World Supply of Grain Keeps Pressure on Prices

Published on: 11:58AM Mar 02, 2016

Good Morning! Paul Georgy with the early morning commentary for March 2, 2016.

Grain markets are quiet and nearly unchanged as crude oil comes under selling pressure.

Allendale's Annual Acreage Survey is underway! Share your planting intentions for corn, soybeans and/or wheat for 2016 and we will email you the survey results as soon as they are available. The survey ends March 11th and results will be emailed to participants on March 16th. Click here to enter your data. Thank you for your help and participation!

Weather conditions in South America continue to be ideal for most areas. Many analysts are nudging up soybean production in Brazil and Argentina. Crop conditions for safrina corn crop are supportive for growth as Brazilian farmers are running ahead on their planting pace.

Farmer sales of corn and soybeans have come to a standstill after they moved grain last week. Lower prices and adequate inventories at processors and country elevators is also keeping the demand side of the equation sidelined.

American Petroleum Institute data showed U.S. crude stocks rose by 9.9 million barrels last week while gasoline inventories decreased by 2.2 million barrels and distillate stocks built. Trade was expecting an increase in crude inventories of 3.6 million barrels and gasoline stocks to drop 1.8 million barrels. EIA data will be released at 9:30 this morning.

Funds were estimated to have been net sellers of 7,000 soyoil contracts, 5,000 wheat, 5,000 soybeans, 4,000 corn and 2,000 soymeal contracts on Tuesday.

Brazil's Trade Ministry reported that corn exports reached 5.4 million tonnes in February, which is a record for February and the third highest month ever after the all-time high of 6.3 million tonnes shipped in December. Brazil’s ports are expected to switch to soybeans during March as soybean harvest hits full swing.

(Reuters) Farmers' limited access to credit in Brazil, a key importer of potash used to nourish corn and sugarcane crops, has hurt demand there, said Mosaic Chief Executive Joc O'Rourke, speaking at the conference. So Mosaic is bartering with Brazilian farmers, allowing them to use crops as collateral to borrow money for fertilizer purchases, he said. Agribusinesses Archer Daniels Midland Co and Cargill Inc are Mosaic's counterparties in the transactions.

(Reuters) - China aims to lay off 5 to 6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing's boldest retrenchment program in almost two decades.

ADP employment report is expected to be mildly below trend as hiring incentives dissipate.

Cash cattle bids have begun to surface at 136 in the south. Market ready supplies have been a bit less for a few weeks causing packers to pay up. Packer margins are in the red as product values are not able to keep up the pace. Trade is expecting cash cattle to be steady to $2.00 higher this week.

Rich Nelson writes in the Allendale Advisory Report: There is still no clear sign that cash hogs are ready to start that seasonal break yet. The afternoon cash hog report showed a rebound of 96 cents for the IA/MN run. That helps reverse some of the sharp losses posted on Friday. As a whole, this measure of cash hog prices is only 79 cents off the recent peak on February 17th. As we have noted previously, the seasonal peak for cash hogs is March 8.

Dressed beef values were higher with choice up .99 and select up .13. The CME Feeder Index is 159.26. Pork cutout values are down .14.

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