Rains Deflate Bean Rally
Dec 29, 2013
Grains were lower overnight, but pared losses by the end of the night session.
Rains in Argentina over the weekend helped push bean prices lower. Widespread thunderstorms eased the threat of yield damage for both crops after prolonged hot, dry weather had supported global prices. Also, China announced it would eliminate its cotton and soybean stockpiling program and replace it with direct subsidies to farmers. This could lead to stocks being put on the domestic market, although this will not hurt China's soy purchases as a majority of crushers in the coastal regions are already dependent on imports. In the US cash market, basis levels are coming under pressure as buyers roll to the March contract and take some spread out of the market. Friday saw another move lower in the March-Jan spread on futures, but cash traders continue to trade at a high level than the futures.
In corn, markets were lower as large supplies continue to keep prices on the defensive. Friday after the close USDA’s Quarterly Hogs & Pigs report showed slightly lower hog inventory than expected. The report showed the U.S. hog herd as of Dec. 1 at 99 percent of a year ago, or 65.940 million head. Analysts, on average, expected 66.307 million head, or 99.9 percent of a year earlier. The U.S. hog herd for the same period last year was 66.374 million head. The quarterly report was the first to show a noticeable drop in hog numbers, which analysts attributed to Porcine Epidemic Diarrhea virus (PEDv), reinforcing expectations that herds will shrink as the industry struggles to develop vaccines to treat the virus that has killed thousands of young pigs across 20 states.
In wheat, Russia projected its 2013 wheat crop as 37% higher as compared to the bad-harvest year of 2012 (39.7 MMT), with their 2013 estimate at 54.4 MMT. This is quite a bit higher than the USDA estimate which puts the crop at 51.5 MMT.