Feb 19 – Morning Comments

Grains were mixed in a quiet overnight session following Tuesday’s sharp rally in soybeans. Corn and wheat had fractional losses while March soybeans managed to hold on to $13.60 with a small one-cent gain in the night trade.

Soybeans continue to be bolstered by strong exports. Weekly export inspections came in at the high end of expectations with 1.47 MMT for the week. However, monthly crush figures as reported by NOPA were lower than expected with January crush at 156.9 MB, off from December’s value of 165.4 MB and below the trade estimate of 162.4 MB going into the report. As futures has rallied, farmer sales continue to pickup with many buyers fading on basis following yesterday’s sharp move. Palm oil is also providing some strength to the bean oil market. Overnight Malaysian palm oil futures rose for the sixth day in a row as stronger export demand and concerns of dry weather curbing output buoyed prices to their highest level since September 2012. Market participants said the dry weather in Malaysia and Indonesia, where most of the world’s oil palm is grown, could hinder production and tighten supplies of the edible oil which is used to make soaps to cookies and biofuel.

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For corn, export inspections were stronger than expected at 827,600 Mt versus trade expectations of 545,000 to 675,000 MT going into the report.  Ice along the Illinois River continues to hamper export movements. Still no offers for Illinois River barges until at least next week with ice forcing width restrictions forcing width restrictions on two locks and slowing traffic on the waterway, according to the Army Corps of Engineers, Rock Island (Illinois) district. Bids were flat at 600 percent of tariff on the Illinois while costs increased by 15 to 25 percentage points to 460 on 500 on the Mississippi River at St. Louis.

In wheat, Ag Canada expects farmers there to plant less wheat in the coming year following the bumper crop in 2013. According to their projections, they expect 24.7 million acres to be planted in 2014 off 6% from 2013. Overnight tender business was slow, with Japan announcing that they received no bids on their tender to buy 120,000 Mt of feed wheat. China sold 413,016 MT or 68.9% of the 599,756 MT of reserve wheat available at an auction on Wednesday, according to the National Grain and Oil Trade Center. The transaction rate is higher than the 60.7% at the previous auction last week. Transaction rates at domestic reserve wheat auctions have been increasing in the past several weeks as flour mills and traders are active in wheat buying on higher expectations for prices.