SunPrairie Grain Morning Comment
MINOT - Feb 11/14 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:35 AM CDT:
Wheat is up 1-3 cents, finding support from USDA decrease in US ending stocks in yesterday's report (Mpls May last trade 6.31, KC May 6.51)
Soybeans are 7-9 lower, demand goes to South America, USDA makes no change to US ending stocks (May last trade 13.04 ½)
Corn is down 0-2 cents, fact remains that US supplies are abundant and there is still a lot of corn to move (May last trade 4.47 ½)
Sunflowers are down 0-5 cents, soybean oil is lower with beans and meal today, lower crude and canola don't help either
Canola is off 15-25 cents, selling pressure weighs on oils today
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The grain markets are still lightly focused on what the USDA had to say in its monthly report which was released yesterday afternoon. A better than expected reduction in corn stocks surprised the marketplace but it's the decline in wheat stocks that is supporting prices today. The USDA is pretty optimistic about US exports but does not seem to be taking into consideration the fact that rail performance is terrible and getting grain to move from the elevator is no easy feat. Soybeans did not have great news and have been trading lower. The US dollar is lower and crude prices are down about 40 cents/barrel. In economic news - the marketplace is waiting on what Janet Yellen (new fed reserve chair) has to say about the state of the US economy and monetary policy. Markets are closed Monday for the Presidents Day holiday.
The US wheat carryout was reduced by much more than expected to 558 million bushels (608 millbu estimated in January, 603 millbu expected for Feb). The global carryout was reduced as well to 183.73 million metric MT(MMT) from 185.40 MMT estimated in January. Needless to say, wheat prices have been higher on the news. Spring wheat saw a pretty decent gain by yesterday's close due to a basis increase. If you remember, spring wheat took a hard hit at the end of last week when we rolled from March futures to May futures (futures were inverted, meaning March prices were higher than May prices). Basis stayed the same with the roll, so wheat prices were down. Yesterday, though, basis values caught up, making up for some of what was lost in the futures roll. Spring wheat futures were higher as well, adding to cash price gains. Clear as mud?
In global wheat market news the USDA left the Australian crop size unchanged...however Australia released an increased crop estimate which put production to what is reportedly the third largest on record. The increase came from a larger than expected crop out of the western part of the country - which must have more than made up from those losses in eastern Australia we were talking about just a couple months ago. I'm also hearing about some logistical problems in Ukraine which are limiting exports for this month. In the US we keep talking about additional snowfall to hard red winter wheat growing areas which provides insulation and protects the crop from cold temperatures while simultaneously providing much needed precipitation to dry areas.
Soybeans are struggling again this morning. Gains were pretty substantial last week on hopes for the USDA to decrease US ending stocks due to robust demand. The USDA made no changes to US ending stocks and left their estimate at 150 millbu. Needless to say, soybean prices have been working their way lower ever since. Global carryout increased to 73.01 MMT from 72.33 MMT estimated in January. The USDA increased its Brazilian crop estimate while decreasing the Argentinean number. Brazil, though, just decreased its production estimate due to dry weather concerns. However, the newest estimate is still for a record crop size. The reduction in Argentina's estimate came from dry weather concerns as well. Rain is in the forecast, though. Soybeans also saw a roll to the May futures yesterday, slamming prices and making cash prices lose 39 cents by the end of the day.
The corn market really got the surprise number from the USDA yesterday and you would have thought that prices would have been higher. The USDA reduced US ending stocks to 1.481 billion bushels...lower than the January estimate of 1.631 billbu and the average market guess of 1.619 billbu. The reduction came from an increase in export demand. Despite the news though, futures closed lower yesterday and are trekking lower again today. The market is fully aware that there is an abundance of corn that still has yet to be marketed sitting in bins across the US countryside. This fact is what keeps prices trending lower. A reduction in the global carry out should be favorable for prices as well - the USDA put the global carryout at 157.30 MMT, down from 160.23 MMT estimated in January and much lower than the market was estimating for the report (159.60 MMT). For now prices will keep an eye on South American weather and that corn crop that Brazil is planting right now.
Kayla Burkhart
Broker/Procurement
SunPrairie Grain
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1800 13th St SE | Minot, ND 58701
P 701.857.9322 | F 701.839.5515 | C 701.720.4682
kayla.burkhart
To discuss this report further or for specific trade ideas please contact me
directly
Kayla Hoffman
SunPrairie Grain
Kayla.Hoffman@chsinc.com
Toll free: 800.735.4956
Local: 701.852.1429
Fax: 701.839.5515
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