AM Comments 02/22/13
Friday, February 22, 2013, 7:56 amSubmitted by: Dustin Weiner
Good morning!
Our markets are higher this morning led by soybeans. The soybean market finally broke through the recent highs of near $15.00 (March futures) and triggered some buy stops that shot the market even higher. Since then things have calmed down a bit but beans are still trading double digits higher.
Soybeans… the story in beans is fairly simple, the front end of the market is getting a big push thanks to China coming in and buying U.S. beans. The rumors are that they have purchased around 9 cargoes off the PNW (Pacific Northwest) this week (this would show up on next week’s export sales report. They bought these out of the PNW instead of the US gulf because of the shorter transit time to China – they need beans now and the Brazilian ports aren’t operating as fast as they’d like. Brazilian port workers are expected to strike for a limited time both this morning and Tuesday afternoon. Every extra boat China sends to the U.S. just squeezes our already tight carryout even more – hence the higher prices.
Corn… corn spreads are tightening (meaning corn in the front end is worth more than corn in the back end). This means one of two things (or both): A) demand is starting to come back or B) farmer selling is so light that the only way to get them to sell is to discount them for holding. If demand truly is coming back, it is most likely happening in the form of increased domestic (read: ethanol) crush. With gas prices 60c higher than they were a month ago, this is possible.
Below this email are some different weather outlook maps from NOAA – forecasting some improvement in regards to drought conditions which if realized could be a little bearish to new crop prices…
Currently:
Corn is 2 to 3 cents higher
Soybeans are 10 to 15 cents higher
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