Morning Grain Comments, 02/08/2016

Monday, February 08, 2016


The last real spot of concern for this South American growing season received might have been washed out over the weekend, with strong rains arriving for key Argentine crop regions—the bulls desperately needed some help in that area and will now have to turn to 2016 U.S. weather.

Japan is looking for 146k tonnes of food wheat in their regular weekly tender, including 55k from the U.S., 29k from Canada, and 62k from Australia.

India has tendered for 240k tonnes of optional-origin corn for Feb-March.

Egypt’s GASC again cancelled their tender Friday, passing on four offers for wheat for March 2-11; they did hold a press conference yesterday to reassure the markets that they would accept all shipments with less than 0.05% ergot.

Private analysts Safras & Mercado estimated the 2015/16 Brazilian soybean crop at 51% sold as of Friday, above 38% last year and the 44% 5YA pace. Harvesting came in at 8.4% complete, more than double the previous week.

Argentine President Macri announced the increase of the country’s ethanol blend in gasoline from 10% to 12%, though all of the rise will come from sugar cane ethanol. 60% of Argentina’s ethanol output is corn based.

Friday’s Disaggregated CFTC Report showed managed money traders adding over 28k net corn contracts on the week ending Tuesday (2/2); that compared to just a +5k net estimated gain; the rest of the Chicago grains posted small (mostly expected) net gains in that category. Swap dealers were positive on the week as well, ranging up to a net +9.3k gain in corn. Producers and merchants cut 34k net corn and added minor amounts to negatives across the rest.

 

Today’s charts show total corn and soybean demand changes for the February USDA S&D Reports, since 1991; the average trade estimates show minor demand losses/carryout gains expected for both crops tomorrow morning. That would run a bit contrary to recent years for both, with corn showing only one demand drop in the last decade, and soy none in the last eight years. Continually-disappointing export paces aren’t usually the norm for this time of the year.

 

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