Grains were weaker to kick off the day with wheat and soybeans feeling the most selling pressure in the night session.
USDA announced a sale of 229,000 MT of corn to Japan and a 142,500 MT sale of soybeans to Mexico.
The NOPA crush report to be released Wednesday is expected to show 159.1 million bushels of soybeans in January (ranging from 156.9 million to 162.0 million bushels); NOPA reported a December crush of 160.176 million bushels; in January 2016, processors crushed 150.453 million bushels. Marketing year-to-date NOPA crush figures are up 2.5% over the same period last year, on par with USDA’s expected increase in annual soy crushings of 2.3%.
Yesterday, a Mexican Senator who leads a congressional committee on foreign relations, says he will introduce a bill this week where Mexico will buy corn from Brazil and Argentina instead of the United States.
In wheat, prices broke above its 200-day moving average for the first time since June. However, there is no shortage of wheat in the world and competition will be strong. In Australia farmers produced a record amount of wheat during the 2016/17 season, the country's chief commodity forecaster said on Tuesday, as ideal weather pushed the world's fourth largest exporter to production levels of more than 35 million tonnes. That’s up from 24.5 MMT last year and above USDA’s forecast of 33.0 MMT.
As wheat has rallied, the US competitive position has started to erode. This week relative to French White Wheat, US prices have gained nearly $5 a MT vs French prices. For corn, US price strength has caused US prices to gain about a $1 a MT vs Brazil and Europe. In beans South America prices have strengthened relative to the US. Farmer selling in Brazil during harvest is reported to be relatively slow.
WORLD EXPORT PRICE SPREADS RELATIVE TO US
Crop Country Today Last Week Last Year
CRN BRZ -$21.2 -$20.7 -$23.2
CRN EUR -$1.4 +$0.0 -$19.4
SBN ARG +$4.4 -$6.5 -$18.5
SBN BRZ +$2.6 +$1.7 -$11.4
WHT EUR -$23.7 -$18.6 -$45.8
Export spreads represent a foreign country price minus US price
at export destinations, in USD per metric ton. A higher spread indicates
the foreign price has risen relative to US prices, making the foreign country less
competitive and the US more competitive
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