Sean K. Treasure
The slide in grain and oilseed futures continued unabated this week, particularly in the wheat pits with Chicago wheat leading the charge down. For the cash markets, this means that basis levels will continue to have to do the work in order to draw bushels out of farmer hands. It’s a painful process for cash shorts and unfortunately it’s one that could draw on for some time.
It’s interesting; for all the flack wheat is taking for poor export sales volume, this week wasn’t bad. All wheat sales came in at 469.6 TMT. Not a barn burner but it’s still a respectable total. Corn was reported at 828,100 MT and soybeans were 499,500 MT. Really, it was decent all around in my opinion and this despite the increasingly high value of the US dollar. I noted some time ago that I expect world trade in grains to be brisk due to the relatively inexpensive cost of ocean shipping via dry bulk carriers. It’s true, by and large the US hasn’t been able to capture much additional business but the rest of the world is flourishing. Look at French wheat sales; at the beginning of the year French wheat was all but written off due to major quality issues but Egypt stepped in and absorbed it in massive quantities. The French Ag Ministry has subsequently been forced to reduce carryout multiple times to accommodate the additional export volume. The Ukraine is another good example: The Ukrainian Ag Ministry is raising the export projection to roughly 37 MMT versus 32.8 MMT last year. Importers are buying but the dollar is dragging down US competitiveness.
Speaking of shipping costs, the BDI has rebounded off its lows of 509 to close today at 561 points. They say the cure for low prices is low prices; the world demand for grain results in greater demand for dry bulk vessels and prices move higher. Still, it’ll be a long slog back to 1,000 points for the BDI.
The EIA reported ethanol production this week at 931,000 BPD. Historically a very high number but the trend since the beginning of the year is down and to the right of the chart. Reversing this trend will be difficult in the short term, especially with crude in a death spiral. WTI closed at $49.61/barrel today and Brent finished the week at $59.73. Not helpful for blending margins.
Basis levels are firmer throughout the country as buyers struggle to pull grain out of producer hands. Spot bids as follows:
Chicago Gulf PNW
Soybeans -.02 K .70 K 1.10 H
Corn: .15 K .55 K 1.15 K
SRW: .20 K .86 K N/A
HRW: N/A .80 K (12 pro) 1.30 K (11.5 pro)
DNS 14 pro: 1.90 K N/A 3.00 K
SWW: N/A N/A 1.90 K
Business was brisk on the international front. Here’s what happened:
· Japan sought 120,000 MT of feed wheat and 200,000 MT of barley but received no offers.
· Japan bought 130,929 MT of wheat from the US, Canada and Australia for Apr 21-May 31 shipment.
· South Korea’s KOCOPIA announce a tender for 55,000 MT of US or optional origin corn for arrival in June.
· Jordan tendered for 100,000 MT of hard wheat for June shipment. Tender closed on 3/4/15, results pending.
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 slide in grain and oilseed futures continued unabated this week, particularly in the wheat pits with Chicago wheat leading the charge down. For the cash markets, this means that basis levels will continue to have to do the work in order to draw bushels out of farmer hands. It’s a painful process for cash shorts and unfortunately it’s one that could draw on for some time.
It’s interesting; for all the flack wheat is taking for poor export sales volume, this week wasn’t bad. All wheat sales came in at 469.6 TMT. Not a barn burner but it’s still a respectable total. Corn was reported at 828,100 MT and soybeans were 499,500 MT. Really, it was decent all around in my opinion and this despite the increasingly high value of the US dollar. I noted some time ago that I expect world trade in grains to be brisk due to the relatively inexpensive cost of ocean shipping via dry bulk carriers. It’s true, by and large the US hasn’t been able to capture much additional business but the rest of the world is flourishing. Look at French wheat sales; at the beginning of the year French wheat was all but written off due to major quality issues but Egypt stepped in and absorbed it in massive quantities. The French Ag Ministry has subsequently been forced to reduce carryout multiple times to accommodate the additional export volume. The Ukraine is another good example: The Ukrainian Ag Ministry is raising the export projection to roughly 37 MMT versus 32.8 MMT last year. Importers are buying but the dollar is dragging down US competitiveness.
Speaking of shipping costs, the BDI has rebounded off its lows of 509 to close today at 561 points. They say the cure for low prices is low prices; the world demand for grain results in greater demand for dry bulk vessels and prices move higher. Still, it’ll be a long slog back to 1,000 points for the BDI.
The EIA reported ethanol production this week at 931,000 BPD. Historically a very high number but the trend since the beginning of the year is down and to the right of the chart. Reversing this trend will be difficult in the short term, especially with crude in a death spiral. WTI closed at $49.61/barrel today and Brent finished the week at $59.73. Not helpful for blending margins.
Basis levels are firmer throughout the country as buyers struggle to pull grain out of producer hands. Spot bids as follows:
Chicago Gulf PNW
Soybeans -.02 K .70 K 1.10 H
Corn: .15 K .55 K 1.15 K
SRW: .20 K .86 K N/A
HRW: N/A .80 K (12 pro) 1.30 K (11.5 pro)
DNS 14 pro: 1.90 K N/A 3.00 K
SWW: N/A N/A 1.90 K
Business was brisk on the international front. Here’s what happened:
· Japan sought 120,000 MT of feed wheat and 200,000 MT of barley but received no offers.
· Japan bought 130,929 MT of wheat from the US, Canada and Australia for Apr 21-May 31 shipment.
· South Korea’s KOCOPIA announce a tender for 55,000 MT of US or optional origin corn for arrival in June.
· Jordan tendered for 100,000 MT of hard wheat for June shipment. Tender closed on 3/4/15, results pending.
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.
