Feb 13 – Morning Comments

Soybeans were rallying back to the $13.30 mark in the overnight trade, but may selloff thanks to weaker than expected weekly exports. Corn was up 1 cent while wheat gained 2 cents.

For soybeans, Wednesday brought an announcement of China cancelling 272,000 MT of old-crop US beans, but at the same time buying 240,000 MT of new-crop US beans. On Thursday, China has begun testing imported U.S. soybean cargoes at the southern province of Guangdong for contamination with the unapproved genetically-modified MIR 162 strain of corn. Weather in South America also showed signs of improving putting the bean market under pressure. Most Brazilian growing regions will see decent rains over the next few days and continue for the next 10 days. All of Argentina becomes dry by later today, and should stay dry for the rest of the week and the weekend, with just a bit of light rain in the early part of next week. A favorable pattern for them where rains have been somewhat excessive.

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In corn, Wednesday’s weekly ethanol report production was up 7,000 BPD this week, averaging 902,000 BPD. The ethanol crush margin in eastern Iowa declined 5 cents week-over-week, now down 90 cents from the first of the year. A sideways to lower corn market and steadily rising DDG prices could support crush margin in the coming weeks. Last year ethanol production reached marketing year lows in late January before climbing into the summer months; this year is shaping up very similarly. The Andersons Grain estimated on their earnings call a 2014 US corn plantings at 93-94 million acres, off from 95.4 in 2013.

For wheat, export tenders have been light of late. But drought continues to be an issue in Australia. Soaring demand for Australian wheat to feed starving cattle is diverting grain away from export markets, as embattled ranchers are forced to send tens of thousands more animals than usual to feedlots to fatten them up before slaughter.

WEEKLY EXPORT SALES (in thousand metric tons)

  Actual Expected
Corn 1,340.9 800-1,200
Soybeans 296.2 600-950
Wheat 626.6 450-750