Floor Talk April 18

[Tony_Dreibus]

At the close:

At the close, the July corn futures settled 3 cents higher at $3.85, while the Dec. futures ended 2 cents higher at $3.90. July soybean futures closed 1 1/4 cents lower at $9.63, while Nov. futures finished 3/4 of a cent higher at $9.67. July wheat futures settled 13 1/2 cents higher at $4.81. July soymeal futures closed $2.90 short ton lower at $295.70. July soyoil futures closed $0.59 higher at $34.23.  In the outside markets, the Brent crude oil market is $0.53 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 87 points higher.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that most of the rally today is US Dollar based.  
“The Brazilian impeachment vote is providing some support as well. I have been doing some pricing for Brazil customers today, but not too much and I don’t see any real new deals going down,” Scoville says.  
US farmers have gone quiet, after selling last week. So, I guess they will wait for more of a rally or a clear top before getting aggressive.  Some of the buying Dilma Rousseff related, but only a little bit, he says.  
“People are trying to talk weather which is an issue for Brazil’s corn but Argentina is supposed to be drier.” 

Mike

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At mid-session:

At mid-session, the July corn futures are trading 4 1/4 cents higher at $3.86 1/4, while the Sept. futures trade 3 1/2 cents higher at $3.85. July soybean futures are 5 cents higher at $9.69, while Nov. futures are 6 1/4 cents higher at $9.72. July wheat futures are 14 cents higher at $4.81. July soymeal futures trade $0.90 short ton lower at $297.70. July soyoil futures are $0.76 higher at $34.40.  In the outside markets, the Brent crude oil market is $0.61 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 71 points higher.

Are we running out of corn? Look at old-crop price rising above new-crop. What gives?

Also, my Argentine market analyst contact says the crop-damage is growing. Extremely bad areas reported this morning, after a meeting with all of the company branch offices. He says the crop-losses will hit 5.0 million tons, at least, and maybe more than that.

Mike

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In early trading:

At 8:50am, the July corn futures are trading 1/4 of a cent higher at $3.82. July soybean futures are 1 1/4 cents lower at $9.63. July wheat futures are 4 1/2 cents higher at $4.72. July soymeal futures trade $1.90 short ton lower at $296.70. July soyoil futures are $0.48 higher at $34.12.  In the outside markets, the Brent crude oil market is $1.44 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 45 points lower.

Mike

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Sorry for the delay -- no power in central Texas this morning as the storms roll through. 

When it rains, it pours, or at least that's apparently how it works in the southern Plains. The area hadn't seen meaningful rain since last year, and then this weekend the skies open up and as much as 8 inches fell in a very short amount of time, according to the National Weather Service. Naturally that means flooded fields in some areas. The rest of the region, however, will benefit from the much-needed rain that fell over the weekend, which may have saved plants in some areas. I suspect at the upcoming hard-red winter wheat tour in a couple weeks, this rain will be talked about early and often. 

Here's what happened overnight:

Brent Crude Oil = 3.2% lower. 

West Texas Intermediate Crude Oil = 3.7% lower.

Dollar = down 0.1%.

Wall Street = U.S. stock futures lower in pre-market trading. 
World Markets = Global stocks decline as investors disappointed by weekend OPEC meeting, lower oil prices. 

[Hobbyfarmer]

April 18, 2016

Speculation grows that Brazil could Import U.S. Corn

Speculation is growing that Brazil could start importing corn from the United States if the Brazilian government temporarily eliminates the 10% import tariff for corn brought in from outside the Mercosul trading block. It all but seems assured that the tariff will be lifted making it feasible to import U.S. corn into northeastern Brazil.

The city of Fortaleza is one of the largest cities in northeastern Brazil and corn is currently being offered at R$ 54.00 per sack or $7.00 per bushel, which is 56% more than last year at this time. The president of the Poultry Producers Association of the State of Ceara, where Fortaleza is the capital, feels the price of corn at the Gulf of Mexico is right on the cusp of being profitable for importing into northeastern Brazil.

Importing corn right now from the U.S. would cost about R$ 44 per sack (US$ 5.70 per bushel) if the 10% import tariff remained in place. If the 10% tariff was eliminated, the price would drop to R$ 40 per sack or approximately US$ 5.20 per bushel. Corn from the United States would have to compete with corn from Argentina and the current price of corn from Argentina is R$ 41 per sack or US$ 5.32 per bushel. So, if the tariff is eliminated, U.S. corn would be a little cheaper than Argentine corn going into northeastern Brazil.

The potential price of U.S. corn would also be influenced by the currency exchange rate between the Brazilian real and the U.S. dollar. The value of the Brazilian currency has fluctuated wildly in recent weeks with every news cycle concerning the potential impeachment of the Brazilian President. The Lower House of the Brazilian Congress voted on Sunday to start impeachment proceedings against President Rousseff.

The Brazilian Association of Animal protein estimates that livestock producers could import as much as 1 million tons of corn in 2016, which would be the most corn imported since the year 2000. Most of those imports would occur during the first half of 2016 before the safrinha corn would hit the market.

The window for importing corn will probably close at the end of June or the start of July when farmers start to harvest their safrinha corn crop. The safrinha corn should take care of the immediate corn deficits, but hot and dry weather in central Brazil is leading to concerns that the safrinha corn harvest could end up below current expectations. If that would turn out to be the case, Brazil may need to import more than 1 million tons of corn.

A series of vessels from Argentina is scheduled to start offloading Argentine corn at the southern Port of Rio Grande as soon as this week. Most of the corn from Argentina will be imported into southern Brazil, but some may also be imported into northeastern Brazil