Commentary 2/27/14

Commentary 2/27/14

CORN

DOWN 8
River levels abound!  St Louis river level now at +8.8 ft and forecast to drop to 4.9 by 3/4.  That is still 13 feet higher than it has been the last three weeks!  Export sales are robust at 33.1. Japan and a lot of the W Hemi business on corn. Now 89% sold vs. Feb USDA export estimate. The USDA announced a sale of 11.2 mbu this morning to Mexico for 13/14 delivery. Some analysts adamant that Argentina farmer will sell SB only to pay bills or plays the currency game; this might not be a quite solvent U.S. producers follow this same patter of old crop corn, until pollination. The Parana Ag Agency says safrinha corn is 57% planted, up 16 points from LW; pegs crop at 10.2 (10.2 LY). Hydrous ethanol in Brazil hit a 3 year high yesterday – low inventories, sugar production are concerns. China sues Ukraine – breach of loan-for-grain agreement; the former agreement said to have a record high reserve stx.

BEANS

DOWN 14

Brazil had 1/2″ of rain in southern RGDS but otherwise was relatively dry.  Argentina had good coverage yesterday of 1/2″ to 2″” in .  Forecast calls for cool temps with below avg rainfall across Argentina. Temperatures the next 7-10 days will run below average before t-storms return in one week. Expect average to perhaps above average rainfall for Brazil and Paraguay for the same time frame; good for 2nd crop corn moisture levels but limits harvest/planting progress.

Wednesday’s flash bean sale to unknown has more analysts thinking that US crop supplies are tight and that China cancelling 1 mmt may not be enough to ration.  Solid o/c exports sales explode futures;  Brazil farmer/cash U.S. movement pressures near- by. Export sales were positive at 12 for 13/14. SBM was robust at 264,000 MT on the sales side and 276.5 for shipments. USDA announced a 112,000 MT optional origin sale to China for 13/14. SX/CZ ratio has risen from 2.4 in early Jan to 2.51 – some argue for more early harvested Delta beans.

WHEAT

DOWN 18

Global supplies of wheat are plentiful.  Spring wheat continues to be volatile.  FAS expects Saudi Arabia wheat to output to fall17%.  Cepa notes that low returns to corn in Brazil’s south could cause more acres to switch to wheat.  Heightened winterkill concerns in early April, given below normal temp outlook and possible planting and emergence delays to spring wheat crop. Futures temporarily respond to decent sales, then ease. Safras expects a record Brazilian wheat crop in 14/15, 7.3 MMT as area planted jumps 13%. The export demand for U.S. wheat not going away just yet – 13.4 old crop – need 11.2 along with 7.3 14/15.