Sep 20, 2014
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February 2014 Archive for Cash Grain Insights

RSS By: Kevin McNew,

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.


Swan Song for Bean Market?

Feb 28, 2014

 Soybean prices were fairly quiet overnight following Thursday’s 60-cent trade range, which ended with the bean market to the downside. In the night session, beans were off 1 cent while corn gained 2 cents. Wheat futures recovered 6 cents from Thursday’s sharp selloff.

In beans, the market continues to see-saw between the near-term strength in export demand and prospects of large supplies from South America. Thursday’s export sales report again showed net gains to sales of over 300,000 MT for old-crop beans. Year-to-date total commitments of US soybeans are at 43.4 MMT with over half of the marketing year remaining, which is far higher than the 41.1 MMT USDA export forecast for the entire marketing year.  In Brazil, 9-inches of rain in the soy regions there have caused massive flooding and stalled crop harvests. However, longer term the prospect of large supplies should keep deferred prices on the defensive. Yesterday’s early morning bean rally saw fairly hefty farmer sales for new-crop November beans, which eclipsed the day ay $11.82 before falling back to the $11.50 area. Technically, the market showings signs of a reversal to the downside following Thursday’s move.

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For corn, the market continues to be relatively quiet, although export business has been robust of late. Year-to-date export commitments are at 89% of the annual forecast for USDA, which is substantially higher than the 5-year average of 65% for this time of year. Furthermore, corn outstanding sales – which is the quantity committed for but not shipped yet – is a staggering 18.8 MMT but in the last 5 years the average outstanding sales for this time of year is 10.3 MMT, and the highest year in 2011 was 13.3 MMT. Without cancellations, it seems likely that the market will have to work hard to get that sizable quantity moved to the export market, either by basis or futures. Overnight, an Israeli buyer bought 60,000 MT of corn believed to be sourced from the Black Sea.

In wheat, as expected Egypt’s GASC bought non-US wheat in its latest tender, acquiring 295,000 MT from Russia and Romania.  Japan will raise the price of imported wheat to domestic millers from April by an average of 2.3 percent from the previous six-month period after higher import costs of Canadian wheat and a sales tax rise, a farm ministry official said on Friday. Japan, the world's sixth-biggest wheat importer, buys the majority of its milling grain through import tenders for five types of feed quality wheat and sells to domestic millers at prices set twice a year.  

OC Bean Export Sales Better than Expected

Feb 27, 2014

 Soybeans continues to climb overnight with front-month March futures adding 6 cents a bushel, and trading above $14.10. For corn and wheat, prices continue to falter with both markets giving up 2 cents a bushel in overnight trade.

Brazil's crushing association, Abiove, is standing by its forecast for a record crop of 88.6 MMT despite concerns over heavy rain in top growing state Mato Grosso and dry weather in No. 2 growing state Parana. But the association, which added 1 MMT to its 87.6 MMT forecast on Feb. 19, doesn't expect to raise it further. In Brazil, heavy rains are also disrupting transportation as flooding and delays along the "soybean highway" have slowed farmer deliveries to the port. The dry spell in the Brazil growing region over the past few days is expected to end with rains returning and expected to persist over the next week. This morning, USDA's export sales report showed over 300,000 MT of old-crop bean sales, even though many had been looking for net cancellations this week.

In wheat, yesterday Argentina announced an increase in their export licenses by 500,000 MT which could potentially trim Brazil’s wheat purchases from the US. Also yesterday, Egypt’s GASC announced a fresh round of tenders to buy various wheat types, but it seems unlikely that the US will garner much of that business. Earlier in the week Egypt canceled 110,000 MT of US wheat orders. High freight and lack of capacity at US ports are expected to keep US interests limited in this latest tender. The last Egyptian tender put US freight to Egypt at about $40 MT as compared to $17 MT for Russia.

For corn, prices have found little support in the recent soybean rally as nearby March trades back down to the $4.50 level. Basis levels have continued to inch lower as well in the face of heavy farmer deliveries. In ethanol, weekly production figures came in at 905,000 BPD, up 2,000 BPD from last week’s total.

WEEKLY EXPORT SALES (in thousand metric tons)














Bean blitz takes a break overnight

Feb 25, 2014

 Soybeans retreated in the overnight session giving up 6 cents a bushel. Wheat and corn were mixed with prices mostly unchanged in the night trade.

Beans have been on a tear in recent sessions thanks to weather problems in South America. In the key state of Mato Grasso in Brazil rains have been intense over the last week dropping 10 inches of precipitation as farmers there get ready to harvest. Overall, 30% of Brazil’s crop has been harvested, 5% below the pace this time last year. A large swath of rain is expected over key producing areas in the coming days which could further exacerbate the problems. Overnight, Brazil announced that its number 2 soybean port Rio Grande would be down for two weeks as a result of an accident. For the US, this has helped prop-up not only nearby prices but pushed May & July futures higher as well as the US export window could widen. On Monday, USDA released their export inspections report which showed beans at 1.27 MMT. Although this was at the low end of trade expectations of 1.2 to 1.5 MMT, it nonetheless is an impressive volume for this time of year.

In corn, prices have shown little upside after achieving the $4.50 mark last week. News that Ukraine’s political unrest could be ending has some thinking the export market there could improve. In the US, weekly export inspections totaled 791,497 MT, which was on par with trade expectations of 700,000 to 825,000 MT. Overnight, a South Korea feed group announced a tender to buy 70,000 MT of corn.

For wheat, weekly export inspections of 427,000 MT were on par with expectations of 350,000 to 450,000 MT. Canada continues to struggle with grain logistics, as Canada Ag Minister Gerry Ritz said railways there are delivering grain only to British Columbia ports for the short term, and not to the US or Thunder Bay, Ontario.  Overnight, the Taiwan flour millers association announced a tender to buy 83,150 MT of US milling wheat, while a South Korea feed group announced a tender to buy 60,000 MT of feed wheat from any origin. China's wheat imports soared 305% year on year to reach 725,942 MT in January. The country mainly imported wheat from Australia, US, Canada and Kazakhstan.

Export Sales Show Slowing Pace

Feb 21, 2014

 Trade was mostly quiet overnight with all three grains giving up about one cent in the night session.

Yesterday’s USDA acreage estimates met with a bit of skepticism by analysts, as combined acreage for all principal crops was lower.  But, analysts contend that last year’s high prevented planting numbers, combined with an added one million acres coming in from CRP, will lead to crop acreage numbers higher than expected. This morning, USDA also put out supply and demand balance sheet estimates for new-crop 2014/15. Not surprising, USDA has penciled in higher ending stocks in all three grains for the next marketing year as compared to the current year. In corn, assuming a 165 yield and 92 million acres planted, USDA projects ending stocks to reach 2,111 MB next as compared to 1,481 MB this year.  Wheat shows a modest expected increase in stocks from 558 MB this year to 587 MB next year. But, the biggest change is expected on the soybean side. Here, USDA looks for stocks to top out at 285 MB up from 150 MB this year, assuming 2014 acres of 79.5 million and a US average yield of 45.2.

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In international news, export tender activity has slowed of late on the recent runup in prices. Asian wheat importers reduced purchases this week as a recent jump in global prices to a two-month top curbed demand from top importers who are looking to cover supplies for May shipments.  Benchmark U.S. wheat futures WH4 climbed to $6.20-3/4 a bushel on Thursday, highest since December. Political unrest has sent the currency there in a free fall which has led farmers to hoard their grain supplies.

This morning’s export sales report was mostly disappointing with wheat and corn coming in at the low end of expectations. Although soybeans beat expectations, it was  solely due to large new-crop sales of 749,000 MT as only 86,300 MT for old-crop. China canceled 145,600 MT of old-crop sales an unknown destinations also canceled 268,500 MT.

WEEKLY EXPORT SALES (in thousand metric tons)















USDA sees 2014 soy acres below trade expectations

Feb 20, 2014

 Front month March beans fell 8 cents a bushel, taking it below $13.50 as improved weather seems to be the norm in South America. Corn and wheat followed with 2-cent losses in the night trade.

This morning, USDA’s chief economist Joe Glauber resented the first outlook for 2014 crops. The soybean forecast is for 79.5 million acres, up from 2013 actual plantings of 76.5 million acres, but slightly below recent analyst estimates of 80 million acres.  On Wednesday, Hamburg-analyst Oil World cut its Brazilian soybean forecast to 85 MMT from 89.5 MMT. However, recent rains seems to be helping the situation there. Southern Brazil soy region forecast calls for slightly wetter conditions on Friday and next Wed-Thurs to limit late crop stress. Brazil soybean region received 0.25 to 1.5 inch of rain in the past 24 hours, some areas saw more, 40% coverage and the forecast calls for 0.5 to 2.5 with 75% coverage over the next 5 days.

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In corn, USDA pegged 2014 plantings at 92 million acres, off from 94.5 million in 2013. USDA also suggested only modest growth in ethanol over the next 8 years. University of Illinois economists have suggested that an EPA cut in the ethanol mandate is unlikely to happen based on prices for ethanol RINS. In recent days, ethanol RIN prices have risen sharply, suggesting traders believe there will be a need for the RINS to meet the normal mandate of 14.4 billion gallons, and not the lower 13 billion gallon proposal which would make RINS worthless. The EPA received over 15,000 comments on the 13 billion gallon proposal, and is expected to announce a final rule in spring or summer.

For wheat, the HRW market continues to be bolstered by demand from Brazil and HRS is benefitting from logistics problems in Canada. Wheat importers are largely covered through May and were expected to revert to hand-to-mouth buying as they await the next harvest, traders said. Grain exporters are also monitoring developments in Ukraine, where shipments have so far not been impacted by the unrest in Kiev. However, traders there expect prices to rise domestically which could hurt Ukraine’s competitiveness in the world market. At the USDA conference, the agency projected 55.5 million acres of wheat in 2014 versus 56.2 million in 2013.


Beans Hold Gains on Strong Exports

Feb 19, 2014

Grains were mixed in a quiet overnight session following Tuesday’s sharp rally in soybeans. Corn and wheat had fractional losses while March soybeans managed to hold on to $13.60 with a small one-cent gain in the night trade.

Soybeans continue to be bolstered by strong exports. Weekly export inspections came in at the high end of expectations with 1.47 MMT for the week. However, monthly crush figures as reported by NOPA were lower than expected with January crush at 156.9 MB, off from December’s value of 165.4 MB and below the trade estimate of 162.4 MB going into the report. As futures has rallied, farmer sales continue to pickup with many buyers fading on basis following yesterday’s sharp move. Palm oil is also providing some strength to the bean oil market. Overnight Malaysian palm oil futures rose for the sixth day in a row as stronger export demand and concerns of dry weather curbing output buoyed prices to their highest level since September 2012. Market participants said the dry weather in Malaysia and Indonesia, where most of the world's oil palm is grown, could hinder production and tighten supplies of the edible oil which is used to make soaps to cookies and biofuel.

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For corn, export inspections were stronger than expected at 827,600 Mt versus trade expectations of 545,000 to 675,000 MT going into the report.  Ice along the Illinois River continues to hamper export movements. Still no offers for Illinois River barges until at least next week with ice forcing width restrictions forcing width restrictions on two locks and slowing traffic on the waterway, according to the Army Corps of Engineers, Rock Island (Illinois) district. Bids were flat at 600 percent of tariff on the Illinois while costs increased by 15 to 25 percentage points to 460 on 500 on the Mississippi River at St. Louis.

In wheat, Ag Canada expects farmers there to plant less wheat in the coming year following the bumper crop in 2013. According to their projections, they expect 24.7 million acres to be planted in 2014 off 6% from 2013. Overnight tender business was slow, with Japan announcing that they received no bids on their tender to buy 120,000 Mt of feed wheat. China sold 413,016 MT or 68.9% of the 599,756 MT of reserve wheat available at an auction on Wednesday, according to the National Grain and Oil Trade Center. The transaction rate is higher than the 60.7% at the previous auction last week. Transaction rates at domestic reserve wheat auctions have been increasing in the past several weeks as flour mills and traders are active in wheat buying on higher expectations for prices.


Beans Rally on Brazil Crop Losses

Feb 18, 2014

 Soybeans started the week in positive territory with March futures once again taking on the $13.50 mark after advancing 12 cents in overnight trade. Wheat and corn also advanced with more modest 2 cent gains.

For beans, Brazilian consultancy AgRural shaved 1.8 MMT off their estimate for Brazil's soybean crop on Monday, saying drought in much of the country in recent weeks had reduced yields. AgRural expects a crop of 87 MMT, down from 88.8 MMT in previous projections. The drought had not hurt top producing state Mato Grosso, however, where the harvest is now 37% complete, according to AgRural's weekly report. Recent rains may help mitigate losses though and could help boost yields of late-planted beans. Today, the National Oilseed Processors Association's will release their monthly report for January which is expected to show 162.4 MB crush, down 1.8% from December, a Reuters poll of nine analysts showed. NOPA reported that its members crushed 165.384 million bushels in December, the highest monthly figure in NOPA records dating back through 2002.

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In corn, markets have found modest support of late from growing US exports and a tighter old-crop stocks situation. However, overnight Libya bought 30,000 MT of Ukraine corn for immediate spot shipment. Ukraine has ample corn supplies bought logistical problems have hampered their ability of late to move it to international markets. February exports are expected to be only 2.7 MMT for all grain, versus 4.7 MMT in December.  If Ukraine begins to move more corn, this likely will hamper US exports in the latter half of the marketing year.

For wheat, front month March futures is trying to hold on to $6 at the close for the first time since early January. A strong Euro currency is helping keep European wheat less competitive in the world market.  However, global supplies of wheat continue to be adequate. French winter wheat is 75% good to excellent, which is up from 66% this time last year. 

Bean Rally Takes out $13.50

Feb 14, 2014

 Soybeans continued to rally overnight gaining 8 cents and eclipsing $13.50 for the first time since September. Wheat was also strong to the upside advancing 7 cents while corn lagged behind with only a 2 cent gain.

Soybeans continue to find support from strong short-run demand. Although Thursday’s export sales were below expectations, there continues to be buyers of US beans when many traders had expected it to dry up completely with Brazil beginning to harvest.  Total bean sales year-to-date of  43.2 MMT far exceed the 41.2 MMT forecast for the entire year by USDA.  Also helping give the market some upside was a forecast by USDA for long-term supply and demand showing 2014 soybean plantings at only 78 million acres, while some in the trade are expecting that number to come in at 80 million in USDA’s first survey at the end of March.

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For corn, USDA’s 2014 planting numbers were higher than expected at 93.5 million. The big shocker is an ending stocks projection for 2014/15 of 2.6 billion bushels, a big jump from current stocks, just under 1.5 billion bushels. If realized, that kind of stocks would likely push corn futures into the mid $3 level. Corn exports continue to benefit from lack of competition from Ukraine. The ag minster their reported that Feb exports will continue to be slow with corn exports expected to only reach 2.4 MMT for February.  In January, Ukraine grain exports fell by 40% month-on-month mainly due to port and rail issues which limited movement.

For wheat, flooding in Europe and dry weather in the US Plains is helping to give a bit of a lift to wheat prices after they hit a3-year low last month.  However, India expects to harvest a record crop in 2014 with the ag minister there projecting production to top 95.6 MMT, up from 92.5 MMT projected by USDA in 2013. India already has burdensome stockpiles of wheat and continues to aggressively move supplies to the world market.  Overnight, Iraq announced a tender to buy at least 50,000 MT of wheat from the US, Canada or Australia.


Beans come up short on Weekly Exports

Feb 13, 2014

 Soybeans were rallying back to the $13.30 mark in the overnight trade, but may selloff thanks to weaker than expected weekly exports. Corn was up 1 cent while wheat gained 2 cents.

For soybeans, Wednesday brought an announcement of China cancelling 272,000 MT of old-crop US beans, but at the same time buying 240,000 MT of new-crop US beans. On Thursday, China has begun testing imported U.S. soybean cargoes at the southern province of Guangdong for contamination with the unapproved genetically-modified MIR 162 strain of corn. Weather in South America also showed signs of improving putting the bean market under pressure. Most Brazilian growing regions will see decent rains over the next few days and continue for the next 10 days. All of Argentina becomes dry by later today, and should stay dry for the rest of the week and the weekend, with just a bit of light rain in the early part of next week. A favorable pattern for them where rains have been somewhat excessive.

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In corn, Wednesday’s weekly ethanol report production was up 7,000 BPD this week, averaging 902,000 BPD. The ethanol crush margin in eastern Iowa declined 5 cents week-over-week, now down 90 cents from the first of the year. A sideways to lower corn market and steadily rising DDG prices could support crush margin in the coming weeks. Last year ethanol production reached marketing year lows in late January before climbing into the summer months; this year is shaping up very similarly. The Andersons Grain estimated on their earnings call a 2014 US corn plantings at 93-94 million acres, off from 95.4 in 2013.

For wheat, export tenders have been light of late. But drought continues to be an issue in Australia. Soaring demand for Australian wheat to feed starving cattle is diverting grain away from export markets, as embattled ranchers are forced to send tens of thousands more animals than usual to feedlots to fatten them up before slaughter.

WEEKLY EXPORT SALES (in thousand metric tons)














Bean Selloff Continues

Feb 11, 2014

 Beans were weaker in overnight trade, giving up 11 cents a bushel with most of the losses happening at the end of the night session. Corn was mostly unchanged overnight, while wheat posted a 3-cent advance.

Mondays’ revised supply and demand estimates from USDA were thought to be bullish for corn and wheat bought only wheat found any real upside following the report. In corn, USDA increased the US export forecast from 1,450 MB last month to 1,600 MB in their latest estimates. This cut the carryout to 1,481 MB. On the world front USDA cut the Argentine corn crop estimate by 1 MMT to a new forecast of 24 MMT. However, traders seem reluctant to push prices higher as some analysts believe the feed use forecast for this year – a 22% increase over last year – is too high at 5,300 MB.

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For beans, analysts had been expecting at least a modest decrease in US ending stocks but the USDA kept their forecast unchanged and left carryout at 150 MB. On the international front, USDA trimmed the Argentine bean estimate by 0.5 MMT but raised the Brazilian crop estimate by 1.0 MMT. Soybean export premiums at the Gulf were mixed on Monday as new export demand is slowing as the South American harvest picks up, but tight loading capacity through March is keeping a floor under FOB basis offers. Some Chinese importers were said to be offering to resell some Feb and March US purchases today, traders said. That follows active buying of South American soy by China late last week, they said.

In wheat, USDA cut their US carryout forecast to 558 MB thanks to a 50 MB higher projection for US exports. However, overnight the Australian government revised their wheat crop estimate higher to 27.01 MMT, just above the USDA figure of 26.5 MMT.


Will USDA Cut Trim Stocks?

Feb 10, 2014

Grains started the week on a down note, with corn and wheat trading 3-cents lower following last week’s advances, while soybeans were fractionally higher.

Traders are awaiting fresh supply and demand data to be released by USDA today at 11:00 am CST. The report is expected to show minimal changes in old-crop ending stocks, with the consensus of analysts looking for small cuts to the carryout for all three crops.  Higher exports of late have helped firm the price outlook.

2013/14 US Ending Stocks (Million Bushels)














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In corn, Friday brought another announced sale with USDA stating that 141,200 MT of US corn had been sold to unknown destinations. Although China continues to block US shipments of GMO corn from the US, other Asian buyers have stepped up their purchases in recent weeks. A USDA attache’ report suggests Chinese corn stocks will reach their highest level in a decade thanks to above average yields this past growing season and slowing industrial usage. The attache’ report suggests China’s slow and unpredictable biotechnology regulatory system has created a challenging environment for agricultural imports that is likely to persist or worsen.

For beans, Brazil's biggest grain cooperative, Coamo, said dry, hot weather has seriously hurt the country's soy crop, which is in the early stages of a record 90-million-tonne-plus harvest. Coamo President José Aroldo Gallassini told Reuters in an interview on Friday that weather forecasts for 10 more days of drought and high temperatures will deepen the losses to the crop. "If it rains today -- and it won't -- there will be losses. If it doesn't rain for another 10 days, the losses will be more violent. We will need to wait and see" how big the losses will be, Gallassini said.

In wheat, prices are being pressured as weather models forecast moisture across key U.S. growing regions which have seen crops suffer due to dryness in January. Snow showers hit Kansas on Sunday, providing some relief for crops. Wheat had drawn support from declining crop rating conditions in Kansas, the top U.S. producer of the crop. 

US Corn Still in Demand without China

Feb 07, 2014

 Corn pulled back overnight but still manages to be on track for a third week in a row of advances. In the night trade, corn was off 2 cents while soybeans and wheat posted slight gains of 2 and 3 cents, respectively.

In corn, weekly export sales on Thursday came in at an impressive 1.7 MMT on Thursday, well over the trade expectations of 1.2 MMT going into the report. Japan was a big buyer, acquiring nearly 800,000 MT some of which was switched from China. Also on Thursday, USDA announced China had canceled 220,000 MT of US corn it had previously purchased. China still has about 1.5 MMT of US corn outstanding that it has not shipped. Overnight, South Korea was an active buyer as two different feed groups bought 59,000 MT of US corn that had been previously shipped to China.

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For soybeans, front-month March has not been able to hold above the $13.30 mark in the past two sessions. Upside resistance is around $13.38, which is the highest point of prices since the end of 2013,  is the next upside target. Old-crop soybean sales were still impressive for the week at 577,000 MT but soymeal was exceptionally strong at 283,700 MT. China has yet to cancel any significant quantities of US bean purchases as the latest data still showed them as net buyers of 436,400 MT of US soybeans for the week. Monday’s USDA report could prove interesting as soybean bookings of 43 MMT for the marketing year already surpass USDA annual forecast of 40.7 MMT.

 In the wheat market, US exports have ticked higher in recent weeks thanks to logistical problems out of Canada and the Ukraine. However, Russia found renewed business overnight with a 25,000 MT deal with Lebanon, and part of a 400,000 MT purchase by Iran of Russian and European wheat.  Japan is seeking to buy 28,655 MT of late June-arrival Canadian Western Red Spring wheat, in an atypical tender issued on Friday, after failing to pick up that amount of the grade in a regular tender, a farm ministry official said on Friday. On Thursday, Japan bought a total of 284,161 MT of food quality wheat from the U.S., Canada and Australia in its regular tender, or all of the 312,816 MT it tendered for except for the one Canadian lot in the reissue.

Corn Exports Beat Expectations Again

Feb 06, 2014

 Grains held on to gains across the board in the night session, as prices continue to try to move higher on strong demand. Beans were up 3, corn gained 2 and wheat posted a 1-cent gain in the overnight trade.

For beans, traders are looking for only modest changes to South American production in Monday’s USDA report. Average trade estimate for Argentine soybeans is 54.13 MMT vs USDA Jan estimate of 54.5 MMT and Brazilian soybeans is projected to come in at 89.76 MMT as compared to the January USDA estimate of 89.0 MMT. World soybean ending stocks are expect to inch higher to 72.67 MMT versus 72.33 MMT by USDA in January. On Wednesday, soybean bids faded by 5 cents at a processor in Lafayette, Indiana, but basis was mostly unchanged as snowfall brought movement to a halt and farmers returned to the sidelines after selling big on Tuesday.

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In corn, prices continue to build support above the $4.40 level as expanding export business helps lift prices. On Wednesday, Ethanol production was off 5,000 BPD, averaging 895,000 BPD during the week ending 1/31/14. DDG prices have improved week over week, but ethanol margins continue to slide lower as corn futures have increased 8% since the January 10th USDA report and ethanol prices in Iowa are down 30 cents per gallon during the same time period. Given higher corn and lower ethanol prices, ethanol plants are likely to use basis as a tool to preserve margins in the spot corn market. One example of this was Cargill in Blair, NE which has steadily lowered basis over the last week, now 8 cents below the board.

Japan's Ministry of Agriculture bought 50,310 MT of Hard Red Winter and 82,454 MT of Dark Northern Spring grades from the United States, as well as 99,522 MT of late June-arrival Canadian Western Red Spring wheat. Japan typically buys about 20,000-30,000 MT each of the five grades of food quality wheat from the U.S., Canada and Australia in tenders typically issued three times a month. But, Canada’s shipping problems led to more supplies being garnered from the US. Also overnight, Oman bought a 20,000 MT shipment of wheat from India. Indian state trading companies have been holding a series of international tenders to sell part of India’s huge wheat stocks, generating cheap supplies for Middle Eastern buyers.

WEEKLY EXPORT SALES (in thousand metric tons)















Grain Rally Fades Overnight

Feb 05, 2014

 Tuesday sharp rally found little follow thru in the overnight session with March soybeans briefly hitting $13.20, but pulling back to $13.12, leaving it unchanged. Corn and wheat fell giving up 2 and 4 cents, respectively in the night trade.

Soybeans rallied 20 cents on Tuesday thanks to strong near-term demand for exports and soymeal. Hot weather in South America continues to linger. Southern Brazil looks to be hot and dry in the coming days with temperatures expected to hit the mid-90s and little signs of significant precipitation through the end of the week. On Tuesday, Informa lowered its Argentina bean crop to 57 MMT, off from 57.5 MMT from the previous month but still well above USDA’s latest projection of 54.5 MMT. For Brazil, Informa bumped up their forecast to 89.7 MMT, just slightly above USDA’s projection of 89 MMT. Although US export business has been slowing in recent days, the lack of export cancellations by China has given the market new life. Export sales to date are 43 MMT for beans, which surpasses the total for the year projected by USDA at 40.6 MMT. In addition, pipeline supplies are not picking up with the rally as farmer bean sales have been limited during the last few days of escalating futures.

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For corn, it’s another story. Farmers have been actively selling their corn crop in recent days, and pipeline supplies are building leading to lower basis levels at key buyers around the country. CIF corn basis values at the Gulf fell on Tuesday by 3 cents to +77H. At a key processor in Blair, NE, corn basis fell for the fourth straight day to -8, its lowest level in more than two years. On the international scene, buying activity was limited overnight with no big tenders announced. Informa lowered their estimate for South American corn production, with Brazil and Argentina combined at 89.15 MMT, which is 3.4 MMT lower than Informa’s projection in January.

In wheat, Tuesday’s 20 cent rally helped push prices off their lowest level in 3.5 years. Stats Canada on Tuesday gave a slightly lower than expected wheat stocks estimate of 28.4 MMT, but it still represents a 38% increase over stocks last year. Oklahoma and Kansas reported deteriorating crop conditions for the winter wheat crop, as dry and windy weather took its toll on rating. Kansas reported 24% of the crop in poor to very poor condition in January, versus only 8% in December. However, the recent snow storm helped give needed moisture to the Plains as Kansas is expected to see nearly a foot of snow from the latest winter system. 

Can Beans Take Back $13?

Feb 04, 2014

 Grains found modest support in overnight trade with soybeans within striking distance of the $13 benchmark on a 6 cent advance. Corn was also higher, but only gaining a cent while nearby March wheat posted fractional gains in the night session.

Beans found support on Monday from a drier and hotter outlook in Brazil. On Monday, USDA said private exporters reported sales of 40,000 MT of U.S. soyoil to unknown destinations for 2013/14 delivery. Back months continue to be pressured by looming South American harvest, with strong yield reports from the early harvest in Brazil. Dry weather in most soy areas of Brazil this week should limit harvest delays.  Export inspections for soybeans came in at 45 MB, below expectations of 50 to 58 MB going into the report.

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For corn, prices continue to inch higher and Monday’s small rally helped motivate some farmers to move cash grain. Farmer selling has been light in the New Year, and stocks in the hands of farmers seem plentiful compared to recent years so it seems that in rallies could be short-lived. Weekly export inspections were 216 MB, lower than projections of 28 to 33 MB by analysts going into the report. Overnight, a South Korean feed group bought 65,000 MT of US corn for June delivery.

In wheat, the market continues to struggle with plentiful world supplies. Weekly export inspections of US wheat were 11.6 MB below forecasts of 16 to 22 MB ahead of the report. Overnight, India offered 200,000 MT of wheat to export as it continues to try to unload 2 MMT of stockpiles in government warehouses. South Korea was a buyer of 65,000 MT of feed wheat from optional origins. Japan's Ministry of Agriculture offered on Tuesday to buy a total of 312,816 MT of food quality wheat from the United States, Canada and Australia in a regular Thursday-closing tender. Japan, the world's sixth-biggest wheat importer, keeps a tight grip on imports of its second most important staple after rice and buys the majority of the grain for milling via tenders typically issued three times a month.

Corn in Positive Territory to Start the Week

Feb 03, 2014

 Grains were quiet to start the new week as overnight trade was mostly listless. Corn advanced 2 cents a bushel, while front-month March beans was down 1 cent. Wheat posted a fractional increase in the night session.

Farmers in Brazil's top-soybean-producing state Mato Grosso are reporting soy harvest yields well above what they had expected, which if the trend continues, could result in a record crop and make Brazil the world's top producer of the oilseed, based on official forecasts. Fields like Seibeneichler's throughout Mato Grosso are producing up to 70 60-kilogram bags per hectare, as much as a third higher than a January estimate for average yields in the state by Agroconsult, which expects a record 91.6 MMT crop from Brazil.

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Winds and snow are hindering grain supply from southern Russia to Novorossiisk on the Black Sea, the port's operator and traders said on Friday, slowing the country's return to the global wheat market. Russia, one of the world's top five wheat exporters to regions including North Africa and the Middle East, became competitive again on international markets in January, after a three-month hiatus, because the ruble has now weakened along with emerging market currencies. 

In corn, US export business has likely benefited from the problems in Ukraine getting corn to export. On Friday, USDA announced another sale of US old-crop corn to Spain for 110,000 MT. On Friday, CIF corn  basis bids were mostly steady at the Gulf. Spot barge freight is steady with a weak tone as demand softened after shippers fulfilled their January loading needs. Navigation on the Illinois River remains a major challenge with heavy ice buildup limiting tows to 6 or 8 barges. Peoria Lake remains one-way traffic only. Problems on the Illinois are backing up the upriver traffic down towards St Louis.  

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