Grains Show Positive Bias Overnight

Grain futures were higher overnight across the board with wheat leading prices higher posting a 6-cent gain. Nearby May soybeans were up 4 cents while corn was up 2 cents.

Soybean futures gained more ground on Thursday with Chinese buying supporting prices amid concerns over delays in shipping a record soybean crop from Brazil. Wednesday USDA announced 120,000 MT sale of new-crop beans to China and another 120,000 MT of old-crop beans to an unknown destination. Although Brazil’s record-setting crop is causing an overall bearish take on the soybean market, transportation bottlenecks are causing shipping delays and continue to keep nearby soybean prices supported.

In wheat, prices continue to recover from their steep sell-off as export business looks more promising. Saudi Arabia’s state grains authority has issued an international tender to purchase 110,000 MT of soft wheat and 440,000 MT of hard wheat. In addition, Egypt may need to come back to the wheat market soon. Data shows Egypt has strategic stocks of nearly 2.3 MMT of the grain from international and local markets, enough to last until late May, the country’s supplies minister said on Wednesday. Egypt’s wheat imports are sharply down this year caused by political and economic turmoil.

For corn, EIA reported higher ethanol production for the current week, gaining 15,000 barrels per day to total 812,000 barrels per day. Ethanol stocks were lower for the week by 0.6%. Although crush margins have improved of late, they still remain tight leading to limited economic rewards for ethanol producers.

WEEKLY EXPORT SALES

Corn: 512,600 (expected 350,000 to 450,000 MT)
Soybeans: 1,171,000 (expected 750,000 to 1,000,000 MT)
Wheat: 524,900 (expected 400,000 to 600,000 MT)

Beans and Wheat Turn Positive Overnight, Corn Flat

Soybeans prices found support overnight after four consecutive losing sessions. May futures traded up 7 cents while wheat was up 6 cents a bushel. Corn prices were mostly unchanged after staging a strong close on Tuesday.

Corn found strength on Tuesday on renewed optimism over export business. Monday’s export sale of 127,000 MT along with signs that the US dollar may be due to end its steep rally helped push corn off its recent lows. Since February 1, the US dollar index has rallied 3.7% making US denominated goods more expensive to foreign buyers. In addition, prices are being supported by thoughts that China may start to be in the market for more corn as their domestic crop has started to show signs of mold.

For soybeans, prices recovered overnight but are still well off their highs from late last week. Ongoing pressure from Brazil’s supplies and ongoing harvest should keep prices from staging a prolonged rally. About 7.4 MMT of soybeans and grains are scheduled for shipment on vessels berthed, arrived, or expected at Brazil’s major ports as of Feb. 26, researcher SA Commodities data show. In addition, about 28 percent of the nation’s crop has been harvested.

In wheat, the steep drop in the past month has helped US wheat prices become the low-cost alternative in the world market. A 50,000 MT purchase of SRW for feed by Japan earlier in the week was a positive sign. Overnight, the Korea Feed Association (KFA) announced they were tendering for 55,000 MT of feed wheat for arrival by June 30. Another sign of potential export strength in the future was an announcement overnight by Russia’s which plans to replenish its grain intervention reserves by buying up the next crop. This should help constrain market supplies even if there is a good harvest this year.

Corn Resilient in the Face of Lower Beans and Wheat

Corn prices inched higher in the overnight session adding to Monday’s gains while soybean and wheat price continued to erode. As of this writing, Corn is up 4 cents, while soybeans and wheat are down 3 cents.

For corn, fresh export business on Monday helped keep corn from following beans and wheat lower. USDA announced export sales of 127,000 metric tons of corn for delivery to unknown destinations. Of the total 50,800 tons is for delivery during the 2012/2013 marketing year and 76,200 tons is for delivery during the 2013/2014 crop year.

In the soybean market, prices continue to slide after briefly touching the $15 level last week. Overnight, nearby March traded as low as $14.37 but managed to recover back to the $14.50 area. Brazil continues to see active harvest progress, with 28% of the crop harvested as of Feb. 22, up from 19% a week earlier. Monday USDA announced a 120,000 MT sale of soybeans to China for new-crop 2013/14 delivery.

In wheat, beneficial rains have put the wheat market on the defensive as prices reach their lowest level since June. Monday, the Kansas Ag Statistics Service said on Monday that the crop was rated 23% good to excellent as of Feb. 24, up from 20% a month ago. This second snow storm bearing down now on the Plains should help to improve crop conditions further. Overnight, there was export business as Japan bought 50,000 MT of SRW wheat for feed and Taiwan was looking to buy 96,000 MT of wheat from the US in a tender. Current price levels give the US a distinct edge in the market as US SRW wheat is quoted around $285 a ton, FOB, while India’s state-run PEC Ltd last week received the highest bid at $312 per ton in its tender. The cheapest quality of Australian standard wheat is being offered at around $310 a ton.

Bean Prices Stabilize But for How Long?

Grain prices were mixed overnight with soybeans gaining 4 cents while wheat prices were down 4 cents. Corn was mostly unchanged.

Soybeans started Sunday’s session sharply lower, trading down to $14.53 but managed to recover those losses by Monday morning and post a positive gain. Brazil’s dock strike has seemed to come to an end as government officials and laborers met over the weekend and dock workers called off their strike. Ports in Brazil have 192 vessels waiting to load oilseeds and grains, more than double last year’s number of 90. The Brazilian soybean harvest is 27 percent complete, ahead of last year’s 20 percent pace. Although China was in the market last week for US beans, it seems likely that their buying will turn to bountiful South American supplies in the coming weeks.

For corn, CFTC data on Friday showed large speculators added to their short positions cutting their overall bullish bet to the lowest level in eight months. Improved moisture in the Western Cornbelt in recent weeks, combined with an outlook for bumper supplies in the coming 2013/14 crop year will make it difficult for prices to regain their highs of recent months.

Wheat prices continue to be pressured by improved precipitation in the Plains. Last week’s storm dumped a foot of snow in key areas of Kansas and Oklahoma last week, and a second storm system is hitting the region again this week expected to bring another foot of snow. But, demand strength from export business may keep prices from pushing significantly lower. Friday’s USDA export sales report showed a robust week of nearly 700,000 MT of US wheat sales, compared to 400,000 to 600,000 MT expected by analysts.

Bean Basis Softens on Price Rally

Soybean basis lost one-cent a bushel on average across the country this week, while corn basis managed to post a modest one-cent gain for the week.

Gains in corn basis were most notably tied to ethanol plants, which saw a 2-cent gain over the last week. Ethanol margins continue to improve off their lows from the start of the year as ethanol prices have firmed and corn prices have eased off. At the Gulf, corn basis was unchanged and limited changes occurred along river terminals as barge rates were mostly stable.

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For beans, basis levels were off 1-cent a bushel across the country this week. Soybean crushing plants were lower by 2-cents a bushel, while some processors in the Eastern Cornbelt were off 5 to 10-cents on the week. River markets were slightly stronger as export business continues to be strong for this time of year.
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Beans Catapult Higher Overnight

Soybean futures eclipsed the $15 mark and traded as high as $15.16 on nearby March futures in the overnight session continuing to hold 20-cent gains. Wheat and corn prices followed, but were up only 3 cents a bushel.

The soybean market found new buying enthusiasm deliveries of about 7 million metric tons are held up at ports in Brazil. Chinese soy crushers boosted purchases from the U.S. this week on concern that a possible strike in Brazil by dock workers will disrupt shipping. Yesterday, USDA reported 130,000 MT sales of soybeans to unknown destinations. Some insiders are saying China has bought up to 500,000 MT of soybeans this week in private deals.

For corn, traders continue to look ahead to the spring corn crop. USDA on Thursday gave a surprisingly small corn plantings number at 96.5 million while many analysts expect acreage of 98 to 99 million. Even so , USDA’s normal weather expectation would build out next year’s ending stocks to around 2 billion bushels and push US average prices into the $4.80 area. China’s feed mills bought at least 120,000 metric tons of corn from the U.S. this week, the first purchases this year.

In wheat, winter storm Q dropped 1.5 to 2.5 inches of precipitation in the last 48 hours across key growing areas of Oklahoma and Kansas. Export business seems to show signs of picking up. On Thursday USDA reported the private sale of 110,000 MT of SRW wheat to unknown destinations.

Wheat Pressured on Storm Q Relief for Plains

Grains were lower overnight as wet weather continued in the Midwest and Plains from massive Winter Storm Q. Wheat prices were off 5 cents while corn was down 2 cents. Soybean prices posted a 4-cent loss.

For wheat, Winter Storm Q continues to provide heavy snow and moisture to key Plains regions that have been locked in widespread drought. Yesterday, precipitation accumulations totaled 0.5 an inch as snow fall of 6 inches were fairly typical. This morning finds heavy snow continuing to blanket much of the region which should add to the totals from yesterday. On the export front, Egypt bought US soft red winter wheat on Wednesday at $296.75 a ton.

In soybeans, prices have stalled out unable to take out key resistance in the $14.95 region for nearby March futures. On the fundamental front, soybean prices have been supported this week by dry weather in Argentina and threat of labor strife by Brazil’s dock workers. Port workers there plan to walk off the job on Friday morning and again Tuesday afternoon, and threaten to prolong their work stoppage if the government’s planned port regulations reform is implemented. Crop forecaster Lanworth on Wednesday said it expects U.S. soybean production to rise to 3.465 billion bushels in the 2013/14 crop year, based on average yield of 43.1 bushels per acre.

For corn, nearby prices continue to be pressured by lack of any noticeable demand base. New-crop futures also continue to sink lower as traders look for a large increase in corn plantings this spring. Good moisture levels in the Eastern Cornbelt combined with attractive prices have some expecting a 99 million acre crop this spring, the biggest in nearly 80 years. USDA’s Ag Outlook Forum begins today and should provide some guidance to the market about potential crop size based on USDA economist expectations.

Soybean Comeback Continues

Soybean futures continued their climb back adding 12 cents overnight on top of the 45 cent gain from Tuesday. Corn and wheat however were fractionally lower.

Soybeans continued to get a boost from dry weather in Argentina along with continued demand strength. On Tuesday, China bought 120,000 MT of old crop soybeans and USDA’s weekly export inspections showed 40 MB for the week, up nearly 10 MB from last week and more than four times the level required to hit USDA’s annual forecast. In South America, shipping delays are said to be 30-40 days and Argentine farmers are said to be holding onto beans as a hedge against inflation and the rapidly devaluing peso. All this could keep the US bean market in play longer than the market has been factoring in.

For wheat, Winter Storm Q is hitting the central Plains today with snow accumulations expected of a foot or more in drought-stricken areas. Tuesday’s wheat export numbers came in at a better than expected rate of 30 MB for the week, up 10 MB from last week and above trade expectations of 15 to 20 MB. Export tenders are being floated by Egypt and Japan, with the US likely to win some of the business.

In corn, weekly exports totaled just 9.5 MB, down MB from last week and well below the more than 20 million needed to hit USDA targets. The USDA Outlook Forum on Thursday and Friday this week will provide non-survey based forecasts of new-crop plantings and ending stocks for 2013/14. Both are expected to be large.

Soybeans Sharply Higher Overnight

Soybean prices were sharply higher overnight following a 3-day weekend advancing 20 cents a bushel. Corn and wheat prices were mostly unchanged.

Soybean prices got a boost as weekend weather in Argentina turned out to be disappointing. Rains over central, eastern and northern Argentina were somewhat below expectations going into the weekend and while some areas did get a significant amount of rain, it was not the widespread coverage that the models were forecasting. Traders also are looking for China to return from its holiday in a buying mood after prices have fallen sharply over the last week during the Chinese New Year.

For wheat, Winter Storm Q is expected to hit the central Plains and Midwest on Thursday bringing up to a foot of snow which would help drought stricken areas. Areas from Northern Kansas to North Dakota look to get fairly significant precipitation.

In corn, nearby March Futures are hovering at the key $7 benchmark. Overnight it traded briefly as high as $7.03 but was unable to hold the gains. Lack of significant demand signs keeps the corn market from having significant follow through to the upside at the moment.