The grain markets are mixed this morning with light trade volume expected on this holiday shortened trade session.
In the overnight session corn traded ¼ cent higher, soybeans is down 4 cents and wheat in Chicago is down 3 ½ cents. The market closes early today at 12:00 CST today and will reopen at 8:30 CST on Friday morning.
A cold front is moving into the plains region on New Year’s Eve providing a threat of winterkill throughout the winter wheat producing states. New snowfall is expected between 1-2 inches in most of the area, but possible sub-zero degree temperatures may threaten some of the wheat crop. Confidence on this event is still relatively low.
Southern Brazil is likely to see heavy rains over the next 10 days which should then make its way north keeping crop concerns low throughout the country. Argentina is expected to get precipitation in the north and north eastern parts of the country, with another rain event expected next week which should provide relief to some of the dryer areas of the country. The driest areas currently include central and southwest Cordoba, western Buenos Aires and La Pampa which accounts for about 15-20% of corn and soybean production. The rains next week should provide relief to nearly half of the driest areas.
The head of Russia’s Grain Union said Russia may not be able to supply wheat to Egypt’s GASC in January due to the export curbs now existing in Russia. GASC’s Mamdouh Abdel Fattah responded by stating “Traders have to abide by their contracts.”
Shipments have been arriving in Egypt regularly each month in the 2014 calendar year
This week’s U.S. Grains Council’s (USGC) Chart of Note illustrates the significant market share that U.S. corn has regained in the Egyptian market compared to last year.
Following the United States’ record 2013 corn production of 355.3 million metric tons (13.9 billion bushels), U.S. corn sales to Egypt rebounded to more than 3 million tons (118 million bushels) from January to November 2014, compared to almost nothing during the 2013 calendar year. As the chart shows, this has made the United States the largest supplier of corn to the Egyptian market this year.
U.S. corn has been arriving in Egypt regularly each month in the 2014 calendar year, with no Ukrainian corn or other Black Sea-origin corn coming in during the summer months. However, Black Sea-origin corn did come in this fall as new crop Ukrainian corn became ready for export.
The Council will work to carry this momentum into 2015 as the predicted record 2014 U.S. corn crop of more than 365 million tons (14.4 billion bushels) hits the export channels.
The wheat market has priced in the effects of a Russian export duty last week, but talks of cold temperatures with limited snow cover over the next two weeks has traders on edge.
The markets were mostly mixed in the overnight session with corn down ¼ cent, soybeans down 4 cents on the January contract and wheat up 3 ¼ cents higher. The U.S. made a wheat sale to Taiwan for 78,320 metric tons of milling wheat for delivery between February and March 2015.
Next week will usher in colder weather which may threaten the winter wheat areas throughout the U.S. There is potential for temperatures to dip below zero in in Nebraska, Colorado, Kansas and Missouri which could leave winter wheat areas vulnerable with limited snow potential over the next few weeks to help.
The wheat market was unable to rally yesterday despite the news that Russia will be imposing an export duty. The market seemed to view this headline as justification for the rally throughout last week and not as fresh bullish news. Traders have mostly factored Russia out of the export scene for now leaving the market to sort out the relatively high price for U.S. wheat. Domestic wheat is trading around $30 per metric ton higher than Europe, Russia and the Black sea.
Yesterday, export inspections were released with all grains beating analyst expectations. Soybeans recorded 2,234,262 million metric tons while analysts expected between 1.5 and 2 million metric tons. Wheat recorded 442,055 million metric tons inspected which was well above the high side of expectations at 400,000 metric tons and corn recorded 790,415 metric tons inspected for export with analysts expecting between 575,000-700,000 metric tons.
The wheat market is trading higher again this morning with more news out of Russia that it will introduce an export duty. The restrictions of exports has been largely factored into prices so be wary any immediate move higher this morning.
Corn and soybeans are trading lower by ½ a cent and 3 cents respectively, while wheat is trading up 3 ¼ cents on more export news out of Russia. A reportable sale of 166,600 metric tons of corn was reported this morning to be delivered to unknown destinations for the 14/15 marketing year.
This is a holiday shortened trade week with Wednesday observing an early close at 12 CST. Thursday the grain markets will be closed for Christmas and Friday the markets open at 8:30 CSTwith a regular close. Volume is expected to be light which can allow for unexpected price movement.
Over the weekend, the Egyptian state grain buyer GASC announced it had bought 300,000 metric tons of wheat from France and Russia. Out of the tender France won a majority of the sale booking 240,000 metric tons of wheat. According to Interfax news agency, Russia is planning on imposing a grain export duty. It is widely believed by the market that Russia is for the most part out of the export scene, but the export duty represents a more formalized trade restriction.
Rains over the weekend continue to help crop development in Argentina and Brazil, giving the market little reason to be concerned about South American production.
Grain markets found heightened volatility this week
Grain markets found heightened volatility this week with corn futures posting gains while soybeans traded lower. In the cash market, basis for both corn and soybeans were unchanged on average across the country this week, but that masks a fair amount of movement by end users and exporters.
For corn, ethanol users backed off on bids by a penny a bushel this week, but there are signs that more weakness could be in store for the ethanol sector. In Iowa, spot ethanol prices tumbled 32 cents a gallon to reach $1.68 a gallon. At the start of December, ethanol prices were as high as $2.42 a gallon. So far, ethanol production continues to exceed last year’s tally at this time of year but that should change as current margin are now a $1 a bushel lower than the same time last year. On the export front, sales have been pace to reach USDA’s export target for their year but recent approval by China to accept Syngenta’s MIR 162 variety may give a slight boost there for corn & DDG exports. Basis levels at river terminals were up 2 cents on average thanks to some weakness in barge rates.
In soybeans, the Gulf export market was off 9 cents on basis for the week which triggered some weakness at river terminals even with falling barge rates. On average, river terminals were off 4 cents a bushel. At soybean plants, basis levels were off 2 cents a bushel.
Grains fell sharply in the overnight session with wheat leading the slide lower on a 19-cent decline. This follows yesterday’s 24-cent fall from its high on the March contract of 6.77. For corn, prices were off 6 cents in the night trade while beans fell 7 cents.
In wheat, Russia's Association of Grain Exporters said overnight it had stopped buying grain on the domestic market for export due to what it described as state pressure. Russia has started to restrict exports by toughening quality controls and reducing railway loading of grain to cool local prices as the country tackles a currency crisis linked to plunging oil prices and Western sanctions. Although bullish on its face, the fact that Russia would pull out of the export market has been the driving force behind the price rally in recent weeks, and as such the “buy the rumor sell the fact” mentality might be kicking in. In Germany, the winter wheat sown area for the 2015 harvest has been expanded by 2.8%, the national statistics office said on Friday.
In corn, South Korea’s Feed Association bought 60,000 MT of corn overnight to be sourced from the US or South America, while MFG out of South Korea bought 120,000 MT also optional origin with the US as a potential originator.
In Argentina, port workers went on strike Thursday demanding a year-end bonus as high inflation has cut into wage earning power there. Some private economists put the inflation rate at Argentina at 40%, far higher than official government estimates. For growing conditions, Argentina is expected to see rains easing in the near-term which should help wrap up planting which has been behind pace. Meanwhile, Southern and Central Brazil are expected to benefit from widespread rains over the next 1 to 5 day period.
Tune into GrainTV to hear about export sales and whether or not we are on pace to meet USDA expectations. Cody and Kevin discuss some tools wheat producers can use to start protecting these higher prices.
Soybean futures continued to erode this week giving up 14 cents a bushel while corn found modest strength in a 3 cent advance. In the cash market, basis movements were fairly muted this week with US average corn basis gaining 1 cent a bushel while soybeans added 2 cents to the US average...
In the overnight, soybeans and wheat traded lower slipping 5 ¾ and 5 ¾ cents respectively, while corn stayed mostly unchanged increasing by ¼ cent. The export sales report was very supportive for corn, neutral for wheat and bearish for soybeans which missed analyst expectations by a...
In the overnight session the grains traded slightly higher with corn up 3/4 of a cent, soybeans up 3 1/4 cents and wheat up 3 ¾ cents. Soybeans are trading at $9.87 ½ just below $9.91 which is the low side of the sideways range it traded in since late October. The low side of the range...
Grains are mixed in the overnight session with corn down ¾ of a cent, soybeans up 1 ½ cents and wheat up 7 cents after a sharp selloff over the last 20 days helped U.S. wheat gain some competitiveness on the global market. Also helping wheat is the accusations out of Kiev that Ukrainian...