Monday, February 10, 2014

Closing Grain Market Comments - USDA Report Day 2-10-14

Grain markets closed mixed today; on the heels of a mixed USDA report.

When things closed corn was down a penny, KC wheat was up 11-14, MPLS wheat was up 9-12, beans down 6 cents, the US dollar near unchanged with the cash index at 80.640, and the DOW was up 8 points.

USDA report was out this morning.  Mixed to poor reaction with a mixed report.  Headlines where bullish corn, bullish wheat, and neutral to bearish beans.

Very disappointing for corn as we seen a 150 million bushel cut in the carryout; that typically could be a strong up day.  But not today; perhaps because the strength was just increased exports; which is really old news.  Maybe we can see follow strength in a few days?  Delayed price reaction perhaps?

The one thing that I thought was good was the fact that corn carryout is now around 500 million bushels less than some of the numbers many had out in late December/early January.  The problem is 1.48 billion bushels of corn is still a lot of corn; yes it is much tighter then some thought; but tight enough for us to rally?  Plus we already have rallied some.

In the big picture having a starting spot next year at 2.0 billion bushels or 1.5 billion bushels should make a big difference in regards to the importance of weather and acres.  So even though 1.48 billion bushels is plenty of corn; the trend is going the right direction.  The trend of getting tighter isn’t going to hurt prices. 

As for the bean market; the USDA left things unchanged in the US.  A line in the sand that the USDA simply won’t go past even if they should??  The bottom line on today’s update for beans is we didn’t really change anything.  If demand stays strong we probably need to find a way to ratio demand.  While the crop outlook in SA remains big.  But is that big crop for sale???  If it is why have our exports remained so strong?

As for wheat; it lead price direction today; and perhaps set the stages for more short covering.  But today was no market changer for wheat;  558 million bushel carryout is tight; but wheat has a history of showing us that it can have good prices with big carryout numbers while we have seen poor prices with tight supplies.  The hardest question for wheat is really determining what is tight.

For the big picture today’s report should show us that our demand has really increased; the low prices helped our exports get increase for corn, wheat, and beans today. 

We will have to really watch the March stocks report; but if that doesn’t show a surprise in quarterly stocks we have set the stages for perhaps a fundamental reason for grains to bounce.  Yes some dry weather and weather scares this spring would help; but today’s carryout numbers are much tighter then some thought they would be several months ago.  They are not bullish; but they could eventually lead to a little bounce. 

Money sitting on the sidelines could easily decide to enter our market wondering if they missed the lows.

As for more info on the USDA report below are couple links; the first is CHS You Tube video with highlights from the report.  The second is more info broke down on the report from the Van Trump Report.

Here is CHS Hedging Report recap.

Here are numbers with info from the Van Trump Report.

February WASDE Supply & Demand Numbers  Just wanted to provide everyone with the latest USDA changes and adjustments.  Below are the specifics and a few thoughts. 
Soybeans - Bearish - Net-net no change in US ending stocks.  Global ending stocks pushed higher on production increases in Brazil 
  • Exports bumped higher by 15 million bushels from 1.495 billion to 1.510 billion. 
  • Crush left unchanged at 1.700 billion
  • Residual was dropped 10 million from 22 million down to 12 million.  
  • Imports raised higher from 25 to 30 million.   
  • Brazilian soybean production was bumped higher from 89 MMTs to 90 MMTs.
  • Argentine soybean production lowered from 54.50 to 54.0 MMTs in conjunction Arg exports were lowered from 9.7 MMTs down to 8.0 MMTs   
Corn - Neutral/Bullish - US ending stocks lowered by 150 million bushels. Global ending stocks also lowered.  Problem is many large traders are thinking "exports" might now be maxed out while a reduction of 300 million bushels plus is still set to come in the "feed/residual" category.    
  • Exports increased by 150 million from 1.450 billion to 1.60 billion
  • Ethanol left "unchanged" at 5.0 billion
  • Feed/Residual left "unchanged" 5.3 billion 
  • Argentine production lowered form 25.0 to 24.0 MMTs in conjunction exports were lowered form 17.0 to 16.0.  
  • Brazil production left "unchanged" at 70 MMTs 
  • Chinese production and imports left "unchanged" 
Wheat - Bullish - USDA moves ending stocks down  50 million bushels from 0.608 million to 0.558 million. Global ending stocks moved lower as well from 185.40 down to 183.73. 
  • Exports raised from 1.125 billion bushels to 1.175 billion 
  • Imports into the USDA increased from 160 million to 170 million 
  • Feed left unchanged at 250 million  
  • Argentine exports from 4.0 million down to 3.0 million 
  • Brazilian wheat imports lowered from 7.7 down to 7.4   
  • Chinese wheat imports left "unchanged" 
  • Kazakhstan wheat production lowered from 15.5 down to 13.94
  • Ukraine wheat production bumped slightly higher from 22.0 to 22.28
US 2013/14 Ending Stocks

Today's #
USDA January
Avg. Guess
Range of Guesses
USDA 2013
1.570 - 1.748
0.130 - 0.164
0.574 - 0.653
World 2013/14 Ending Stocks

Today's #
USDA January
Avg. Guess
Range of Guesses
156.27 - 163.20
71.00 - 75.35
182.80 - 186.00
South American Production 2014

Today's #
USDA January
Avg. Guess
Range of Guesses
19.80 - 25.00
Argentina Soybeans
52.70 - 57.00

66.10 - 74.00
Brazil Soybeans
88.30 - 93.00

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Midwest Cooperatives
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