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Soybeans Lead the Decline in the Overnight

Grain Futures were Lower

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Grain futures were lower overnight with soybeans leading the decline on a 7 cent loss, giving up much of yesterday’s 10-cent advance. In outside markets, crude oil tried to stabilize after yesterday’s $2 a barrel slide while US equity futures and the dollar were eaking out small gains to start the day.

USDA announced a 130,000 MT sale of corn to Taiwan, and a 241,600 MT sale of corn to Unknown of which 91,300 MT is for 2016/2017 delivery and 150,300 for 2017/2018.

This morning Brazil’s forecasting agency Conab pegged the bean crop to a record large 103.8 MB, up from their previous forecast of 102.45. They also boosted their corn forecast to 84.5 MB from their last estimate of 83.8 MB.

Crush margins in China have started to erode sharply and are now at their lowest point since September. Soybean crushers in China have slowed bean buying as profits are cut and stockpiles have surged. With the Chinese New Year at the end of this month, there is growing beliefs that China will curb its buying and turn to South America after the week-long Lunar New Year.

USDA will release their own forecasts on Thursday for US & global grains. Traders look for a modest drop in US corn and bean carry-outs with corn expected to fall to 2,385 MB from last month's forecast of 2,403, and soybeans are expected to fall to 468 MB from 480 in December. The Quarterly Stocks report will shed some light on corn for feed demand in the 1st quarter of the marketing year. USDA has a 9% increase in feed use year on year which seems like a stretch. Cattle on Feed numbers for Q1 were essentially unchanged vs last year, while hogs and broiler numbers were up roughly 3% for the quarter vs last year.

US Southern Plains are expected to see some beneficial rains on the horizon. Argentina continues to be aggressive players in the wheat markets as their export prices have stayed flat in response to the CBT rally in recent weeks. In the past week export prices for corn have risen in foreign countries relative to the US, while SA bean prices have gotten cheaper relative to the US.

US Export Prices Relative to Foreign Competitors (in USD/MT)

This Week Last Week

Corn-ARG $23.40 $22.48

Corn-BRZ $16.90 $15.34

Corn-EUR $5.05 $3.81

Beans-ARG -$14.10 -$8.16

Beans-BRZ $2.70 $3.22

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

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