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E Hedger Grain Commentary 3/11/10

Published on: 16:51PM Mar 11, 2010
Market Settlement Change Low High 
May corn 365 1/4 - 1/4 361.5 368
May wheat 478 3/4 -2 3/4 475.5 483.25
May beans 930 1/2 -27 1/2 929 962.75
May soymeal 252.60 -6.60 251.2 260.7
May soyoil 40.11 -0.91 40.05 41.02
Apr live cattle 93.825 -0.05 93.55 94.13
Apr lean hogs 71.875 -0.67 71.53 72.75
 
Corn and wheat closed mixed to lower, while soybeans sharply lower. The trade was carrying a negative bias into today from the USDA report and weak outside markets. Yet, it was today’s export sales that really rattled the soy complex. Exports were weak for corn and wheat this morning. Corn sales were 338,600 MT for 09/10 which is down 56 percent from the previous week. Beans sales had a negative 115,000 MT for 09/10 delivery due to cancellations. Soyoil also saw negative sales with a 9,400 MT reduction. China cancelled 192,000 MT and was the reason for the negative sales. This encouraged long liquidation the entire day. Soyoil and soymeal were also sharply lower with soymeal futures making new lows since March 2009. Today’s action will only encourage further selling if the market were to see any rallies.     
 
Below are the report figures:

Production                  USDA              Average       Jan. USDA
Corn                13.131             13.081             13.151
Yield                164.9               164.5               165.2
Soybean           3.359               3.35                 3.361
Yield                  44                    43.8                 44
Ending Stocks           USDA              Average        Feb USDA
            Corn                 1.799               1.713               1.719
            Soybean           0.190               0.195               0.210
            Wheat               1.001               0.971               0.981
 
The corn report figures are bearish numbers. Ending stocks increased 80 mil bu thanks to a 100 mil bu reduction in exports. Production was lowered 20 mil bu, but this was not reduced as much as many bulls were hoping. Not only was the US stocks increased, but so was world stocks. With available spring acres and supplies appearing to be sufficient for now it looks like corn will continue its downtrend until it reaches a price that encourages greater demand. 
 
The USDA put the US 09/10 soybean ending stocks at 190 mil bu vs. 210 mil bu on the February report. This was slightly below estimates. The reduction was from a 10 mil bu increase in US crush along with a 20 mil bu increase in exports. Both are record figures. While the US old crop supply looks friendly on paper, we need to be aware that world stocks rose to a record of 60.7 mmt vs. 59.73 (February) and 42.02 last year. The Brazil 2010 crop was raised to 67.0. The large South American production, spring acres, and pressure in corn and wheat will limit soybean rallies with the potential for selling to increase after this spring. The report showed a big increase of 410 mil lbs in soyoil ending stocks. Meanwhile the ending stocks for soymeal were left unchanged. Exports were increased, while domestic usage was reduced. Increased DDGs look to offset the meal demand.
 
The demand side for wheat continues to be poor. The ending stocks and stocks to usage ratio remain high figures. Exports have been weak due to US wheat not being competitive on the world market. It is important to note that winter wheat acreage is down sharply, but first we need to work through current supplies.
 
Overall, the bearish fundamentals in place since January still remain major factors in the grain market. Please call us with any questions about the report.
 


 
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