Meal Prices Pressured by Ample DDG's
Jun 20, 2014
Soybeans seemed to find resistance in the overnight at the 100 day moving average after closing below the level on Tuesday. Soybeans could continue to be pressured as domestic feeders have access to ample DDG’s after China banned U.S imports of the feed due to the non-approved GMO seed variety MIR 162. With ample supplies of DDG’s domestically, feeders are turning using them instead of Soymeal which has weighed on meal prices recently.
Soymeal exports have stayed relatively strong with old crop exports reported at 54,800 metric tons on Thursday which was in line with expectations. It was also reported that an animal feed maker in the Philippines bought 160,000 metric tons of U.S. soymeal in a tender that closed on Tuesday. Traders viewed that tender as an indication that South American are still relatively expensive on the global market.
Corn futures are moving lower in the overnight session, helped out by negative demand side news from China. A senior government official indicated that China may work to further reduce corn stocks following several weeks of state grain auctions. Chinese corn stocks are estimated at 150 million tonnes and the government has struggled to liquidate stocks at the current floor price of around $360 per tonne. If China is getting aggressive about liquidating stocks this floor price will need to be lowered and U.S. prices may need to follow suit if they are to remain competitive from an export perspective.
Wheat futures are drifting lower this morning but we are starting to get indications that demand is returning to this market. Overnight it was reported that Brazil had booked 6-8 cargoes of U.S. HRW wheat in the last 48 hours. Also in the overnight it was reported that the Taiwan Flour Millers association made a purchase of 100,000 tonnes of U.S. milling wheat. Demand side numbers will be important to finding a bottom a world wheat ending stocks remain very large.