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OPEC Countries Reach Agreement to Reduce Oil Production

Basis levels for soybeans Continue to Come under Pressure

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Grains gave up most of yesterday’s gains, pushing solidly into negative territory to start the day. In outside markets, equity indices were slightly lower while crude oil was trying to hold on to modest gains.

Basis levels for soybeans continue to come under pressure especially along river terminals. Yesterday losses of 5 to 10 cents on soybean basis were fairly widespread. Some processing plants continue to hold firm on spot basis though. Corn, on the other hand, continues to hold up as unseasonably strong export movement is holding basis up for the time being.

Overnight, two different South Korea feed manufacturers were tendering for corn and soymeal. From Jordan, they are back in the market for 100,000 MT of hard milling wheat. Jordan has struggled to make purchases in a series of wheat and barley tenders in recent months, with traders saying uncertainty about new quality controls and payment terms has reduced participation by major grain exporting houses.

The International Grains Council on Thursday cut its forecast for the 2016/17 world corn crop by 3 million tonnes to 1.027 billion, largely reflecting a downward revision for China. World wheat production in 2016/17 was upwardly revised by 4 million tonnes to 747 million driven by higher outlooks in Kazakhstan, Canada and China.. In the US, rains continue to slow harvest in the Eastern Corn Belt and should limit the pace thru the weekend. The Western Corn Belt remains dry until Tuesday.

In a surprise move, OPEC countries agreed to reduce oil production to 32.5 million barrels of oil per day from 33.4 million. Saudi Arabia, the largest oil producer, is expected to give up 350,000 barrels a day, according to a senior OPEC source quoting the final proposal. Other OPEC nations are expected to lower production too, though more details were not immediately clear.
Three countries are exempted from the production cuts: Iran, Nigeria and Libya.

WEEKLY EXPORT SALES

Actual Expected

Corn 575 750-950

Soybeans 1,692 1,100-1,300

Wheat 595 400-600

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