Wheat recovered from a five-month low as traders expect a gain in U.S. export sales after the recent sharp sell-off. Soybeans and corn also increased overnight.
Since the first of December, wheat prices have been on a downward spiral, giving up nearly a $1.30 a bushel as nearby March futures dropped to $7.65 yesterday, the lowest level since July 2. However, since that time buying interest has spurred prices back to the $7.78 area. This morning’s export sales numbers are expected to show 500,000 to 700,000 tons for the week. With a declining dollar, relatively cheap US prices, and a stockout situation in much of the Black Sea markets, we would expect to see US wheat export business picking up in the new year. This year’s relatively high protein content of US SRW wheat is seemingly attracting new buying interest.
For corn, export sales are expected to be light this week as high US prices continue to be a driving force for slow business. Weekly ethanol production will be released today by EIA, and is expected to continue to show sub-par numbers in light of tight crush margins. Even though corn prices are off 64 cents a bushel since the first of December, ethanol prices are off 23 cents a gallon over the same time period or 62 cents a bushel corn-equivalent.
In the bean market, next week’s report on Chinese manufacturing is expected to show factory activity in December expanded at its fastest pace in eight months, reinforcing ideas of economic revival and keeping China’s appetite high for U.S soybeans. However, this week’s export numbers will factor in a recent string of announced cancellations, and as such are only expected to total 400,000 to 600,000 tons for the week, but still not too far behind the 629,900 tons last week. Overnight, South Korea bought a 25,000 ton load of US soybeans.
Weekly Export Sales
Wheat: 1,009,000 MT (expected 500,000-700,000)
Corn: 104,300 MT (expected 150,000-300,000)
Soybeans: 87,000 MT (expected 100,000-300,000)