Morning Grain Comments, 02/16/2016

Tuesday, February 16, 2016

The grain markets exploded (relatively) out of the gates last night following the long weekend, slowing since but remaining moderately higher this morning; the trade is seeing loading delays in Brazil and China returning to the market, but overall demand for U.S. beans is still sluggish...

Egypt’s GASC bought just one cargo (60k tonnes) of Romanian wheat in its latest tender on Friday, for March 10-20 shipment, at $191/tonne C&F.

Meanwhile, Egypt has reportedly rejected four cargoes of U.S. soybeans this month due to a fungus called Ambrosia, totaling around 30k tonnes.

Chinese customs reported January soybean imports at 5.66 MMT, down 38% from December and 18% below last January, and February’s total is expected to fall further—to around 4 MMT—as crushing demand remains slow.

India’s Farm Ministry estimated 2016 wheat production at 93.82 MMT, down from their 94.75 MMT target after two straight moisture-depleting seasons; that is still well above the 86.53 MMT harvest in 2015.

The Rosario Grains Exchange on Friday estimated the Argentine soybean harvest at 58.5 MMT, up from just 55.0 MMT previously, with corn production up from 23.8 MMT previously to 24.2 MMT this month.

Private analysts AgRural increased their 2015/16 Brazilian soybean estimate by a million tonnes this month to 99.7 MMT; they pegged the harvest progress at 16% complete, up from 10% last week and 14% last year.

Friday afternoon’s Disaggregated CFTC Report showed managed money traders dropping over 38k net corn contracts on the week ending last Tuesday (Feb 9), compared to daily trade estimates for a net 32k loss; soybeans dumped nearly 40k net contracts on the week, more than double the expected loss. Chi wheat dropped 34k net contracts versus the –20k guess, with the rest of the grains down as well. Meanwhile, producers and merchants added 47.5k net corn on the week, with beans up over 31.5k net and Chi wheat +23.9k.

NOPA January soybean crush is expected to come in at 155.3 million bushels this morning, down from 157.7 mbu in December and 162.7 mbu last January. Trade estimates range from 153.8-158.0 million bushels.


The 2016 November soybean contract has put in just one weekly close over the $9/bushel mark since Nov, though none below $8.80/bu either. Since the start of the “ethanol era” in 2007, the lowest a Nov bean contract has traded in the first quarter of the year was a brief dip by SX9— under the $8 mark in early March 2009, with that week’s close at $8.15. Last year, SX5 trended lower from late December 2014 onward but didn’t move below $9/bu until late May.


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