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.
The grains are trading sharply higher in the overnight session with strong daily export sales.
In the overnight session the grains are trading sharply higher with corn up 5 ¼ cents, soybeans up 7 ¼ cents and wheat up 15 ½ cents this morning. This morning we saw large single day reportable sales of 126,000 metric tons of corn to unknown destinations, 1.5 million metric tons of soybeans to China for 15/16 and an 89,264 metric tons sale of spring wheat to Mexico for 2014/15.
Weekly exports sales were released at 7:30 CST this morning showing wheat sales improved 8% on the week, booking 476,300 metric tons of sales which was on the high side of analyst expectations. Corn sales met expectations with 693,500 metric tons, but declined 28% from the previous week. Soybean export sales fell 14% this week booking 696,000 metric tons. Soybean sales met expectations and is still running well ahead of pace to meet this year’s USDA expectations. Cumulative sales for soybeans are now at 41 million metric tons which is well ahead of expectations for this time of year which are around 34 million metric tons.
Yesterday ethanol production was released showing another increase in weekly production. Production jumped 2,000 barrels per day, setting another marketing year high at 990,000 barrels per day. Despite the strong production numbers this week there seems to be a slowdown on the horizon. The average ethanol prices in Iowa have been declining over the last couple weeks with late November ethanol prices going from $2.31-$2.52 dollars per gallon to around $1.88-2.15 per gallon. Crush margins have fallen accordingly from $3.42 per bushel to around $2.90.
Wheat prices continue to climb as the market monitors the effect of certain restrictions that have been imposed by the VPSS.
In the overnight session corn, soybean and wheat are all trading higher. Corn improved 3 ¼ cents, soybeans is up 3 ½ cents and wheat is trading 13 ½ cents higher this morning. The wheat market is continuing focus on the developments in Russia as yesterday’s announcement that the Veterinary and Phytosanitary Surveillance Service has restricted grain export certificates for some countries.
Yesterday was a strong deviation within the grains with corn trading a few pennies lower, wheat showing strength and soybeans sliding 16 cents by the close of the session. Soybeans which traded lower on Monday following a disappointing NOPA crush report saw more disappointment in export sales after 6 major Chinese buyers bought just over a million metric tons of soybeans for delivery in 2015. Traders viewed these sales as routine considering how widely publicized the sales were. In the overnight session January soybeans went as low as $10.16.
Yesterday there was talk that China has approved a genetically modified strain of corn developed by Syngenta. This has not yet been confirmed with an official announcement, but the implications of the strain being approved could foreshadow stronger demand for corn or corn based products out of the U.S. Last week Chinese firms bought 900,000 metric tons of DDG’s from the U.S. for delivery between December and March.
Note: Friday Informa Economics will issue its 2015 acreage update.
The grains are mixed this morning with corn up 1 ¼ cents, soybeans down 3 ¾ cents and wheat in Chicago down 2 ½ cents. Traders should keep an eye on the Informa Economics latest crop estimates scheduled for release at 10:30 AM this morning. Also on the horizon is the USDA Supply and Demand...
In the overnight session the grains traded mixed with corn down 1 cent, soybeans up 2 ¼ cents and wheat up 2 cents going into the morning pause in trade. The Chicago wheat market seems to have held support off $4.96 last Thursday which was the previous low back on February 2nd....
In the overnight the grains traded higher with corn up ¼ of a cent, soybeans up 3 ½ cents and wheat up 6 ¾ cents going into this morning’s pause. Wheat seems to be bouncing higher this morning after holding a major support level of $4.92 ¼ which was the low back on February 2nd. Today is...