Free Commentary

By: Dan Hueber

While we remain a few hours away from the finish, it would appear that the first week of 2017 will be positive for the grain and soy markets.  As it stands right now, for the week March wheat us up right at 28-cents, March corn just over 10-cents higher and March beans with around a 6-cent gain.  Now I wish I had some kind of historical data that would tell us that if we close higher for the first week of January then there is X percentage that it will translate into a bullish year but I at least do not possess that statistical/historical information and even if it could be verified, I doubt it worth much for practicality.  All that said, it is at least nice to see the year begin with an encouraging step forward.

With this past Monday taken as a holiday for most, the export sales were delayed until this morning and as expected, they were down sharply.  For the week ending December 29th we set marketing year lows for all three major crops.  For corn, this equated to total sales of 429,200 MT or 16.9 million bushels.  This figure was 55% below last week and 67% below the 4-week average.  Top sales were made to Japan taking 161.4k MT, Peru with 100.9k and unknown destinations at 63.5k.  Bean sales were down a whopping 91% from the previous week and 94% from the 4-week average coming in at just 87,500 MT or 3.21 million bushels.  There were actually new sales of 641.5k MT to China, 80k to Indonesia and 75.3k to Vietnam but cancelations by unknown of 898,300 MT wiped out anything positive.  Last and literally not least was wheat and we sold 183,700 MT or 6.75 million bushels.  When was the last time you can remember the net sales of wheat outstripping the net sales of beans? Regardless this figure was down 68% from last week and was 61% below the 4-week average.   Top sales went to the Philippines with 98.2k MT, followed by Taiwan with 56.8k and then Mexico at 48.8k.

As I have written about on numerous occasions over the past year, the financial climate in agriculture has been challenging not only for those at the farm level but also for trading houses and grain merchants even in spite of record production levels.  According to the news overnight it would appear obvious that not everything is rosy at the Chinese giant, COFCO Group.  If you recall over the past couple years this company has purchased the struggling Noble Group’s ag unit as well as Nidera and there have been more than a few problems pop up with each of these acquisitions. What came to light in the news this morning is that the companies’ CEO, Matt Jansen has resigned as has Kevin Brassington, who was the head of the global grain and oilseeds division.  Mr. Jansen joined COFCO in 2014, coming over from ADM and initially taking on the role of the head of the agricultural unit and became CEO in July of this past year.   Obviously, the shakeout in the grain/commodity trading industry is not quite complete.

Next week we can look forward to the final crop production numbers to be released on the 12th.  While we should not see any major shifts in the numbers we should never assume that the USDA cannot provide a surprise.  Bloomberg did release survey numbers yesterday.  For total corn production, they came up with 15.2 billion bushels with a yield of 175.2.  This compares with the November USDA estimate of 15.226 and 175.3.  For beans they found an average estimate of 4.374 billion and a yield of 52.7.  The USDA currently stands at 4.361 and 52.5.  Projected ending stock for this marketing year are expected to come in at 2.378 billion for corn, vs the last estimate of 2.403, 473 million beans vs. 480 and 1.141 billion bushels of wheat compared with the last estimate of 1.143.

We hope you all have a safe and warm weekend.