(Agriculture.com) – We have begun trade for the final three days of 2014 and the wheat market has remained in positive territory thus far. Over the weekend, Russia finally clarified the official changes to their export policies for wheat and beginning February 1st of this next year and running through June, there will a duty changed of 15% of the customs price plus 7 ½ Euros and no less than 35 Euros per tonnes, which would be approximately $43 a tonne. Additionally the government will purchase third-class wheat at a price of $186 tonne in an effort to rebuild inventories. I suspect this announcement helped shore up prices overnight but the fact that we had sold off sharply late last week and that cold temperatures are forecast to return here and in Europe was probably a greater reason for the bounce.
The delayed export sales report was issued this morning and for the week ending December 18th we sold 293,000 MT or 10.77 million bushels. This leaned towards the low end of trade expectations and was 39% below the previous week and 30% below the 4-week average. Outside of this I would expect to see dwindling volume and position squaring as we finish out the year.
Corn
The corn market was struggling just a bit as we began this new and final week of the year but a solid export sales report helped to shore up the confidence of the bulls once again. For the week we sold 1,700,000 MT or 66.94 million bushels, which was above the upper end of estimates as the trade had been expecting a figure of between 800k and 1 MMT. This number was almost 2 ½ times the previous week and was 81% above the 4-week average. The top purchaser was unknown destinations taking 452.1k MT, followed by Japan with 432.2k MY and then Mexico with 268.9k MT. Could it be that China has indeed been buying corn since the ban on MIR162 has been lifted?
Last week the Buenos Aires Grain exchange reported that corn planting in that nation reached 59.7% complete of the 7.2 million acres projected this year. This would be 5.5% behind that pace set last year. Overall conditions are rated good.
Corn has slowly been able to creep into higher ground over the past few sessions but March futures have yet to reach my overhead targets between 4.19 and 4.26. While there could be a little evening up as we reach into the final few sessions of the year I continue to believe these are valid targets. It would appear that we may be able to hold the recent strength possibly out through the January 12th report but would need positive reinforcement from that release to think we could sustain these levels. Let’s not forget that it was just a year ago that the funds tried to press corn lower into the final report in anticipation of a bearish number and then succeeded in pressing in the low for the first six months of the year on the 10th of January.
Soybeans
Soybeans have been able to build a bit on the turnaround rally posted last Friday but so far remain entrenched in the overall sideways pattern. While they have not exactly fallen off a cliff, export sales were lower again this week coming through at 635,800 MT or 23.36 million bushels. This was 9% lower than the previous week and 38% lower than the 4-week average. Technically China shows up as the top purchaser with 618.2k MT followed by Thailand at 76.6k MT and Vietnam at 76.5k MT. As you might surmise, there were cancelations of 501.3 MT from unknown destinations as well as a few smaller quantities from other nations.
The overall weather conditions and outlook remains favorable in South America and it was reported over the weekend that early harvest has begun in the state of Mato Grosso in Brazil. These beans would have been planted around the 15th of September and even though they are short-season varieties, yields are reported to be in the 51 to 53-b/p/a range.
Even with the strength so far this morning, this market is telling us nothing new. As with corn, we may ultimately need to set tight until we reach the final crop numbers on the 12th of January to receive a tip-off for the action in the first quarter of 2015.
