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Export shift

01/19/2012 @ 3:54pm

It seems to happen every year.  Importers booked substantial quantities of early beans out of Brazil during the past summer, Brazilian beans were cheaper.  Now, Mato Grosso (the first area to harvest) is still in the rainy season, harvest is slow and early beans are not arriving at the ports.  

Export business, especially for soybeans, has therefore returned to the U.S. Given that farmers pretty much stopped selling cash grain after the January USDA reports, basis levels have improved in an attempt to pry beans out of farmers’ hands.  Soybean futures prices ending this afternoon were less than 10 cents lower than the day before the report.  This is not only a reflection of a weather market, but also the strong cash markets.

For corn and wheat, there are also glimmers of hope for improved business.  US wheat prices are more competitive with wheat coming out of the Black Sea.  The US may be able to sell Egypt some wheat soon.  The last time Egypt issued a tender, it was only the freight disadvantage that kept the US from selling wheat to the world’s largest importer.    

Also, US corn is more competitive after the 50 cent post-report price break.  US corn is also fairly priced compared with Ukrainian corn.  Plus, importers nervous about the drought in Argentina have stepped up purchases of U.S. corn.  Egypt, South Korea and Mexico have all made large purchases in the past two days according to the USDA.  Tomorrow’s and next week’s export sales reports should both have improved numbers versus previous weeks.

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The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation. 

 


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