The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
The Grain Hedge Team provides a macro-focused daily view of the world’s grain markets. Kevin McNew received a bachelor’s degree from Oklahoma State University and his master’s and Ph.D. degrees in Economics from North Carolina State University. He spent 10 years as a Professor of Economics with the University of Maryland and Montana State University focusing on commodity markets and is widely regarded for his ability to boil-down complex economic situations into easy-to-understand concepts for applied life.
Trading was quiet overnight in the grain markets as prices continued to stay in a tight range. Corn, soybeans and wheat were all up about a penny a bushel on limited news.
Reports from USDA’s state office in Oklahoma and Kansas on Monday show the depths of the poor wheat crop. Kansas showed only 20% of the crop in good to excellent condition, versus last year’s reading of 49%, while Oklahoma had a mere 5% of the crop in good condition (none in the excellent category). With Kansas and Oklahoma between them typically responsible for about 20% of US wheat production, the drought - which has a firm grip on the likes of Colorado and Nebraska too - has raised fears for the 2013 harvest, particularly of the hard red winter wheat prevalent in the worst-affected states. On the export front, weekly export inspections came in at 22 mb on par with last week’s number. India announced there are offering for export 125,000 MT of milling wheat for Feb/Mar delivery.
For beans, export business has been relatively quiet of late. Monday’s export inspections for the previous week totaled 40 mb versus 48 mb last week. In Argentina, light showers are expected over the next few days but will provide little relief from the recent turn to a drier pattern while most of Brazil is enjoying at least satisfactory crop weather.
In the corn market, ethanol margins have shown signs of improving of late as corn prices have stalled while ethanol and distillers grain prices have been moving higher. Weekly export inspections were 22 mb this week versus 11 mb in the previous week’s report.