Sean K. Treasure
The Baltic Dry Index continues to get pounded, finishing down 31 points today to close at 720. Though all classes were lower, the capsize index fared by far the worst closing 78 points lower today. So, what does this mean for the grain trade? It ought to mean increased interest from importers as, all else being equal grain and oilseeds will be cheaper on a landed basis. Ship owners are getting bludgeoned but it’s clearly a boon to those paying the freight bill. The question that US traders will have is then, how much will US grain be able to participate?
Clearly the bean season is coming to an end as today’s report showed a scant 14,100 MT of new business including cancellations of 413,800 MT. The South American harvest is just beginning and obviously the Chinese are eager to get cheaper product. Check out last week’s wire for an explanation on why that is so easy for them. Typically they will over book using the “frame” contracts described last week in order to offset any supply disruptions from South America. Going forward, this is undoubtedly negative soybean prices.
Corn exports were impressive at 2,185,400 MT. This is an area where clearly the US can participate in any increase in global trade. The US is competitive in the global market for feed grains at current prices so expect more big numbers in the future. Interestingly, the Wall Street Journal did a writeup this week on sorghum demand titled “US Farmers’ Latest Hot Crop: Sorghum” http://www.wsj.com/articles/u-s-farmers-scramble-to-supply-latest-hot-crop-sorghum-1421858950. Sorghum sales were impressive again at 307,700 MT but eventually the crop will price itself out of competitiveness. Corn is king, though we will likely see producers seed a lot more acres to sorghum this year versus last.
Wheat however is a different animal. I don’t expect anything other than ‘average’ for wheat exports. The world has ample supplies and many buyers are still going elsewhere to procure their supplies. Our export sales have been doggy over the past few weeks; fortunately this week’s report was a bit better at 458,400 MT but in the whole scheme of things that’s not an impressive number. It’s neither bullish nor bearish in my opinion.
For the week, March corn closed up 1 ¾ cents and March beans once again finished down, closing 24 ¾ cents lower. In the wheat, nearby Chicago finished off 2 ¾ cents, Kansas City was down 13 and Minneapolis March closed down 8 ½ cents.
With the board down, basis levels are once again stronger across much of the country particularly in the PNW with SWW and DNS leading the charge. Nearby bid lineups as follows:
Chicago Gulf PNW
Soybeans: Option H .85H 1.10H
Corn: +.04H .61H 1.00H
SRW: +.30H .81H N/A
HRW: N/A 1.05H (12 Pro) 1.10H (11.5 Pro)
DNS: 1.15H N/A 2.65H (14 Pro)
SWW: N/A N/A 1.40H
Global grain and oilseed tenders and sales reported as follows:
· Japan bought 142,546 MT of US/Canadian (Feb 21-Mar 20) and Australian (Mar 1-31) wheat including:
· US: 11,540 MT Western White, 41,141 HRW 11.5 pro
· Canada: 50,615 MT Western Red Spring 12.5 pro
· Australian: 39,250 MT Standard White
· Korea’s KFA is seeking up to 125,000 of optional origin corn in two tenders
· Korea’s NOFI is seeking up to 280,000 MT of optional origin corn for June/July arrival
· Japan is tendering for 13,800 MT of feed wheat and 88,000 MT of feed barley for shipment by Feb 13th.
· Glencore International made the lowest offer of $279.75/MT in a tender to sell 50,000 MT of wheat to Bangladesh last night. Unknown shipment.
· Following up on their announcement to sell 17 MMT of rice, Thailand made a tender announcement soliciting bids for 1 MMT.
· Jordan announced a tender for 100,000 MT of feed wheat and 100,000 of barley. Offers are due next week.
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.
The Baltic Dry Index continues to get pounded, finishing down 31 points today to close at 720. Though all classes were lower, the capsize index fared by far the worst closing 78 points lower today. So, what does this mean for the grain trade? It ought to mean increased interest from importers as, all else being equal grain and oilseeds will be cheaper on a landed basis. Ship owners are getting bludgeoned but it’s clearly a boon to those paying the freight bill. The question that US traders will have is then, how much will US grain be able to participate?
Clearly the bean season is coming to an end as today’s report showed a scant 14,100 MT of new business including cancellations of 413,800 MT. The South American harvest is just beginning and obviously the Chinese are eager to get cheaper product. Check out last week’s wire for an explanation on why that is so easy for them. Typically they will over book using the “frame” contracts described last week in order to offset any supply disruptions from South America. Going forward, this is undoubtedly negative soybean prices.
Corn exports were impressive at 2,185,400 MT. This is an area where clearly the US can participate in any increase in global trade. The US is competitive in the global market for feed grains at current prices so expect more big numbers in the future. Interestingly, the Wall Street Journal did a writeup this week on sorghum demand titled “US Farmers’ Latest Hot Crop: Sorghum” http://www.wsj.com/articles/u-s-farmers-scramble-to-supply-latest-hot-crop-sorghum-1421858950. Sorghum sales were impressive again at 307,700 MT but eventually the crop will price itself out of competitiveness. Corn is king, though we will likely see producers seed a lot more acres to sorghum this year versus last.
Wheat however is a different animal. I don’t expect anything other than ‘average’ for wheat exports. The world has ample supplies and many buyers are still going elsewhere to procure their supplies. Our export sales have been doggy over the past few weeks; fortunately this week’s report was a bit better at 458,400 MT but in the whole scheme of things that’s not an impressive number. It’s neither bullish nor bearish in my opinion.
For the week, March corn closed up 1 ¾ cents and March beans once again finished down, closing 24 ¾ cents lower. In the wheat, nearby Chicago finished off 2 ¾ cents, Kansas City was down 13 and Minneapolis March closed down 8 ½ cents.
With the board down, basis levels are once again stronger across much of the country particularly in the PNW with SWW and DNS leading the charge. Nearby bid lineups as follows:
Chicago Gulf PNW
Soybeans: Option H .85H 1.10H
Corn: +.04H .61H 1.00H
SRW: +.30H .81H N/A
HRW: N/A 1.05H (12 Pro) 1.10H (11.5 Pro)
DNS: 1.15H N/A 2.65H (14 Pro)
SWW: N/A N/A 1.40H
Global grain and oilseed tenders and sales reported as follows:
· Japan bought 142,546 MT of US/Canadian (Feb 21-Mar 20) and Australian (Mar 1-31) wheat including:
· US: 11,540 MT Western White, 41,141 HRW 11.5 pro
· Canada: 50,615 MT Western Red Spring 12.5 pro
· Australian: 39,250 MT Standard White
· Korea’s KFA is seeking up to 125,000 of optional origin corn in two tenders
· Korea’s NOFI is seeking up to 280,000 MT of optional origin corn for June/July arrival
· Japan is tendering for 13,800 MT of feed wheat and 88,000 MT of feed barley for shipment by Feb 13th.
· Glencore International made the lowest offer of $279.75/MT in a tender to sell 50,000 MT of wheat to Bangladesh last night. Unknown shipment.
· Following up on their announcement to sell 17 MMT of rice, Thailand made a tender announcement soliciting bids for 1 MMT.
· Jordan announced a tender for 100,000 MT of feed wheat and 100,000 of barley. Offers are due next week.
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.
