This week’s export sales report was relatively good considering the recent slump. All wheat old crop sales were reported at 397,500 MT; not something that we would ordinarily get excited about but it’s a positive step. Old crop corn sales totaled 867,900 MT and soybeans were 102,100 MT. Again, these aren’t overtly bullish figures; the takeaway here is that prices are close to levels that are once again competitive in the world market. That doesn’t mean futures can’t deteriorate further, but now that we’ve reached a level of nominal competitiveness, further depreciation should correspond with rising tonnages of export sales. If that’s true, there shouldn’t be a huge amount of downside…(famous last words)
It seemed for a while that basis and futures were simultaneously moving lower. Grain marketing 101 says that basis and futures normally have an inverse relationship. When one goes up the other goes down. This time, since U.S. grain was priced out of the market, exporters with light sales books were forced to drop their bids along with simultaneously dropping futures. Bad for cash longs, but necessary nonetheless. For the time being, things seem to have reached a new equilibrium as premiums for grain and oilseeds are modestly higher across much of the country with some exceptions (PNW wheat basis has taken it on the chin). Now that we seem to have reached a price level that places U.S. grain in a position to sell, it stands to reason that flat to lower futures ought to be bullish premiums.
Spot basis values:
Chicago Gulf PNW
Soybeans Option K .76 K .85 K
Corn: .15 N .65 K .95 N
SRW: .10 K .70 K N/A
HRW: N/A .80 K (12 pro) 1.10 K (11.5 pro)
DNS 14 pro: 1.25 K N/A 2.40 K
SWW: N/A N/A 1.30 N
In other news, Brazilian truckers are striking again. Nothing to get excited about and it will likely pass without much fanfare. Wet weather is expected in the Midwest which will likely temporarily delay corn planting. It doesn’t appear to be anything to get worked up over as dry weather is expected to return next week. Outside markets were mixed today. Equities were higher with the Dow about 21 points higher and the S&P finished almost 5 points higher. WTI crude oil was down 59 cents/barrel, gold was off $19.30 an ounce and the dollar index actually touched a 3 week low today. This last development is the most intriguing for grain traders. Agriculturals have been hammered due in no small part to the strength of the dollar. Further retreat in the dollar should be positive to grain exports and grain prices.
On the global front, it is still unclear whether the Iraqi Grain Board has accepted an offer from the Russian’s for at least 50,000 MT of hard wheat. The tender which closed Monday stipulated that offers would remain good until the end of the day Friday. (BTW, if you’re an importer, this is a great way to have a healthy amount of price protection priced into your offers. No-one wants to sell a free call). The EU granted export licenses for 679,000 MT of soft wheat for export this week. Europe continues to dominate the wheat export market.
International grain business this week:
· Japan bought a total of 107,743 MT of wheat via a tender this week. The total included the following:
· US- 21,330 MT of Western White and 24,990 MT of HRW and 25,543 of DNS
· Canada- 35,880 MT of western red spring.
· Iraq tendered for at least 50,000 MT of hard wheat. Russia offered the lowest at $243/MT C&F
· KOCOPIA (S. Korea) bought 53,000 MT of corn for August shipment at $201/MT C&F. Origin unknown.
· Japan bought 20,040 MT of feed wheat and 31,865 MT of feed barley in an SBS tender.
Please don’t hesitate to contact me with any questions or comments. [email protected]
Happy trading!
Sean K. Treasure
Disclaimer: Commodity trading involves substantial risk and may not be suitable for everyone. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this wire and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.
It seemed for a while that basis and futures were simultaneously moving lower. Grain marketing 101 says that basis and futures normally have an inverse relationship. When one goes up the other goes down. This time, since U.S. grain was priced out of the market, exporters with light sales books were forced to drop their bids along with simultaneously dropping futures. Bad for cash longs, but necessary nonetheless. For the time being, things seem to have reached a new equilibrium as premiums for grain and oilseeds are modestly higher across much of the country with some exceptions (PNW wheat basis has taken it on the chin). Now that we seem to have reached a price level that places U.S. grain in a position to sell, it stands to reason that flat to lower futures ought to be bullish premiums.
Spot basis values:
Chicago Gulf PNW
Soybeans Option K .76 K .85 K
Corn: .15 N .65 K .95 N
SRW: .10 K .70 K N/A
HRW: N/A .80 K (12 pro) 1.10 K (11.5 pro)
DNS 14 pro: 1.25 K N/A 2.40 K
SWW: N/A N/A 1.30 N
In other news, Brazilian truckers are striking again. Nothing to get excited about and it will likely pass without much fanfare. Wet weather is expected in the Midwest which will likely temporarily delay corn planting. It doesn’t appear to be anything to get worked up over as dry weather is expected to return next week. Outside markets were mixed today. Equities were higher with the Dow about 21 points higher and the S&P finished almost 5 points higher. WTI crude oil was down 59 cents/barrel, gold was off $19.30 an ounce and the dollar index actually touched a 3 week low today. This last development is the most intriguing for grain traders. Agriculturals have been hammered due in no small part to the strength of the dollar. Further retreat in the dollar should be positive to grain exports and grain prices.
On the global front, it is still unclear whether the Iraqi Grain Board has accepted an offer from the Russian’s for at least 50,000 MT of hard wheat. The tender which closed Monday stipulated that offers would remain good until the end of the day Friday. (BTW, if you’re an importer, this is a great way to have a healthy amount of price protection priced into your offers. No-one wants to sell a free call). The EU granted export licenses for 679,000 MT of soft wheat for export this week. Europe continues to dominate the wheat export market.
International grain business this week:
· Japan bought a total of 107,743 MT of wheat via a tender this week. The total included the following:
· US- 21,330 MT of Western White and 24,990 MT of HRW and 25,543 of DNS
· Canada- 35,880 MT of western red spring.
· Iraq tendered for at least 50,000 MT of hard wheat. Russia offered the lowest at $243/MT C&F
· KOCOPIA (S. Korea) bought 53,000 MT of corn for August shipment at $201/MT C&F. Origin unknown.
· Japan bought 20,040 MT of feed wheat and 31,865 MT of feed barley in an SBS tender.
Please don’t hesitate to contact me with any questions or comments. [email protected]
Happy trading!
Sean K. Treasure
Disclaimer: Commodity trading involves substantial risk and may not be suitable for everyone. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this wire and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.
