The corn and wheat numbers were bullish, soybeans were neutral.
Probably the biggest surprise of the day had corn exports up 150 million bushels. Wheat exports also went up, that was a surprise as well.
Corn exports increased 150 million bushels with ending stocks dropping the same amount. This put corn ending stocks at 1.481 billion bushels. Soybean exports went up 15 million bushels with crush unchanged. Brazil’s soybean production was up with Argentina dropping. This was expected. Wheat ending stocks dropped 50 million bushels as exports went up a similar amount.
Prior to the report, corn was up one cent, soybeans were up seven cents, with wheat up four cents. Shortly after the report, corn was up two cents, soybeans were down eight cents, and wheat was up six cents. Soybean were down initially almost ten cents, then moved to a small plus, but quickly went lower again.
Traders were looking for this report to be pretty boring with no major changes in the numbers from last month. Many had expected both corn and soybean ending stocks to decline slightly while exports are expected to jump higher by a small amount. Traders are looking ahead to the USDA Forum to be held February 20-21 when they make public their ten year supply and demand tables for many grains and commodities. March 31 is the next quarterly grains stocks report. Also USDA will release that day their estimate of corn and soybean acres for 2014.
Soybean harvest is underway in Brazil. It is about three weeks ahead of last year. For nearly two months the market has been expecting China to move or switch some of their U.S. soybean purchases to Brazil. The market had expected the switch could be up to two million tons. Last Friday China returned from their new year festivities. It is a several day shutdown for China when they celebrate their new year. To date China has not yet cancelled any of their U.S. soybean purchases. China typically buys for shipment to China or for shipment to unknown destinations. When you see sales to unknown destinations it is usually China, but not always. Some had expected the switch could happen very shortly with news last week they had bought Brazil soybeans to be shipped from May to July. So far there have been 600,000 tons of U.S. soybean cancellations from the unknown destination category. That happened on Jan. 30 with the weekly sales totals from that day.
Several items continue to news worthy. One is the weather and harvest progress in Brazil. Many areas in Brazil are seeing above normal temperatures this week. More normal temperatures are expected later this month. Another news item is the Argentina farmer with them still holding 9 million to 11 million tons of old crop soybeans unsold. Those farmers have been in a long running and frustrating feud with the Argentina government. Farmers there have been concerned for years of the continuing high inflation levels. They have been reluctant sellers as they perceive their soybeans to be a hard asset, similar to gold.
Once farmers sell the soybeans they receive Argentina pesos. With the peso at record lows earlier this month, the peso buying ability quickly diminishes. Also the Argentina government for years has had an export tax on soybeans. So the farmers get hit hard very quickly when selling soybeans. In addition, earlier this month the Argentina government attempted to institute rules that the old crop soybeans had to be sold by March 1. The debate and uncertainty continues at this time. Last week the Argentina farmers were selling new crop soybeans but not the old crop they still had.
Note that the USDA is no longer issuing their Monday grain inspections report in bushels. They will be reported in tons, matching the Thursday export sales report also published in tons.
The market will quickly return to weather, China, and how corn movement takes place at the higher numbers seen the past 10 days.