May 23, 2013
Better than expected export sales numbers kept the grain markets on the rise today. Planting progress is picking back up as drier weather across the Midwest has corn growers trying to finish up and soybean producers trying to catch up with normal before Memorial Day. More rain is coming toward the end of the weekend as another set of storms move across the Plains and into the western Corn Belt slowing planting progress again next week.
U.S. stocks followed a global selloff by moving lower on the day. Asian and European markets were lower overnight after the Fed released its minutes late in the day yesterday, pulling U.S. markets down at the close. The minutes suggested that some on the committee would like to slow the level of bond purchases as early as June, bringing concern about unwinding from the ongoing quantitative easing. Compounding the negative news was a disappointing Purchasing Managers' Index for China released by HSBC that was 49.6, down from 50.4 in April and its lowest reading in seven months. Better economic news came with weekly initial unemployment claims dropped 23,000 to 340,000 and new home sales that came in at 454,000 in April, above the expected 430,000. Major stock indexes were trading from 0.2% to 0.5% lower at the commodity close.
The dollar index was off sharply following the losses on in the stock market and relative strength of foreign currencies on the fed news. Crude oil was down nearly $1 early in today's trade before finish down 15 cents following the drop in stocks and concern about Chinese productivity.
Corn traded higher again today as export sales, better cattle on feed numbers, ethanol production increases and slow planting have all taken part in the current run higher in both July and December futures. Yesterday's weekly petroleum status report was bullish corn as production moved to an 11 month high and stocks fell to the lowest level since November 2010. This morning's export sales report was not especially bullish, but did meet expectations with 4.1 million bushels of old crop corn sold and 13.4 million bushels of new crop booked. Exports were off 10% to 10.6 million bushels, but that number is right in line with the past several weeks, keeping shipments steady if not spectacular in this tight supply situation.
July corn futures were up 3.50 to $6.62. December corn was up 4.25 on the day to close at $5.3475.
Bottom line: Exceptional planting progress has brought the crop closer to normal, but emergence is still well behind as additional rains move across the Corn Belt. Reduction of corn acres from 0.5 million to 1.5 million acres is rumored, helping to hold December futures above $5 for the time being.
Soybeans traded slightly higher today after testing the $15.50 range on the July contract around midday. Export sales came in above expectations as the report placed old crop sales at 6.7 million bushels, well above the zero to negative value that many had expected. New crop sales were robust at 30.8 million bushels and exports were 3.7 million bushels for the week. USDA also announced another 4.2 million bushel sale of new crop soybeans to China this morning to add to the bullish export news. A strike by workers at the main grain shipping hub for Argentina in Rosario appears to have been settled for the time being. Drier weather across the middle of the country should see some additional beans planted before rains move back through the Midwest late in the weekend and early next week.
July soybeans closed up 5.25 today at $14.995. The November soybean contract was up 4.25 to close at $12.43.
Bottom line: Tight supplies and planting issues are playing into soybean prices. New crop soybeans tested the $12.50 level today before closing at $12.40. Prices may strengthen if export sales continue and later planting impacts yield expectations. Old crop soybeans are near the $15 level, presenting cash opportunity to move beans near $16 in many locations as basis slips a little but remains strong.
Wheat exports pulled the markets higher today as Japan made some purchases yesterday and the export sales report out this morning was bullish. Old crop sales of 8.8 million bushels were 91% above last week and above expectations. In addition, there were 26.2 million bushels of new crop wheat sold to a variety of buyers and from several market classes just as harvest is getting underway. Showers are soaking Oklahoma again, and are forecast for west Texas, but the rains may be too late to help the drought stressed crop. More like impacts from the Texas showers will be disruption of early harvest activities.
July wheat on the Chicago board was up 14.75 to close at $7.0325. The July 2014 contract closed the day up 9 to finish at $7.4675.
July KC wheat was up 11.25 to close at $7.545. The July 2014 winter wheat contract was up 10.75 to finish at $7.9525.
July Minneapolis wheat was up 5.50 today to close at $8.1325. The September contract was up 7.75 to close at $8.05.
Bottom line: Wheat markets are pricing weather and export sales into the spring as new crop wheat is on the horizon. Opportunities for more wheat sales may come as harvest moves north and wheat yields are reported.
Showers in eastern Australia should allow farmers to seed the final remaining area of wheat production for the country. Wheat and canola planting will be able to be completed with a quarter inch or more moisture received across much of the region. The southwest will need to pick up some rains in early June to continue growth on recently germinated wheat.
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