on that waterway. Vessel backups at Cairo are "days long" due to the upriver shipping problems.

For wheat, the Egypt’s GASC announced another tender on Wednesday. SRW offers from the Gulf could again be limited due to a lack of capacity and the fact that it would be difficult to source 2.3 million bushels in short order and get it to the Gulf, traders said. Also, they said fobbing capacity is tight during that LH Feb period due to big corn and soy loading commitments. But if someone offered, the price would probably be very competitive, as US prices have taken a sharp down-turn in the past week.

 WEEKLY EXPORT SALES (in thousand metric tons)

 

Actual

Expected

Corn

821

300-550

Soybeans

1,226.8

750-1,050

Wheat

401.9

350-600

 

Will Wheat Find New Export Biz

Jan 15, 2014

 Soybeans held on to slim gains overnight after another round of higher prices on Tuesday. Corn and wheat continued to struggle with modest losses of 3 and 1 cent respectively.

For beans, prices have rallied to their highest level since Christmas, but seem to be lacking conviction to the upside. After trading as high as $13.16 in Tuesday’s day trade for March futures, prices have fallen back and consolidated around the $13.07 level. Today brings the NOPA monthly crush report for December with traders expecting a 2.3% increase over November with an average estimate of 163.9 MB and a range of expectations from 160 to 166.5 MB.

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In corn, basis levels continue to move lower with Decatur posting a 4-day in a row of lower basis quotes. Since Friday’s report, spot basis in Decatur is off 23 cents a bushel. Overnight, South Korea's largest animal feed maker Nonghyup Feed Inc. (NOFI) issued an international tender to buy up to 140,000 MT of corn and 70,000 MT of feed wheat. The tender deadline is Thursday, Jan. 16, with optional worldwide origin sought for May arrival.

For wheat, the recent slide in US futures prices has some buyers looking for new supplies. Brazil mills are rumored to be seeking US HRW, and with Argentina only shipping 500,000 MT of wheat in the near term this could spell more business for the US.  Further, Argentina wheat is reported to be $50/MT higher than US HRW wheat, which could fuel more buying from the US. Overnight, French government officials projected 2013/14 soft wheat ending stocks at 2.7 MMT, up from 2.4 MMT seen last month, while exports were cut from 11.8 MMT in December to 11.5 MMT in January. Meanwhile, Ukraine raised its overall grain harvest projection for 2013 to 62.9 MMT, up from 46.2 MMT in 2012. 

Beans Close in on $13

Jan 14, 2014

 Soybeans continued to move higher overnight with front-month March closing in on the psychological $13 mark. Corn and wheat dipped in overnight trade, giving up 2 cents a bushel.

On Monday, soybeans were bolstered by more export sales when USDA announced a 140,000 MT sale for old-crop beans to unknown destinations. The weekly export report also showed better than expected export inspections of   59 MB, 9 MB above the high end of expectations. On Wednesday, the National Oilseed Processors Association's will report monthly crush figures, with analysts looking for 163.9 MB in December, up 2.3%.

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In corn, weekly exports were disappointing at 20.9 MB, below expectations of 22 to 29 MB. Farmer sales of corn were reportedly strong on Monday following the recent rally, which has helped soften some basis levels around the country. At Decatur, spot corn basis was off 4 cents a bushel. Futures prices have shown signs of stalling after the price jump on Friday. Although smaller than expected, the US crop is still plenty large and with global competition heating up it may be difficult for corn to maintain its strength. Several analysts continue to expect the market to make a return to the $4 mark at some point in the future.

For wheat, Argentina announced it will be exporting 1.5 MMT of their new-crop into the global market, with 500,000 MT being exported immediately. The 1.5 MMT mark if realized would be below USDA’s latest forecast of 4 MMT of exports for Argentina. India’s state-run trading house PEC sold 120,000 MT of wheat from the Indian west coast port of Kandla was $281.31 a MT. PEC is offering the wheat for shipment between Jan. 20 and Feb. 25 as part of the Indian government's plan to sell 2 MMT of the grain overseas by March as it attempts to reduce bulging stocks.

Corn Continues Higher to Start the week

Jan 13, 2014

 Corn found modest follow through buying overnight following Friday’s big rally. In the night session corn was up 2 cents and wheat was up 3 cents. Soybeans drifted lower giving up 5 cents a bushel.

Friday provided a big surprise in corn when USDA revised lower their final US corn production number for 2013. Thanks to a 2 bushel per acre yield drop, corn production came in at 13.925 BB, far below analyst expectations of 14.066 BB. As a result, carryout stocks for 2013 were slashed to 1.631 BB, below the trade estimate going into the report of 1.861 BB. Overnight, South Korea's largest feedmaker Nonghyup Feed Inc. purchased 137,000 MT of U.S.-origin corn originally destined for China where imports are being disrupted by problems with non-approved genetically-modified grains. NOFI has also delayed imports of a further 180,000 tonnes of corn imports to free up storage space for the 137,000 tonnes, which are new purchases and not switches of previous deals into U.S. origin.

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For soybeans, production and stocks were marginally higher in Friday’s report and although beans were carried higher by the bullish enthusiasm in corn, it seems like traders will return to assessing conditions in South America, which seem to be poised for a record-large crop. Soy harvesting is picking up speed in Brazil's top producing state Mato Grosso, and farmers in No. 2 state Parana have started their field work, local farm agencies said on Friday. Mato Grosso farmers have harvested 1.9 percent of their soybeans, above the 1 percent collected a year earlier, the state's farm institute IMEA said in its first report of the 2013/14 harvest season. Harvesting has progressed the most in the western part of Mato Grosso, where 8.4 percent of soybeans planted have been collected. Farmers prioritized early soybean planting this year, even with less than ideal rains. That gives them time to plant a second crop of corn, cotton or more soy. Early planted soy usually has comparatively low yields, and the very first beans planted got irregular rainfall. A farmer in Mato Grosso's Sapezal municipality said productivity would improve as the harvest progresses.

In wheat, Friday’s report showed higher US stocks but smaller US winter wheat seedings for 2014. The US acreage for winter wheat for harvesting in 2014, at 41.9 million acres, is 3% lower than last year, which points to a diminished supply of US wheat in 2014/15. Some traders think the negative reaction in wheat may be a bit overdone, but near term lacks any strong demand stimulus. Egypt’s GASC tendered for more wheat on Friday, but the US is unlikely to garner any of the export business. 

Brazil Raises Corn, Bean Forecast

Jan 09, 2014

Corn maintained its recent contract low at $4.15 overnight with a 2-cent decline while beans managed an 8-cent advance. Wheat posted a modest 1-cent gain in the night trade.

Monsanto said yesterday they expect Q1-2014 corn seed and trait sales to be off 7% to $1.05 billion while soybean sales are expected higher by 16% to $267 million in quarter. Monsanto President Brett Begemann said that U.S. farmers are ordering seeds for spring planting against a "lower expected planted acreage base" for corn. "We see some shifting in acres between crops," he said. On Wednesday, the EIA ethanol report showed weekly production up 6,000 BPD TO 919,000 BPD, while stock holdings of ethanol were up 556,000 BBLS to 16.14 MLN BBLS, their highest level since September. Ethanol margins continue to hold, up sharply higher from last year in spite of recent erosions in DDG prices.

2014 01 08

In Argentina, up to 50 millimeters of rain soaked corn and soy fields in the northern part of Argentina's farm belt refreshing areas hit by an unusually hot, dry December.  Scattered showers and cooler weather will improve conditions in the breadbasket province of Buenos Aires over the rest of the week as Isolated storms will provide varying amounts of rain on Thursday. More importantly, temperatures are falling, which helps lower the rate of ground water evaporation. Overnight, Brazil’s CONAB projected the country’s corn crop at 78.97 MMT, up from 78.78 MMT projected in December, while the soybean crop is pegged at 90.33 MMT versus 90.03 MMT projected in December.

US wheat continues to be pressured by large global supplies. Prices currently sit at around 2 year lows, with only a modest lift given in the wake of the severe cold snap in the US which might crimp production from possible winter kill. The EU saw their two week total exports of soft wheat hit 988,000 MT, bringing the annual total to 14.4 MMT.

China Relaxes DDG Imports

Jan 08, 2014

 Wheat was a leader to the upside gaining 3 cents in the overnight session with corn posting a modest 1-cent advance. Soybeans failed to follow, giving up 2 cents in the night trade.

In corn, a bit of bright news finally came from China when it was reported that Chinese DDG inspections have improved in recent days. Last week, there was 20-25 percent of imported DDGs passing the customs inspection and the passing rate has increased to 40-50 percent this week. China accounted for 40% of US DDG business in the 2012/13 marketing year. Domestically, DDG prices in Iowa dropped $40 per ton (18.4%) between the weeks of 12/19/13 and 1/3/14 following recent DDG rejections. In turn, this pushed ethanol margins down by 41 cents a bushel, but they still remain well above last year’s levels. Estimates ahead of Friday’s USDA reports show analysts look for 14.07 BB of production versus 13.99 previously and ending stocks of 1,861 MB as compared to 1,792 MB last month

2014 01 08

In soybeans, even a large sales to China Tuesday morning did little to spur market sentiment. Tuesday, USDA announced the sale of 350,000 MT to China with another 5 or 6 cargos rumored to have traded over the course of the day. Domestically, basis levels for beans and corn have been on the incline with slow farmer sales crimping the pipeline. Analysts look for Friday’s USDA reports to show 3.279 BB of US production as compared to 3.258 BB and 149 MB of ending stocks versus 150 MB last month

For wheat, Iraq’s state grains board has issued an international tender to buy at least 50,000 MT of wheat to be sourced either from the United States, Canada or Australia. The tender closes on Jan 19 and offers must remain valid up to Jan. 23, traders said.  In its previous tender reported on Dec. 19, Iraq's state grain board purchased 350,000 MT of wheat all of Australian origin.  India's State Trading Corp continues to push wheat to the global market, selling 160,000 MT at $282.62 per ton way above a floor price of $260 per ton.

Markets Take Lower Turn Overnight

Jan 07, 2014

 Grains turned lower overnight with soybeans leading the complex on a 6-cent decline. Corn and wheat followed with 1 and 3- cent losses, respectively.

In corn, basis levels were firming on Monday at some key buyers as slow farmer movement during the cold snap has helped tighten pipeline supplies. The Illinois River remains open to navigation despite severely cold weather. Traffic is restricted to one-way only for about 10 miles on Peoria Lake due to ice buildup and barge tow widths are limited to 105 feet through the river's locks, versus 110 feet normally, due to ice, according to the Army Corps and the Coast Guard. Otherwise, the barge industry is simply trying to keep a channel open on the Illinois by keeping a steady flow of boats moving through. Estimates ahead of Friday’s USDA reports show analysts look for 14.07 BB of production versus 13.99 previously and ending stocks of 1,861 MB as compared to 1,792 MB last month.

In soybeans, basis levels were up at a few key crushing facilities but lower soymeal prices brought on by the slide in DDG prices has kept processor bean bids in check.  Argentina's recently planted corn and soy crops is expected to be  hurt by a fresh heat wave in the days ahead until rains hit the Pampas farm belt late in the week, a local meteorologist said on Monday. The Pampas agricultural belt was hit by weeks of hot, dry weather in December that raised concerns about yields before Jan. 1 rains snapped the heat wave. Analysts look for Friday’s USDA reports to show 3.279 BB of US production as compared to 3.258 BB and 149 MB of ending stocks versus 150 MB last month

For wheat, cold temps did little to lift prices as the brunt of the cold snap is in the Eastern Cornbelt. Temperatures in the Plains have been less extreme and the presence of relative widespread snow cover should help mitigate damage. Overnight, Bangladesh issued a new tender to buy 50,000 MT of wheat after it received no offers in a previous tender on the same quantity. 

Frigid Temps Give Grains Something to Rally On

Jan 06, 2014

 Grains started the week on positive footing with concerns about frigid temps impacting the dormant winter wheat crop, and wheat futures gaining 3 cents a bushel. Corn and beans were up 2 cents a bushel.

The Midwest continues to endure the lowest temperatures in two decades, with thermometer readings at negative values and wind chills in the -30 to -50F range. Countless cash grain elevators are closed on Monday due to the extreme cold. Further, cash traders report that Midwest river conditions continue to decline. Low water on St. Louis and icing on the Illinois River is raising concerns about grain movements this coming week.

In wheat, the extreme conditions pose a risk to portions of the dormant hard red winter wheat crop, particularly in drier areas of the region, meteorologists and agronomists said on Friday. Low temperatures on Monday morning were expected to hit -5F to 15F in parts of Kansas and Nebraska, cold enough to destroy some crops through winterkill.  Snow cover will remain quite thin across much of Nebraska and north-central Kansas, and some extensive winterkill damage is likely there. In international news, Egypt’s GASC on Friday bought 545,000 MT of wheat from Ukraine Russia, Romania and France.   Overnight, a flour mill in Oman has issued an international tender to purchase 40,000 MT of Indian-origin wheat.

For soybeans, Friday’s weekly export sales tally showed a robust 934,000 MT of new business. This was well above trade expectations and 31% higher than the previous week.  Rains will fall this week over southern Brazil, where soybeans are still developing. In the center-west, rains will be more isolated, permitting harvesting. Farmers started cutting beans in top-growing Mato Grosso state around Christmas and progress was in line with the previous year. Overall, rainfall has been adequate and the Brazilian crop is shaping up to be a record of about 90 MMT. Rains last week in No. 2 soy state Parana and No. 3 Rio Grande do Sul, where harvesting starts later, alleviated concerns of dryness hurting yields.

 

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