This week, the USDA gave us a small glimmer of hope for the grain markets. In Tuesday’s reports the Feds lowered both corn and soybean yield for the 2015 crop. While the yield drop was not entirely unexpected, the small reductions in planted and harvested acres caught the trade off guard. Corn saw a reduction of 53 million bushels as a result of those changes. However, total demand was lowered as well, resulting in a new carry out figure of 1,802 million bushels, up 17 million from December. Soybeans saw a 50 million bushel drop in production coupled with a 25 million bushel reduction in demand, pushing estimated carryout down 25 million.
The focus on supply, or more specifically lower supply , offered a very faint light at the end of the tunnel as soybeans charged higher following the data release. Corn became a follower, trading higher as well. However, much of the commentary since the USDA report has tried to refocus attention to the overall carryout and demand side of the picture. Weather in South America is turning more benign, limiting crop stress, processor margins are continuing to tighten, and export markets are not favoring the US origins. All this together is not a friendly fundamental picture. Soybean margins seem to be struggling the most which is creating an erratic basis situation, five cent board rallies often equate to a five-plus cent basis hit. The reverse is often true as well. Rallies such as the ones seen this week warrant our attention. Be alert to opportunities and be ready to reward the market.
If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. firstname.lastname@example.org
CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
This Material has been prepared by a sales or trading employee or agent of CHS Rochester and should be considered a solicitation. The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only. There is a risk of loss when trading commodity futures and options. CHS Rochester bases its recommendations solely on the judgment of CHS Rochester personnel.