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
look through.
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.
Deutsche
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
million
to 71 million tons, below the U.S. Department of
Agriculture
estimates, Deutsche Bank AG said.
Competition for soybeans to
export in Brazil is “fierce”
as crushers and hog and chicken industries also want
supplies,
Christina McGlone, an analyst at the bank in New York,
said in a
report dated yesterday. The USDA’s estimates are 72.5
million
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
regulations,
unrest with port workers and vessel line-ups, she said.
That may
spur demand for U.S. supplies for now, she said.
China
Buys U.S. Corn as Mold to Hit Local Supply, Yigu Says (1)
2013-02-27
07:32:25.332 GMT
(Updates price in fifth
paragraph.)
By Bloomberg News
Feb. 27 (Bloomberg) -- Feed
mills in China, the second-
biggest corn consumer, will probably order more U.S.
grain on
concern that domestic supply won’t meet demand before the
fall
harvest, researcher Yigu Information Consulting Ltd.
said.
Snow and rain in northern China
have increased moisture in
farmers’ unsold grain, making it more vulnerable to mold
and
less suitable as animal feed, said Feng Lichen, the
general
manager of Yigu, which runs China’s biggest corn
information
portal. Some mills are securing shipments from the U.S.,
the
biggest exporter, for deliveries later this year using
newly
issued import permits from the government, as the cost of
U.S.
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
decades, the
U.S. Department of Agriculture said on Feb. 22. Chinese
mills
bought at least 120,000 metric tons from the U.S. last
week, the
first purchases this year, two executives with direct
knowledge
of the matter said on Feb. 22. U.S. corn exporters sold
127,000
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
said
by phone on Feb. 25 from Dalian in northeastern China,
the port
city in the country’s biggest corn-growing region. “The
crops
are just too wet, so as soon as the weather warms up next
month,
mold will grow,” he said.
China Harvest
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
3:37
p.m. in Beijing.
Traders are quoting prices between 2,220 yuan ($356) and
2,250
yuan a ton for September shipments of U.S. corn, including
freight
costs, Zhang said. Futures for September delivery closed
at
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
tons,
cutting possible imports to 2.5 million tons from last
year’s
5.23 million tons.
Purchases by feed mills may have
totaled more than 200,000
tons since last week, Cherry Zhang, an analyst at
Shanghai JC
Intelligence Co., said Feb. 25. Buyers will proceed
cautiously
on concern that U.S. prices may drop more, she said.
COFCO
Gets $4.8 Billion Funding to Expand China Grain Processing
2013-02-27
05:10:27.984 GMT
By Bloomberg News
Feb. 27 (Bloomberg) -- COFCO
Corp., China’s largest grains
trader, said it will receive 30 billion yuan ($4.8
billion)
financing from China Development Bank Corp. to boost
processing
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
safety of
grain and cooking oil, and for rural financing ventures
to
promote development in farming areas, the Beijing-based
company
said in an emailed statement today.
COFCO is the parent of Hong
Kong-listed China Agri-
Industries Holdings Ltd., the country’s second-biggest
soybean
processor, and China Foods Ltd., the second-largest
cooking oil
supplier.
Egyptian
Wheat Stockpiles Will Satisfy 123 Days of Consumption
2013-02-27
11:28:12.198 GMT
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
demand, the
cabinet said today in an e-mailed statement. The
government has
142,000 tons of domestic and imported food oil on hand,
enough
to meet consumption through the middle of May, it said.
Russia
Grain Stockpiles to Fall to Record Low by July 1: SovEco
2013-02-27
09:42:13.246 GMT
By Marina Sysoyeva
Feb. 27 (Bloomberg) -- Russian
state grain stockpiles may
fall to 600,000-700,000t by July 1, SovEcon General
Director
Andrey Sizov says at Grain Producers’ Union in Moscow.
* Russian winter crop losses seen at 12%, Sizov
says
* 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
said
China
Soybean Inventory May Decline to 4m Tons, Grain.Gov Says
2013-02-27
02:11:32.122 GMT
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
last
week, Grain.gov.cn said in an e-mailed report.
* Arrival shipments may be about 7m tons in
Feb.-Mar., lower
than 8.66m tons a year ago, it says
*
Shipments may rise starting from April as supplies from
South America increase, it says.
U.S.
Corn Export Sales Seen Declining in Week Ended Feb. 21
2013-02-27
18:49:24.476 GMT
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
survey of
five analysts by Bloomberg News. Estimates for sales of
wheat
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.
*T
U.S. Export Sales
Estimate Range Feb. 14, 2013
Feb. 23, 2012
Corn
125,000-400,000
361,826 689,959
Soybeans
300,000-700,000
(119,526) 549,108
Soybean Meal
125,000-300,000
236,132 40,016
Soybean Oil
10,000-30,000
28,872 4,769
Wheat
350,000-900,000
699,257 414,070
*T
U.S.
Exporters Sell Soybeans to China, Unknown Destinations
2013-02-27
14:00:00.2 GMT
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,
and the
sale of 120,000 tons to unknown destinations is for
delivery
before Aug. 31, the U.S. Department of Agriculture said
today in
a statement.
Corn
Spread Surges on Tight Pre-Harvest Supply: Chart of the Day
2013-02-27
00:00:00.5 GMT
By Jeff Wilson
Feb. 27 (Bloomberg) --
Tightening U.S. corn inventories
will triple the spread between May and July futures in
Chicago
as buyers scramble for pre-harvest supplies, according to
Water
Street Solutions Inc., a researcher and farm-marketing
adviser.
The CHART OF THE DAY shows futures for May delivery on
the
Chicago
Board of Trade will surge to a premium of 45 cents a
bushel
over the July contract, compared with 15.75 cents
yesterday,
based on a forecast by Arlan Suderman, the senior
market
analyst at Peoria, Illinois-based Water Street Solutions.
The spread would match the peak between the contracts
last year,
when the worst drought since the 1930s sent prices to a
record.
While the government said Feb.
22 that U.S. farmers will
boost output by 35 percent this year as yields return to
normal,
that grain won’t reach buyers for another six months.
Inventories before the harvest will be the lowest
relative to
demand since 1974, U.S. Department of Agriculture data
show.
“U.S. corn supplies are forecast
tighter than they were a
year ago,” Suderman said in a telephone interview
yesterday
from Wichita, Kansas. “It’s all about rationing the
reduced
supply from last year.”
Demand for corn used as
livestock feed and to make ethanol
has probably accelerated after prices tumbled to a
seven-week
low of $6.8075 on Feb. 25, Suderman said. The USDA said
last
week that domestic pork and poultry output in 2013 will
rise 0.7
percent. A government mandate calls for refiners to use
13.8
billion gallons of ethanol this year, up from 13.2
billion last
year. Corn prices have tumbled 18 percent since reaching
a
record $8.49 on Aug. 10 as output rose in South America
and
prospects improved for a rebound in U.S. production this
year.
“There is a real concern among
consumers that the U.S.
won’t have many bushels left before the harvest,”
Suderman
said. “The spread will widen now to slow demand and
maintain
adequate inventories before the harvest.”
Brazil
Daily Soy Shipments From Major Ports: Summary (Table)
2013-02-27
15:26:16.581 GMT
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,
according to SA Commodities in Santos, Brazil:
*T
===============================================================================
Feb. 27 Feb. 26 Feb. 25 Feb. 22
Feb. 21 Feb. 20
2013 2013
2013 2013
2013 2013
===============================================================================
------------------------# of Ships-------------------------
Soy
total
164 162
156 157
150 149
Soybeans
124
123 116
116 108
109
Soybean
oil
1
1
1 0
0 0
Soybean
meal
12
12
12
13 15
14
Soy meal
pellets
27 26
27
28 27
26
------------------------Metric Tons-------------------------
Soy
total 9,467,669 9,298,669
9,067,308 9,250,123 8,785,072 8,643,572
Soybeans
7,459,979 7,358,979 7,068,068 7,099,068 6,676,518 6,643,018
Soybean
oil
5,000 5,000
5,000
0 0
0
Soybean meal
533,989 533,989 533,989 633,804
651,303 603,303
===============================================================================
Feb.
27 Feb. 26 Feb. 25 Feb. 22 Feb.
21 Feb. 20
2013 2013
2013 2013
2013 2013
===============================================================================
Soy meal pellets 1,468,701 1,400,701 1,460,251 1,517,251
1,457,251 1,397,251
Brazil Daily Corn Shipments From Major Ports: Summary
(Table)
2013-02-27 15:26:06.668 GMT
By Dominic Carey
Feb. 27 (Bloomberg) -- Following
is a table detailing scheduled corn
shipments for vessels berthed, arrived or expected at
major ports in Brazil,
according to SA Commodities in Santos, Brazil:
*T
============================================================================
Feb. 27 Feb. 26 Feb. 25 Feb. 22
Feb. 21 Feb. 20
2013 2013
2013 2013
2013 2013
============================================================================
Ships scheduled
24
27
28
27 26
32
Metric tons
1,194,631 1,337,631 1,372,631 1,308,923 1,248,923 1,464,903
============================================================================
Egyptian
Wheat Stockpiles Will Satisfy 123 Days of Consumption
2013-02-27
11:28:12.198 GMT
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
demand, the
cabinet said today in an e-mailed statement. The
government has
142,000 tons of domestic and imported food oil on hand,
enough
to meet consumption through the middle of May, it said.
Ethanol
Rin Credits Jump to Record 51 Cents, Blue Ocean Says
2013-02-27
19:23:28.99 GMT
By Mario Parker
Feb. 27 (Bloomberg) -- The value
of Renewable
Identification Numbers, or RINs, for corn-based ethanol
in the
U.S. rose to a record 51 cents, according to Blue Ocean
Brokerage LLC in New York.
Grain
Terminal Cites Sabotage, Declares Lockout
2013-02-27
19:40:18.596 GMT
By STEVEN DUBOIS
Portland, Ore. (AP) -- A Pacific
Northwest grain terminal
owner imposed a lockout on longshoremen Wednesday after
saying
an "independent former FBI investigator"
determined a union
leader sabotaged company equipment at the height of
contentious
labor problems in December.
United Grain Corp., part of the
Japanese conglomerate
Mitsui & Co., said nonunion replacement workers will
operate its
Vancouver, Wash., export terminal for
"indefinite" period. The
company said it fired the union leader, whom it described
as a
member of the bargaining team of Local 4 of the
International
Longshore and Warehouse Union but did not name.
"Deliberate attempts by an
ILWU leader to damage equipment,
disrupt operations and put co-workers at risk cannot be
tolerated," United Grain CEO Gary Schuld said
Wednesday.
The union called the company's
allegations unfounded, and
locked-out longshoremen immediately picketed outside the
terminal.
"United Grain and its
Japanese owners at Mitsui have failed
to negotiate in good faith with the men and women of the
ILWU
for months, and instead chose to aggressively prepare for
a
lockout, spending enormous resources on an out-of-state
security
firm," ILWU spokeswoman Jennifer Sargent said in a
statement.
"Mitsui-United Grain has fabricated a story as an
excuse to do
what they've wanted to do all along, which is to lock
workers
out instead of reach a fair agreement with them."
Late last year, the company was
among Northwest terminal
owners who declared an impasse on labor negotiations and
imposed
a contract that included new, management-friendly
workplace
rules.
Columbia Grain said the sabotage
occurred Dec. 22, days
before the impasse was declared. In one case, someone
shoved a 2
-foot-long metal pipe into a conveyor, causing it to shut
down,
the company said. In another, a vandal damaged a gear box
with a
mixture of sand and water.
The company, in a letter sent to
the union, said an
"impartial and independent" former FBI
investigator determined
the union leader was the culprit following an
investigation that
included interviews, surveillance tapes and other
evidence.
No charges have been filed, but
Schuld said the
investigator's report will be turned over to law
enforcement
More than a quarter of all U.S.
grain exports move through
nine grain terminals on the Willamette River and Puget
Sound.
The contract dispute initially involved six of those
terminals
that operate under a single collective bargaining
agreement with
the ILWU: United Grain, based in Vancouver; Columbia
Grain,
based in Portland; Louis Dreyfus Commodities, which has
grain
elevators in Portland and Seattle; and Temco, which has
elevators in Portland and Tacoma, Wash.
United Grain has the largest
storage capacity of any West
Coast grain export facility with more than 7 million
bushels of
storage, according to the company's website.
The U.S.-owned Temco broke away
from the alliance in early
December and negotiated separately with the union. They
announced a five-year agreement Wednesday.
"It's no coincidence that
Mitsui-United Grain has chosen to
throw out unfounded charges by an unnamed 'investigator'
just
days after the union membership ratified an agreement
with
Mistui-United Grain's American competitors," Sargent
said.
The pro-management terms implemented
in December eliminate
some employee perks and grievance procedures while giving
employers more discretion in hiring and staffing
decisions.
Management, for example, can expand shifts to 12 hours,
if
needed, and use elevator employees to help load ships.
Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
CHS Hedging, Inc.
The Right Decisions for the Right Reasons
The Right Decisions for the Right Reasons
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