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U.S. grains: Export, domestic demand support U.S. soy

U.S. soybean futures rose for the fifth day in a row on Wednesday due to strong demand from exporters as well as domestic processors, traders said.

Wheat futures crumbled, dropping two per cent, as huge global supplies weighed on the market. Corn also was weaker, with fresh Chinese rejections of distillers’ dried grains roiling export prospects for U.S. supplies, traders said.

The U.S. Agriculture Department on Wednesday morning said private exporters reported the sale of 106,000 tonnes of U.S. soybeans to China for the 2014-15 marketing year.

A weekly USDA report on Thursday morning was expected to show export sales of soybeans in a range from 750,000 to 1.05 million tonnes, up from 156,200 tonnes a week ago.

“We are just continuing to see the demand leading the soy complex higher,” said Karl Setzer, analyst at MaxYield Cooperative in West Bend, Iowa.

“Soybeans are taking the majority of their support today off simple demand coming out of the Asian market.”

The monthly crush report from the U.S. National Oilseed Processors Association showed that domestic demand for the oilseed remained strong amid good profit margins. NOPA said that U.S. processors crushed a record 165.384 million bushels of soybeans in December, topping market forecasts.

Chicago Board of Trade March soybeans closed up 11 cents at $13.18 a bushel. The contract has risen 3.8 per cent during its five-session winning streak, the longest for the benchmark contract since a six-day stretch ended Nov. 13, 2013 (all figures US$).

New-crop soybean contracts weakened despite the gain in the nearby futures, weighed down by expectations of large crops from South America and the U.S. in the coming year.

The old-crop/new-crop spread widened to more than $2 for the first time this year even amid concerns about dry and hot weather in Argentina potentially curtailing crop production.

CBOT corn futures for March delivery settled down 5-3/4 cents at $4.25-3/4 a bushel.

A weak cash market contributed to the decline, as processors and ethanol plants lowered their basis bids following good farmer sales in recent days.

“The corn rally which started on Friday seems to have run out of steam with the rising prices generating selling among those holding inventories,” said Saxo Bank analyst Ole Hansen.

“The outlook for corn demand is also dimming, with China rejecting U.S. cargoes in the dispute about genetically-modified shipments at a time of high corn inventories.”

Chinese quarantine authorities have rejected more cargoes of dried distillers grains (DDGs), a corn byproduct from the U.S., due to the presence of an unapproved genetically-modified (GMO) strain, traders said on Wednesday.

The size of the rejections was unknown.

CBOT March soft red winter wheat ended down 11-1/2 cents at $5.67-3/4 a bushel, ending near session lows. Traders said the market was technically weak, closing below the low end of its 20-day Bollinger range.

Ukraine boosted its 2013 grain harvest estimate by 36 per cent to a record high. Estimate includes 22.278 million tonnes of wheat, up from 15.762 million in 2012. India’s 2014 wheat production was seen at more than 100 million tonnes, a new record, according to Farm Minister Sharad Pawar.

— Mark Weinraub is a Reuters correspondent covering grain futures markets from Chicago.

COPA Medallion COPA finalist in 2012, 2014 and 2015.
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