Information about grain markets and info to help producers to market crops. See how various grain marketing strategies can effect ones average price. We will be posting various potential trade and option strategies along with marketing decisions made on our mock farms.
Wednesday, February 27, 2013
Afternoon recap from CHS Hedging's Tregg Cronin 2-27-2013
Outside Markets as of 2:00: Dollar Index down 0.256 at
81.607; NYMEX-WTI up $0.16 at $92.79; Brent Crude down $0.81 at $111.90;
Heating Oil down $0.0388 at $2.9929; Livestock markets are mixed with cattle up
and hogs down; Softs are firmer led by Cotton which is up 3.35%; Gold down
$22.60 at $1592.90; Copper down $0.0085 at $3.5745; Silver down $0.445 at
$28.875; S&P’s are up 24.75 at 1516.75, Dow futures are up 200.00 at
14,060.00 and Treasuries are weaker.
Taught classes this morning, and in meetings this afternoon,
so just a few comments on cash and spreads with some articles below worth a
Markets continuing their rallies today on lack of farm gate
movement, still firm cash markets, export business, rebounding ethanol
production and most likely some light profit taking in the wheat pits.
The close wasn’t incredibly strong, and May corn failed to close above the
vaunted $7.00 level. $7.01 kick starts technical buying. Ethanol
production continues to see a rebound in weekly production, poking back above
800,000bbls/day for the first time in seven weeks. Stocks declined
slightly, but remain rather large. The improvement in margins has gotten
plants back open, and the basis reflects their desire to get corn bought.
Still lots of ethanol plants in IL/IA paying +50K or more for trains, but the
demand seems to be for AMJJ. Truck corn might be a bit weaker at
some. Wheat’s discount to corn is starting to perk up the interest of a
lot of feed lots both in the US and abroad. Japan was in for SRW as feed
wheat, the first time in quite a while. KS/CO feed lots interested in
HRW. SRW working into southeast markets. Isn’t whacking corn basis
severely yet, but likely isn’t far off.
PNW spring wheat basis firming up with cash guys calling it
up 20c vs. two weeks ago. Doesn’t appear to be the guys who sold the
Chinese business two weeks ago, so hard to tell if it is covering business
already on the books, or if this is fresh demand. To-arrive bids over
Chicago not showing much life this afternoon, so would assume we have plenty of
wheat to put out any fire. A basis selling opportunity seems to be right
around the corner on wheat. Lots of wheat left on farm. MWH/MWK
rallied late, closing up 0.75c to -9.00c, but traded all the way into -7.50c as
guys bought the spread instead of pumping up basis any further.
Dr. Michael Cordonnier said he expects Brazilian yields to
fall as harvest progresses, not rise. Deutsche Bank was in the news
putting the Brazilian soy crop at 79-80MMT, by far the lowest in print and well
under the USDA’s 83.5MMT. Two cargoes to China for 12/13 and two cargoes
to unknown for 13/14. Fits with the business bantered about late last week.
The export pace we’re on is unsustainable. Brazilian basis levels
continue to fall, but this seems to be tied to importers refusing to pay up
because they won’t get beans no matter what they pay, so why bid it?
Lineups on soy grow every day as you can see below. Total soy and
products lineup is 9.467MMT vs. 8.643MMT last week. Corn lineup is
1.194MMT vs. 1.464MMT last week.
Shouldn’t be any deliveries against March corn or soybeans,
but there are 1,882 March Chicago Wheat delivery certificates on the street,
and these could see deliveries potentially. Wouldn’t think there would be
any spring or winter deliveries considering the basis is firm enough and works
by 15-20c to load wheat out.
Bank Says Brazil Soybean Crop May Be 79-80 Million Tons
2013-02-27 07:23:31.183 GMT
By Claudia Carpenter
Feb. 27 (Bloomberg) -- Brazil’s
soybean crop for 2012-13
may be 79 million to 80 million metric tons and corn 70
to 71 million tons, below the U.S. Department of
estimates, Deutsche Bank AG said.
Competition for soybeans to
export in Brazil is “fierce”
as crushers and hog and chicken industries also want
Christina McGlone, an analyst at the bank in New York,
said in a
report dated yesterday. The USDA’s estimates are 72.5
for corn and 83.5 million tons for soybeans.
Supply is limited at ports
because of delayed plantings,
late harvesting due to wet weather, new trucking
unrest with port workers and vessel line-ups, she said.
spur demand for U.S. supplies for now, she said.
Buys U.S. Corn as Mold to Hit Local Supply, Yigu Says (1)
(Updates price in fifth
By Bloomberg News
Feb. 27 (Bloomberg) -- Feed
mills in China, the second-
biggest corn consumer, will probably order more U.S.
concern that domestic supply won’t meet demand before the
harvest, researcher Yigu Information Consulting Ltd.
Snow and rain in northern China
have increased moisture in
farmers’ unsold grain, making it more vulnerable to mold
less suitable as animal feed, said Feng Lichen, the
manager of Yigu, which runs China’s biggest corn
portal. Some mills are securing shipments from the U.S.,
biggest exporter, for deliveries later this year using
issued import permits from the government, as the cost of
corn has dropped, he said.
China’s purchases may help stem
an 18 percent decline in
Chicago prices from a record in August. The U.S. crop
will be an
all-time high following the worst drought in seven
U.S. Department of Agriculture said on Feb. 22. Chinese
bought at least 120,000 metric tons from the U.S. last
first purchases this year, two executives with direct
of the matter said on Feb. 22. U.S. corn exporters sold
tons to unknown buyers last week, the USDA said.
“China’s corn shortage this year
may widen to 5 million
tons from a previous projection of 2 million tons,” Feng
by phone on Feb. 25 from Dalian in northeastern China,
city in the country’s biggest corn-growing region. “The
are just too wet, so as soon as the weather warms up next
mold will grow,” he said.
The most-active contract on the
Chicago Board of Trade has
lost 6.9 percent this month and was at $6.93 a bushel at
p.m. in Beijing.
Traders are quoting prices between 2,220 yuan ($356) and
yuan a ton for September shipments of U.S. corn, including
costs, Zhang said. Futures for September delivery closed
2,433 yuan a ton on the Dalian Commodity Exchange.
The USDA had said on Feb. 9 that
China’s harvest in the
marketing season from Oct. 1 rose to a record 208 million
cutting possible imports to 2.5 million tons from last
5.23 million tons.
Purchases by feed mills may have
totaled more than 200,000
tons since last week, Cherry Zhang, an analyst at
Intelligence Co., said Feb. 25. Buyers will proceed
on concern that U.S. prices may drop more, she said.
Gets $4.8 Billion Funding to Expand China Grain Processing
By Bloomberg News
Feb. 27 (Bloomberg) -- COFCO
Corp., China’s largest grains
trader, said it will receive 30 billion yuan ($4.8
financing from China Development Bank Corp. to boost
and shipping of grains and oilseeds.
The state-owned company will
receive the money over the
next five years and use it to ensure the supply and
grain and cooking oil, and for rural financing ventures
promote development in farming areas, the Beijing-based
said in an emailed statement today.
COFCO is the parent of Hong
Kong-listed China Agri-
Industries Holdings Ltd., the country’s second-biggest
processor, and China Foods Ltd., the second-largest
Wheat Stockpiles Will Satisfy 123 Days of Consumption
By Abdel Latif Wahba
Feb. 27 (Bloomberg) -- Egypt has
3 million metric tons of
domestic and imported wheat in stockpiles, enough to meet
consumption for 123 days, the cabinet said.
Inventories of domestic and
imported sugar are about
290,000 tons, sufficient to satisfy 71 days of local
cabinet said today in an e-mailed statement. The
142,000 tons of domestic and imported food oil on hand,
to meet consumption through the middle of May, it said.
Grain Stockpiles to Fall to Record Low by July 1: SovEco
By Marina Sysoyeva
Feb. 27 (Bloomberg) -- Russian
state grain stockpiles may
fall to 600,000-700,000t by July 1, SovEcon General
Andrey Sizov says at Grain Producers’ Union in Moscow.
* Russian winter crop losses seen at 12%, Sizov
* Russian grain, legumes exports reach 14.3mt so
far in season
from July 1, Sizov say
* Russian grain, legumes exports seen at 500,000
tons in Feb.
* NOTE: 6.5% of winter crops failed to sprout or
were weak at
the end of February 2011; harvest was
94.2mt that yr, Sizov
Soybean Inventory May Decline to 4m Tons, Grain.Gov Says
By Bloomberg News
Feb. 27 (Bloomberg) -- China’s
inventory of soybeans may
fall to 4m metric tons by end-March from 5.2m tons as of
week, Grain.gov.cn said in an e-mailed report.
* Arrival shipments may be about 7m tons in
than 8.66m tons a year ago, it says
Shipments may rise starting from April as supplies from
South America increase, it says.
Corn Export Sales Seen Declining in Week Ended Feb. 21
By Jeff Wilson
Feb. 27 (Bloomberg) -- U.S.
export sales of corn probably
fell in the week ended Feb. 21 from a year earlier, while
soybean-meal and soybean-oil sales rose, based on a
five analysts by Bloomberg News. Estimates for sales of
and soybeans ranged from below to above a year earlier.
The U.S. Department of
Agriculture is scheduled to release
its sales report at 8:30 a.m. tomorrow in Washington.
U.S. Export Sales
Estimate Range Feb. 14, 2013
Feb. 23, 2012
Exporters Sell Soybeans to China, Unknown Destinations
By Patrick McKiernan
Feb. 27 (Bloomberg) -- The sale
of 120,000 metric tons to
China is for delivery in the 12 months starting Sept. 1,
sale of 120,000 tons to unknown destinations is for
before Aug. 31, the U.S. Department of Agriculture said
Spread Surges on Tight Pre-Harvest Supply: Chart of the Day
By Jeff Wilson
Feb. 27 (Bloomberg) --
Tightening U.S. corn inventories
will triple the spread between May and July futures in
as buyers scramble for pre-harvest supplies, according to
Street Solutions Inc., a researcher and farm-marketing
The CHART OF THE DAY shows futures for May delivery on
Board of Trade will surge to a premium of 45 cents a
over the July contract, compared with 15.75 cents
based on a forecast by Arlan Suderman, the senior
analyst at Peoria, Illinois-based Water Street Solutions.
The spread would match the peak between the contracts
when the worst drought since the 1930s sent prices to a
While the government said Feb.
22 that U.S. farmers will
boost output by 35 percent this year as yields return to
that grain won’t reach buyers for another six months.
Inventories before the harvest will be the lowest
demand since 1974, U.S. Department of Agriculture data
“U.S. corn supplies are forecast
tighter than they were a
year ago,” Suderman said in a telephone interview
from Wichita, Kansas. “It’s all about rationing the
supply from last year.”
Demand for corn used as
livestock feed and to make ethanol
has probably accelerated after prices tumbled to a
low of $6.8075 on Feb. 25, Suderman said. The USDA said
week that domestic pork and poultry output in 2013 will
percent. A government mandate calls for refiners to use
billion gallons of ethanol this year, up from 13.2
year. Corn prices have tumbled 18 percent since reaching
record $8.49 on Aug. 10 as output rose in South America
prospects improved for a rebound in U.S. production this
“There is a real concern among
consumers that the U.S.
won’t have many bushels left before the harvest,”
said. “The spread will widen now to slow demand and
adequate inventories before the harvest.”
Daily Soy Shipments From Major Ports: Summary (Table)
By Dominic Carey
Feb. 27 (Bloomberg) -- Following
is a table detailing scheduled soybean
shipments for vessels berthed, arrived or expected at
major ports in Brazil,