Corn is in the midst of the longest selloff in about five years, yet has lost only about 50 cents since the selling began. The volume was light and rather slow giving the impression that selling interest is starting to wane ahead of the long weekend.
Fundamentals did rebound slightly last week with ethanol production increasing 15,000 barrels per day and stocks of ethanol falling 598,000 barrels. Ethanol crush margins improved for the third straight week as well. Export sales met expectations coming in at 284,000 MT combined for this year and next.
Soybeans led the grains lower on Friday and have taken about 92 cents off of prices in recent sessions. Better rain forecasts for dry areas of Argentina and Brazil, while drier patterns for the harvesting areas, started the selloff last week. Accelerating the selling was net export sale reductions of 109,000 MT for ‘12/’13.
It appears as though the advancing South American harvest is starting to gather export sale interest away from the United States. This could be a theme as we head into the rest of the marketing year.
Keep in mind that China was quiet last week due to their New Year’s celebrations and the effects will be seen in the upcoming export sales report.
Wheat has fallen substantially along with the other grains. This market has been pressured more recently by the better precipitation in the Southern Plains. The winter wheat crop was planted in dry soil and has remained relatively drought stricken through much of its dormancy.
The crop is now coming out of dormancy and timely rains/snow is beneficial for yield potential. Export sales of wheat were the bright spot in this week’s report coming in at 705,000 MT combined for this year and next. That total far exceeded expectations.
Corn has had its longest losing streak in the last five years. Soybeans and wheat have not fared much better over the last ten days. With a long weekend in the US, a short-covering rally is expected as traders will book profits made over the last couple of weeks.
