Feb 20 – Morning Comments

Front month March beans fell 8 cents a bushel, taking it below $13.50 as improved weather seems to be the norm in South America. Corn and wheat followed with 2-cent losses in the night trade.

This morning, USDA’s chief economist Joe Glauber resented the first outlook for 2014 crops. The soybean forecast is for 79.5 million acres, up from 2013 actual plantings of 76.5 million acres, but slightly below recent analyst estimates of 80 million acres.  On Wednesday, Hamburg-analyst Oil World cut its Brazilian soybean forecast to 85 MMT from 89.5 MMT. However, recent rains seems to be helping the situation there. Southern Brazil soy region forecast calls for slightly wetter conditions on Friday and next Wed-Thurs to limit late crop stress. Brazil soybean region received 0.25 to 1.5 inch of rain in the past 24 hours, some areas saw more, 40% coverage and the forecast calls for 0.5 to 2.5 with 75% coverage over the next 5 days.

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In corn, USDA pegged 2014 plantings at 92 million acres, off from 94.5 million in 2013. USDA also suggested only modest growth in ethanol over the next 8 years. University of Illinois economists have suggested that an EPA cut in the ethanol mandate is unlikely to happen based on prices for ethanol RINS. In recent days, ethanol RIN prices have risen sharply, suggesting traders believe there will be a need for the RINS to meet the normal mandate of 14.4 billion gallons, and not the lower 13 billion gallon proposal which would make RINS worthless. The EPA received over 15,000 comments on the 13 billion gallon proposal, and is expected to announce a final rule in spring or summer.

For wheat, the HRW market continues to be bolstered by demand from Brazil and HRS is benefitting from logistics problems in Canada. Wheat importers are largely covered through May and were expected to revert to hand-to-mouth buying as they await the next harvest, traders said. Grain exporters are also monitoring developments in Ukraine, where shipments have so far not been impacted by the unrest in Kiev. However, traders there expect prices to rise domestically which could hurt Ukraine’s competitiveness in the world market. At the USDA conference, the agency projected 55.5 million acres of wheat in 2014 versus 56.2 million in 2013.