SA Weather Premium Continues to be Removed From Market

Corn: Prices were in consolidation mode over the past few days following aggressive losses the prior week that offset any gains made this year. Wednesday gains were prompted by market chatter that Chinese importers have booked at least three cargoes of U.S. corn, totaling about 195,000MT, for shipment in the late spring to early summer from the Pacific Northwest, U.S. corn export traders said on Tuesday. This would be the largest one-time purchase of US corn by China since 2013.

Japanese feedmakers, hit by a severe shortage of corn due to delays in shipments from the United States, say the crisis has eased and small cargoes of corn brought from China this month are likely to be the last for a while. At least one small cargo of corn that trading company Mitsubishi Corp has purchased from China’s COFCO Corp arrived at a Japanese port last week.  The emergency deal marked the first sale of corn from the world’s No. 2 producer to the world’s biggest importer since 2010.

While it remains too early to talk ‘weather’ for U.S. grains, headlines from South America have faded with yield reports out of Argentina coming in better than expected in the main producing regions. And according to AgRural, the safrinha corn crop in Brazil is 88% planted versus 85% last year and an 83% average pace. Summer rains in Central Brazil are on the radar as the safrinha crop will need ample rains over the next couple months.

Weekly ethanol production was stronger than expectations, reaching 1.045 million barrels per day, up 2.3% from the week prior and was paired with a reduction in stocks for the second week. Stocks fell 0.4% from last week to 22.8 million barrels, on par with last year. Spot prices moved higher following the data release with many traders anticipating another rise in ‘corn used for ethanol’ from the USDA. Current corn grind for the season is up 3.9% from last year versus the current estimate of 3.7% from the USDA.

Soybeans: Weakness ensued as the market is unable to shake of the massive South American crop though beans fell to four-month lows into Wednesday as NOPA crush rates for February came in at 142.792 million bushels, below 146.091 trade expectations but margins remain well above prior year (76 cents vs. 55 cents last year). In February 2016, processors crushed 146.181 million bushels. Soybean demand from China has also been light, adding further pressure, as buyers have ample time to ‘shop around.’

Brazil’s soybean harvest has reached 56% complete, slightly ahead of last year’s 52% pace at this time. Mato Grasso should be finished by next week as weather remains favorable, however, farmer selling is behind prior year at 61% sold versus 66% sold last year at this time. That being said, Oil World recently updated their forecasts and expect record export from Brazil to reach 52.3 million tonnes from Feb-Aug 2017, 4.5 million MT above prior year. Oil World also placed the crop size at a record 105 million MT.

Furthermore, a new terminal near completion in Latin America’s largest port in Santos, Brazil, is expected to add an extra 20 percent to its grains and sugar capacity, boosting shipping services just as the country produces bumper crops.The 2.2 billion reais ($694 million) Tiplam terminal started operations at a new berth in January and will ramp-up loadings with a second berth at the end of March or early April for a total capacity of 5 million tonnes of grains and 4.5 million tonnes of sugar a year.


WRITTEN BY Alyssa Badger

Alyssa started her career in 2008 at the Board of Trade managing a firm that had a primary focus in grains. The nucleus of her position centered around order entry and research development; from there, Alyssa's enthusiasm for commodities continued to grow and expand. This enthusiasm lead her to move to West Texas and assist in hedging for the largest originator of U.S. cotton to textile mills worldwide. Alyssa has now settled back in Chicago as a Trading Consultant for Highground Trading, Inc. Contact Alyssa