Morning Comments 2/12/2013
Tuesday, February 12, 2013, 8:10 amSubmitted by: Kyle Lehman
With the Chinese Lunar New Year the markets have been thin and choppy. Yesterday corn broke through and settled below the 200 day moving average at $7.04 providing some weakness into the overnight session. Yesterday’s export inspections can be viewed as friendly to corn with inspections totaling 14.5 million bushels beating the expectation of 10 million bushels (China was a happy buyer of 6.3 million of that total). USDA baseline projections were released yesterday showing corn acres down to 96 mln. Using a yield of 162.5 (trendline) their carryout for 13/14 is 2.07 billion bushels. Keep in mind this is a baseline projection. The RFA (Renewable Fuel Association) reported 20 ethanol plants in the US have shut down (none of which are in Iowa). That’s up from 17 plants on Jan. 29th.
Funds continue to reduce long positions in beans due to favorable South American weather and record production estimates. Export inspections added to the bearish tone at 30.2 million bushels well below the 45 million estimated. Brazil’s Carnival holiday is providing some tension in the grain markets as 7 million metric tons of vessels wait at ports to be loaded. The estimated wait time at ports in Brazil has now been extended to a record 45 days. USDA baseline projections for beans are seen at 76 million acres with a 44.4 bpa estimate leading to a carryout of only 185 million bushels.
Argentine weather looks to be favorable in the 11-15 day forecast with near normal temperatures and near normal precip. Brazil continues to see above normal precip which is a concern for harvest delays. Any delay in Brazilian harvest plus the 45 day wait at ports could potentially push a vessel to the US, which our carryout suggests we can’t afford.
Corn down 3c
Beans up 4c
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