Morning Grain Comments, 01/27/2016

Wednesday, January 27, 2016

Chicago wheat volume (and grain volume in general) was less-than-impressive overnight, which says something in its retreat from “breakout” one-month highs; wheat continues to dominate the news though as Russia waffles back and forth on its policy. The talk now is of cutting wheat export taxes, possibly spurring on shipments for the global market titan even further, with 2016 exports already expected to increase year-over-year.

Russia’s Ag Ministry said they expect to export 32.8 MMT of grain in 2016, compared to 30.0 MMT in 2015, with total grain production seen at 104.9 MMT in 2016 versus 104.3 MMT in 2015. The country said today that they’d
consider reducing or removing export taxes on wheat, while putting tariffs on shipments of corn and barley; there is a meeting between ag officials and the Deputy Prime Minister on Friday where any moves will be discussed.

Algeria imported 13.67 million tonnes of grain in calendar 2015, up over 11% on the year “despite efforts to curb purchases”, as the country was looking to trim their budget; soft wheat imports were up 24% in 2015 to 6.74 MMT, while corn imports rose 7.5% to 4.41 MMT.

An analyst at the Rosario Grains Exchange yesterday warned of irreversible corn yield losses in northeastern Buenos Aires, with some fields losing up to 50% of yield potential due to heat and drought over the last month.

Russia had discussed banning corn imports from the U.S. recently but are now possibly adding soybeans to that list, all for phytosanitary reasons; the country doesn't generally import U.S. corn, but they have purchased around 300-450k tonnes of U.S. beans in recent marketing years (including this one).

Ukraine’s Ag Ministry reported cumulative exports since July 1 at 24.0 MMT, including 10.91 MMT of wheat, 3.93 MMT barley, and 8.95 MMT corn. The country exported 35 MMT total in 2014/15, and expects to ship 36 MMT in ‘15/16. The ag ministry and traders have agreed to limit wheat exports to 16.6 MMT this year, with corn exports capped at 16.0 MMT.


The new-crop soybean/corn ratio has been hanging steadily in the 2.25 to 2.30-to-1 range really since the November S&D Report, basically matching the historical average area for this spread at this point in the season, and only slightly below last year’s 2.35-to-1 ratio on the same date. The 2015 ratio went on to peak throughout the summer at just over 2.5-to-1, when both contracts hit their highs pre-Aug report.


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