COMMENTARY 3/18/14

CORN

UP 7

Export demand is hanging right in there.  Ukraine appears to be exporting as usual.   Monday’s  Export Inspections were very solid  at 38.5 with only 35 needed and 33 – 39 expected.  There was an additional sale to Mexico for 107k mt.  A Chinese feed mill has purchased 50k + Ukrainian corn (since US corn is still being rejected).  FH Mar exports from the Ukraine are up 64% from last March and YTD shipments are 40 % larger at 18mmt.

River levels now steady and holding!  That will help cheapen nearby river freight.  St Louis river level now at +10.3 ft and forecast to rise to 9.9 by 3/23.  Drafts on barges improving with more volume being able to be loaded into a barge, which makes freight per bushel cheaper.  Much needed water has come in from the North to help stabilize river levels and give some logistical relief.  Freight costs are now some 18 cents/bu cheaper than what they were 7 -10 days ago.

 

BEANS

UP 27

Yesterday’s Export Inspections and Feb NOPA Crush were in the upper end of expectations or exceeded.  China Ministry of Commerce says March bean imports may increase 5.25mmt, which is a 9% increase for Feb and March looks to be a 40% increase.  There is also more talk of 2 to 3 US bean cargoes could be returned.  There are also 13 vessels at the Gulf waiting to load beans destined for China.   A few spot showers in Argentina.  Southern Brazil is mostly dry.  Argentina should  receive normal amounts of rain in the 6 – 10 day forecast.

The US is 107% sold and 90% exported.  Both of these levels are unprecedented.  If we export all that has been sold, that would put C/O down to just 37 mill bu.   Look to soon see the US import both soybeans AND bean meal as it may  be cheaper to import them than it is to grow them.  Vessel waiting times at Paranagua is almost half of what it was this time last year.

Ag Rural and Safras put Brazil harvest at 59%, up 10 from last week.  They are lowering the crop size 1 to 86 mmt.

 

WHEAT

UP 18

Declining condition and lack of rainfall in the HRW growing areas  of KS, OK, and TX.  Also, there was support today from concern over the  spring wheat planting conditions in Ukraine.  Egypt is seeking 60k wheat for April 11-20 shipment and buys 55k US wheat.

31% of the TX wheat crop is rated poor/very poor, which is down from 46% last week.  Kansas crop saw their poor/very poor rating drop from 22% to 18%.  Milder temps in the US will slowly bring aid to corn planting and help break the HRW out of dormancy in the Plains.  Market is now anticipating the slowing of  Black Sea exports.