Craig’s Closing Comments
March 12, 2015
Corn:
The weekly export sales this morning were a disappointment. They were announced at 418 TMT which was nearly 200 TMT below the low end of the trade estimate. After our weekly export numbers were announced talk seemed to center around the cheaper alternatives around the world. It was noted that Ukraine continues to offer the cheapest corn in the world and they have a clear advantage in accessing the Chinese market. The market was also rocked by the rumor that a corn cargo from Brazil was sold into the SE USA for December delivery.
In other South American news I see that the Argentina corn harvest is about 4% complete, according to the Buenos Aires Grains Exchange. The Buenos Aires Grains Exchange left their total corn production for Argentina unchanged at 22.5 MMT.
Finally, Strategie Grains increased their estimate for the 2015/16 EU corn crop by 0.4 MMT to 68.2 MMT citing larger planted acreage in Germany, Poland, Croatia, and Bulgaria.
If you were looking for a bright note today I suppose it could be that we did see the USA dollar trade lower although it is still at the highest level in well over a decade. There is also starting to be some more rumblings of drought concern. For that reason I am including the latest drought map below.
At the current time two of my three technical indicators are bullish. Having said that I don’t put much stock in them one way or the other right now. The fact is that we have been stuck in a $0.25 trading range for the past couple of months and I don’t know if that will change any time soon.
Soybean:
Coming into this morning’s weekly USDA export sales report the trade was looking for weekly sales to fall into the 300 – 500 TMT range. The actual number was announced at 168 TMT and that provided the bears with some ammunition for today’s session. This would seem to be further confirmation that business is shifting from the USA to South America. It should also be noted that soybean meal exports were also down 22% from last week. The market was further hampered today by the rumor that a USA soybean meal cargo heading to the EU has been switched to originate from Brazil.
In other South American news it should be noted that Brazilian soybean harvest is fast approaching 50% complete. Thus far, nearly 90% of all harvested soybeans are being sold directly off the combine. Our strong dollar is a real gift to the Brazilian farmer.
In Argentina we have heard rumors that flooding was going to reduce that crop size but in spite of that the Buenos Aires Grains Exchange left their total soybean production for unchanged at 57 MMT
In news that could impact demand the USDA confirmed the case of H5N2 bird flu yesterday in Arkansas. If I am not mistaken we saw a case confirmed in Minnesota last week. If cases continue to emerge it will eventually lead to a decrease in domestic soybean meal demand.
At the present time all three of my technical indicators are still bearish both the old crop and new crop futures.
Wheat:
Weather and a variety of export news seemed to drive this market today. On the weather front the map I showed up above clearly indicates dry conditions in HRW country and this is a concern as is the fear that frost damage will be discovered as the crop emerges from dormancy.
The weekly exports sales for the USA came out at 445 TMT. The trade was looking for a number in the 300 – 450 TMT range so this was certainly a better number, in relation to expectations than what we saw posted for corn or beans.
In other export news we had a range. Word out of India is that they are only expecting to export 1.5 MMT this year which would be their lowest exports since 2011. On the other hand France’s AgriMer increased its forecast for French wheat exports out of the EU by 600 TMT to 10.5 MMT. In their report they noted that the weaker Euro supports exports. If this number turns out to be accurate it would represent a 15% increase from last year. While that represents the French number, the EU in its totality may be a different story with Strategie Grains cutting 2.5 MMT from its 2014-15 forecast for soft wheat exports out of the EU, bringing it to 30.0 MMT. This would still be higher than last year’s record exports of 29.3 MMT.
At the present time all three of my technical indicators are bullish both the Minneapolis and Kansas City May futures.
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