Soybean futures shot higher overnight breaking out of its narrow trading range of recent sessions. Nearby March futures eclipsed the $14.70 mark, adding 20 cents in the overnight session. Corn was pulled higher by 7 cents while wheat managed a 4-cent gain.
South American weather continues to underpin the soybean market with rains in Brazil delaying harvest, while dry weather forecasts in Argentina put the developing bean crop still at risk. Furthermore, the record-large Brazilian crop may find trouble getting to global users anytime soon. As many as 126 vessels were scheduled to load 6.2 million metric tons of soybeans and corn as of yesterday. That compares with 72 ships carrying 2.8 million tons a year earlier and 47 vessels with 1.5 million tons in 2011. The wait at Santos, the country’s biggest port, may be as many as 35 days, while the wait in Paranagua may be 15 days.
In corn, news continued to point to cut backs in ethanol as a Texas plant halted production on Tuesday, while Abengoa, Poet and Valero have announced 6 plants idling in the past week. EIA will announce their weekly ethanol production number today, which is likely to show continued weakening in the weekly grind.
For wheat, the market has been inching higher in recent sessions but as of yet there has been little reaction to the poor wheat conditions in the Plains. Kansas showed only 20% of its wheat crop in good to excellent condition in January, while Oklahoma is a dismal 5%. Based on these conditions and the historical relationship between January conditions and yields, we would expect Oklahoma to have an 18 bushel yield vs last year of 36, while Kansas would be at 31 vs last year of 42. If realized, we think this makes it difficult to achieve normal US yields of 46 for wheat and would likely put new-crop 2013/14 ending stocks in the low 600 MB range, off from 716 MB currently forecasted by USDA for the 2012/13 crop year.