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Closing Grain & Soybean Comments
March 4th, 2015
Soybeans: The trade stopped showing soybeans
the love as they closed at their lowest level since
before Valentine’s Day. The futures dropped 1420 cents with the nearby months falling harder
than the deferreds. There was little fresh news
to explain the selling so most traders chalked it
up to position squaring by the recent longs and
the soft cash markets. The May soybeans closed
at $9.94 and the November at $9.72 ¾. The
well-followed July-Nov soybean inverse went
home at 27 cents, a multi-week low.
The products also saw sharp drops on the day
with meal down $4 to $6 and oil down 70-80
points. Conversely, palmoil touched at 8 month
high overnight on expectations of bigger demand
from major importer India.
There was very little news from Brazil on
roadblocks and the truck strike that has
dominated the headlines for the last 2 weeks.
Argentina’s farmers do plan to suspend grain
sales for three days over the 2nd half of next
week. Such protests are common in Argentina.
The most recent estimates on Brazil’s soybean
crop size are in the range of 91-93 mmt. The
USDA was at 94.5 in February but could revise
that number on next Tuesday’s S&D. Conversely,
Argentina’s crop is now expected to be bigger
than their latest estimate of 56 mmt.
1/2/2015 - 3/9/2015 (CHG)
Price
USc
Bsh
Daily 1SK5
May Soybeans-Daily Chart
1050
1040
1030
1020
1010
1000
994
990
980
Feb 13th
970
960
05
12
20
January 2015
26
02
09
17
23
February 2015
02
09
Mar 15
12/19/2014 - 3/9/2015 (CHG)
Price
USc
Bsh
Daily 1SN5-X5
July-Nov Soybean Inverse
40
38
36
34
32
30
28
261/ 2
26
24
22
22
29
Dec 14
05
12
20
26
January 2015
02
09
17
23
February 2015
02
09
Mar 15
Most Midwest soybean plants’ bids were unchanged on Tuesday. The Gulf & PNW bids softened though. The spot
Gulf bid is +72 H down from +85 H last week. Midwest meal offers softened $5 per ton at many locations.
In other news, export sales are expected to bounce back from the poor levels reported last week. Estimate table on
the next page. The funds sold 7,000 beans, 4,000 oil and 2,000 meal on the day. The stronger US dollar seem to
pressure grains. Crude oil is trading higher as of this writing despite a big build in US crude oil stocks. It is trading at
its highest level in 2 weeks.
While it was a very poor close in soybeans, there has been a recent tendency to firm up into the weekly export sales
report. Look for the former support of $10.00 to offer the first level of resistance on a bounce.
Corn: Corn was the best performer of the grains on the day, down just 1-2 cents and settling in the middle of the
daily range. Higher ethanol and livestock markets offered support but the strength in the cash markets was a big
influence as well. The May corn finished at $3.89 ½, in the middle of the two-month $3.73-$4.00 range. The Dec
corn finished at $4.13 ¾. The corn spreads firmed all across the curve, following the cash markets higher. The MayJuly went home at 8 cents, in from 8 ¼ cents yesterday.
Corn basis firmed at many Midwest locations on Tuesday with values improving 2-5 cents. The lack of movement
from the US farmer continues to be supportive to basis. The Gulf & PNW bids also firmed. Spot gulf bids were +52 K
mid-morning, slightly firmer than at this time last week.
The April cattle finished limit higher and other months are up $1.50 to $2.50 cwt higher. The feeder cattle were even
more impressive with most months finishing limit higher. Lean hog futures were up $1.25 to $2.50 cwt. Ethanol
swaps are up 2-3 cents as of this writing.
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The EIA reported weekly ethanol production of
274 million gallons, a 1.7% decline from the week
prior. As the RJOMRT chart shows at the right,
this is very close to the level of production
“needed” weekly in order for 5.25 bln bu of corn
to be used for ethanol production, as forecast by
the USDA. It was the smallest week of production
since October. Ethanol stocks declined slightly
with the drop coming in the Midwest and Gulf
coast states.
Elsewhere: The funds were even in corn on the
day. Ukraine’s grain exports are running on par
with a year ago; they have shipped 11.4 mmt of
corn since July 1. Conversely, the US has
exported around 27 mmt of corn in the same
timeframe. Argentina reported exporting 16.3
mmt between March of 2014 and February of
2015, down 10% from the previous year. Weekly export sales are expected to be bigger than last week. Next
week’s suspension of sales by Argentine producers could provide short-term support for prices there. Argentine corn
export prices recently bounced from multi-month lows. Trade estimates on the size of Brazil’s corn crop are 72.5-77
mmt; the USDA was at 75 mmt in February.
Look for today’s high of $3.92 (CK15) to offer initial resistance to tonight’s trade.
Wheat: Wheat futures traded inside of yesterday’s range but gave back some of the recent gains. The SRW futures
finished 5-10 cents weaker, the HRW futures finished 7-8 cents weaker and the HRS futures finished 4-5 cents
weaker. That left the July contracts at $5.03, $5.34 ¼, and $5.71 ¾, respectively. The firmer dollar was blamed for
at least some of the weakness as it traded at an 11 year high against the Euro. Other bearish factors included
deliveries against SRW futures and positive crop reports from Russia. The wheat spreads also softened on the day.
ABN Amro Clearing issued 250 contracts of deliveries against the WH5 which pressured the SRW vs. its fellows.
Morgan Stanley was the primary stopper. They were the first SRW deliveries of the cycle. There were no HRW
deliveries and just 7 HRS deliveries. Conversely, HRS basis at the PNW firmed notably on Tuesday and the mid-level
HRS protein premiums (13-14%) firmed.
Russia’s Ag Minister said that a favorable winter has
supported crop development and that their total grain crop
could come in over 100 mmt. They had previously
forecast the crop to fall to 85-100 mmt from 104 mmt a
year ago. Ukraine said they have exported 9.3 mmt of
wheat since July 1. The US has shipped about 14.3 mmt
in the same timeframe. Jordan bought 50K tons of hard
wheat for June shipment at values that are sharply below
US values. Weekly export sales are expected to be bigger
than last week’s low number.
Weekly Export Sales-Mil bu.
As of: 2/26/2015
14/15
Estimates
Last Week
Corn
27.6 - 39.4
28.2
Beans
11.0 - 18.4
16.9
Wheat
12.9 - 20.2
12.1
Meal
50 - 225
-6.4
Oil
5 - 20
14.2
*-corn, beans, wheat in mil bu. Meal and oil in 1,000
metric tons. Source: Reuters
The funds sold 5,000 SRW futures on the day. WN15 is
likely to see initial resistance at $5.04-$5.05 on tonight’s trade.
From a technical standpoint, wheat’s job is to hold last week’s lows.
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THOMAS MEIEROTTO
Commodity Risk Manager
[email protected]
d (515) 221-3818 // m (312) 320-2721 // tf (800) 283-5132 // f (515) 221-9559
RJO 'Brien
939 Office Park Road, Suite 225
West Des Moines, IA 50265
www.rjobrien.com
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