Grains –
Export sales are due this morning, here are expectations:
Corn 700-1,100
Soybeans 450-700
Soymeal 120-250
Soyoil 10-25
Wheat 200-500
Here were the flashed sales during the period:
1/17—103k mt corn to unknown for 16/17
1/19—110k mt corn to unknown for 16/17
1/20—126k mt corn to unknown for 16/17
So the first thing you notice is there were once again no flash sales of soybeans. Still, considering many end users are “hedging” South American production/logistics with further US sales I’d still think we should come in somewhere near the low end of the range above. I don’t have any major disagreements with the ranges shown above in general.
I saw reports suggesting there is a Moore seasonal trade that kicked off yesterday buying SK vs. selling SMK. I found this a bit interesting in light of the recent rally in board crush margins. Though the chart shows it has backed off a bit in the past few days, the rally to start the year has been nothing short of impressive. The Moore seasonal would seem to be fading this strength.
Looking at estimates for cash margins, we’ve seen a modest bounce here lately but certainly nothing as dramatic. The chart attached showing my model probably understates actual margins a bit, but it is still a decent relative indicator and it shows no huge swing higher to start the year. In this backdrop, the Moore seasonal position does make some sense to me.
Yesterday’s ethanol production estimate showed another strong weekly run rate, but it was once again accompanied by a strong build in inventories. While certainly not a record level, I could certainly call current inventory levels “elevated” for this time of year.
The build in stocks has had a significant impact on ethanol prices and production margins. Keep in mind the attached estimate off ethanol production margins doesn’t even account for the impact of RINs in margins. RINs got monkey-hammered again yesterday. Since the EPA announced it was “freezing” new regulations D6 RINs have fallen 20%.
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