Morning Grain Comments, 01/28/2016

Thursday, January 28, 2016


Recent move highs for corn and beans and the “breakout” for Chicago wheat have all proven to be failures this week; what was a constant source of bullish news for the markets overall (soybeans in particular), in Chinese import data, is no longer, as they continue to find substitutes for U.S. export supplies. In addition, South Africa’s drought issues are looking like a blip on the radar, with the overriding El Nino weather pattern allowing for continued record or near-record crops for the major global suppliers.

Taiwan millers have tendered for 41,300 tonnes of U.S. milling wheat for April 1-15 shipment, with a deadline of next Wednesday (Feb 3).

Jordan bought 100k tonnes of optional-origin hard milling wheat yesterday morning, at $209/tonne C&F, for June shipment.

The China National Grain and Oils Information Center (CNGOIC) today said that Chinese companies have ordered more than 20 cargoes (about 1.2 million tonnes) of corn for first-quarter 2016 import, mostly from Ukraine; however,
two of those cargoes were said to be of U.S. origin. Beijing set a quota for 7.2 MMT of corn in 2016, but actual imports are expected to wind up at less than half that number—around 3.5 MMT, down over a quarter from 2015. The price on those Q1 imports was reported at $236/tonne delivered, around 25% below domestic corn prices at Dalian.

South Africa’s Crop Estimates Committee yesterday put their initial 2016 corn production estimate at 7.44 million tonnes, down 25% from 9.94 MMT in 2015 due to the ongoing drought; it would be the lowest harvest since 2007. The number did exceed the average analysts’ estimate of 6.86 MMT.

Tomorrow afternoon’s semi-annual USDA Cattle Inventory Report is expected to show a total of 91.6 million head of cattle and calves on U.S. farms as of January 1, or 102.0% of the comparable figure last year.\

 

Today’s chart shows South African corn production and exports since 1980, according to the USDA, with the country’s official first crop estimate added on for 2016. Average output for the seven years from 2007-2013 in S.A. neared 13 MMT, peaking at a record 14.9 MMT in 2013, but drought has cut that number since (to a CEC-estimated 7.44 MMT in 2016). Exports peaked at 2.0-2.5 MMT in the last couple decades but that has now turned into net imports...

 

image


Unless otherwise noted, the posts on this blog should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. or its subsidiaries. INTL FCStone Inc. is not responsible for any trading decisions taken by persons viewing this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. or its subsidiaries. Reproduction without authorization is prohibited. All rights reserved.

Market Intelligence Free Trial