Crush Disappoints, But Demand Pull Remains Strong

February 19, 2014 12:24 AM

What Traders are Talking About:

Overnight highlights: As of 6:15 a.m. CT, corn futures are fractionally lower in most contracts, soybeans are narrowly mixed amid mild bull spread unwinding and wheat futures are steady to 4 cents lower in most contracts. Cattle futures are favoring a slightly firmer tone in electronic trade, while hog futures are mixed.


* 'Disappointing' crush pace in January. On Tuesday, NOPA reported January soybean crush totaled "just" 156.943 million bu. in January. While that's a strong monthly crush figure, it came in well below December crush of 165.384 million bu., which was the highest monthly total ever, and below year-ago. Traders had been expecting a record crush pace for the month of January, with the average guess at 162.4 million bushels. Industry sources signal harsh weather last month slowed the crush pace more than anticipated, though strong crush margins are still providing plants incentive to process as many beans as they can get their hands on.

The long and short of it: The demand pull on the soybean market remains strong from both exports and crush. Though the crush pace wasn't as strong as anticipated last month, there should be less competition from the export side soon as the Brazilian soybean shipping season is underway.

* Winter continues to nip at Texas wheat crop. Texas state statisticians rate 17% of the state's winter wheat crop in "good" to "excellent" shape (down from 18% last week), with 39% "fair" (41% last week) and 44% in "poor" to "very poor" (41% last week). The report notes most areas of the state received only trace amounts of precip, elevating drought concerns. When the crop went dormant late last fall it was rated 32% "good" to "excellent," 40% "fair" and 28% "poor" to "very poor."

The long and short of it: The market is aware that the rugged winter and drought conditions are taking a toll on the HRW crop, but their concern level will be gauged until spring as they know the crop can bounce back with favorable spring conditions.

* China to support hog prices. China will start stockpiling pork in an effort to boost hog prices, which have been falling since mid-December, according to the National Development and Reform Commission. No indication was given on how long the stockpiling would last as it will probably be in effect until the pig-to-feed price ratio strengthens to an acceptable level.

The long and short of it: China strives to have a pig-to-feed price ratio at 6:1. It has been below that level for five consecutive weeks, triggering the state stockpiling.


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