Sean K. Treasure
Another Friday, another week of lower grain futures. As I glance at the KWH chart, it just looks ugly. Going all the way back to May, the trend is clear; lower highs and lower lows. Just take a look at the KWH weekly; all I can say is, don’t fight the trend.
Saudi Arabia announced a tender for 660,000 MT of min 12.5 pro hard wheat for April/May shipment. The winning offers will be awarded in 55,000 MT increments. That’s a heck of a lot of wheat to be sure but the market shrugged it off, obviously discounting the odds of US wheat trading. Yes, we’re becoming more competitive as evidenced by improved numbers on this week’s export sales report. Still, Saudi business can be tough to sell as they have specific grade requirements that most buyers don’t require and the fact that May HRW closed down 6 ½ cents indicates the market isn’t too optimistic about a big US sale.
Actually, the export sales report was positive all around in my opinion. All wheat sales totaled 544,400 MT with SRW the only laggard. Corn had another big week at 1,068,200 MT; a far cry from last week’s total but still a respectable figure. Soybeans were a bit of a surprise as many in the trade are beginning to write off the possibility of anymore significant business. Bean sales totaled 888,200 MT. The fact is, we will see more sales and we will see more cancellations. It’s a balancing act this time of the year for Chinese buyers. Yes, South American harvest is beginning but every year the tail on US soybean exports is a little longer than people seem to think it will be. There are still a couple good months that bean boats will load out of the US. Don’t forget the logistical problems in Brazil. Getting product from origin to destination is a major league cluster.
The US sorghum balance sheet is an interesting study. The US produced 10,998,221 MT of sorghum this year and we’ve sold 7,418,153 MT to date. The pace with which sorghum is being sold to China just isn’t sustainable. I expect sorghum to start pricing itself out of competitiveness soon; like I said last week, corn is king.
Despite the major break in crude prices, ethanol plants are still going full steam ahead based on the weekly ethanol production figures. The US produced 978 thousand barrels for the week ending 1/23, right on par with the past several weeks and at historically very high numbers. Lower corn prices are obviously helping them keep producing though margins have got to be getting tight. How long can they sustain these levels under current market conditions?
For the week, March corn closed down 18 ¾ cents and March beans once again finished down, closing 11 ¾ cents lower. In the wheat, nearby Chicago finished off 27 ¼ cents, Kansas City was down 23 ¾ and Minneapolis March closed down 19 ¼ cents.
Basis has to do the work. Premiums are at the very least steady, with higher numbers in some areas, particularly the PNW. Spot bids as follows:
Chicago Gulf PNW
Soybeans Option H .86 H 1.05 H
Corn: .04 H .55 H 1.05 H
SRW: .30 H .81 H N/A
HRW: N/A 1.05 H (12 pro) 1.20 H (11.5 pro)
DNS 14 pro: 1.05 H N/A 2.63 H
SWW: N/A N/A 1.56 H
It was shaping up to be a slow week until today when Saudi Arabia announced their tender. Japan took the week off. Here’s some highlights from the rest of the trade:
· Taiwan announced a tender for 86,280 MT of US milling wheat. Offers are due next week, we should have specifics soon.
· Lebanon purchased 30,000 MT of milling wheat for LH Mar. Winning offer was $256.23/MT delivered.
· The United Arab Emirates bought ~40,000 MT of milling wheat for Feb 1- Apr 30 and Apr 30-Jun 30. ~25,000 MT was Aussie-origin, and 15,000 MT was Canadian
· The big one: Saudi Arabia announced a tender for 660,000 MT of min 12.5 pro hard wheat for April/May shipment.
· The Philippines announced their intention to purchase up to 500,000 MT of rice starting in March
Please don’t hesitate to contact me with any questions or comments. [email protected]
Happy trading!
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.
Another Friday, another week of lower grain futures. As I glance at the KWH chart, it just looks ugly. Going all the way back to May, the trend is clear; lower highs and lower lows. Just take a look at the KWH weekly; all I can say is, don’t fight the trend.
Saudi Arabia announced a tender for 660,000 MT of min 12.5 pro hard wheat for April/May shipment. The winning offers will be awarded in 55,000 MT increments. That’s a heck of a lot of wheat to be sure but the market shrugged it off, obviously discounting the odds of US wheat trading. Yes, we’re becoming more competitive as evidenced by improved numbers on this week’s export sales report. Still, Saudi business can be tough to sell as they have specific grade requirements that most buyers don’t require and the fact that May HRW closed down 6 ½ cents indicates the market isn’t too optimistic about a big US sale.
Actually, the export sales report was positive all around in my opinion. All wheat sales totaled 544,400 MT with SRW the only laggard. Corn had another big week at 1,068,200 MT; a far cry from last week’s total but still a respectable figure. Soybeans were a bit of a surprise as many in the trade are beginning to write off the possibility of anymore significant business. Bean sales totaled 888,200 MT. The fact is, we will see more sales and we will see more cancellations. It’s a balancing act this time of the year for Chinese buyers. Yes, South American harvest is beginning but every year the tail on US soybean exports is a little longer than people seem to think it will be. There are still a couple good months that bean boats will load out of the US. Don’t forget the logistical problems in Brazil. Getting product from origin to destination is a major league cluster.
The US sorghum balance sheet is an interesting study. The US produced 10,998,221 MT of sorghum this year and we’ve sold 7,418,153 MT to date. The pace with which sorghum is being sold to China just isn’t sustainable. I expect sorghum to start pricing itself out of competitiveness soon; like I said last week, corn is king.
Despite the major break in crude prices, ethanol plants are still going full steam ahead based on the weekly ethanol production figures. The US produced 978 thousand barrels for the week ending 1/23, right on par with the past several weeks and at historically very high numbers. Lower corn prices are obviously helping them keep producing though margins have got to be getting tight. How long can they sustain these levels under current market conditions?
For the week, March corn closed down 18 ¾ cents and March beans once again finished down, closing 11 ¾ cents lower. In the wheat, nearby Chicago finished off 27 ¼ cents, Kansas City was down 23 ¾ and Minneapolis March closed down 19 ¼ cents.
Basis has to do the work. Premiums are at the very least steady, with higher numbers in some areas, particularly the PNW. Spot bids as follows:
Chicago Gulf PNW
Soybeans Option H .86 H 1.05 H
Corn: .04 H .55 H 1.05 H
SRW: .30 H .81 H N/A
HRW: N/A 1.05 H (12 pro) 1.20 H (11.5 pro)
DNS 14 pro: 1.05 H N/A 2.63 H
SWW: N/A N/A 1.56 H
It was shaping up to be a slow week until today when Saudi Arabia announced their tender. Japan took the week off. Here’s some highlights from the rest of the trade:
· Taiwan announced a tender for 86,280 MT of US milling wheat. Offers are due next week, we should have specifics soon.
· Lebanon purchased 30,000 MT of milling wheat for LH Mar. Winning offer was $256.23/MT delivered.
· The United Arab Emirates bought ~40,000 MT of milling wheat for Feb 1- Apr 30 and Apr 30-Jun 30. ~25,000 MT was Aussie-origin, and 15,000 MT was Canadian
· The big one: Saudi Arabia announced a tender for 660,000 MT of min 12.5 pro hard wheat for April/May shipment.
· The Philippines announced their intention to purchase up to 500,000 MT of rice starting in March
Please don’t hesitate to contact me with any questions or comments. [email protected]
Happy trading!
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.
