Free Commentary

By: Dan Hueber –

Grain and soy markets are attempting to climb a bit further up and possibly even out from the hole they have been pushed into during the past few weeks. Granted one would have to suspect that the majority of the buying takes the form of short-covering but regardless, it would appear that we have stabilized once again at levels of value and with a growing season looming just ahead, the bear probably senses that there is greater upside risk than down for the time being.

From what I have seen so far, the buying would not appear to have been stimulated by any positive news.  It was reported that there is currently a vessel loading at the Brazilian port of Paranagua with Paraguayan corn (say that fast three times) that will ultimately be unloaded at Wilmington, North Carolina in late May.  This will be the first corn from Paraguay to make its way into the United States since 2015 and at 61,000 MT will be the largest ever import from that country.  The most likely purchaser is Smithfield Foods (Shuanghui Int. Holdings) and one trader noted that in addition to price, there was little concern of vomitoxin, which has been found in some US corn.  While I recognize that vomitoxin is a concern for hog operations, particularly for sow rations but that sounds like a bit of a stretch to me.  I suspect it is primarily price.  It was also noted this morning that analysts are expecting the South African Crop Estimate Committee (CEC) to lower slightly the estimate for this years’ crop when they release the numbers next week but at an expected 14.175 MMT, it would be nearly double last year’s drought ravaged production.

Weekly export sales have been released this morning but we find nothing really exciting in these figures either.  For the week ending April 13th, we sold 756,400 MT or 29.78 million bushels of corn. This was 3% higher than the previous week but still 23% below the 4-week average.  Top sales were made to Japan with 194.5k MT, followed by South Korea at 198.7k and then Peru with 94.3k.  Soybeans sales took a hit but when you are already ahead of the projected total (101.1%), that must be expected at some point.  Regardless, we sold another 211,000 MT or 7.75 million bushels.  On the top this week was the Netherlands purchasing 160.8k MT, China dropped into second place with 75.1k followed by our neighbors to the north who purchased 24.1k.  We sales also slipped just a bit as we sold 414,000 MT or 15.21 million bushels. Top on the list here was Indonesia with 73.9k MT, closely followed by Japan with 71.9k and then Mexico at 69.6k.

Rain would appear to be in the picture for a wide swath of the middle of this country through the weekend and really through the end of the month for many.  While this could provide a little underlying support for corn, as we have discussed many times before, it is always difficult to garner too much bullish enthusiasm on excess rain in the spring.