1. Art and Diseño

FCStone Grain Recap
February 2, 2015
CORN:
After a sharp rally early in the day which was attributed to “black box” computer systems the
market finished about unchanged. Export inspections are running 2% ahead of last year with .661
mmt reported as shipped in the most recent report. The average trade guess was 750 to 900 tmt
of exports. Plugging that into an assumed usage for the remainder of the DJF quarter and it
appears there isn’t any more pressure to be brought against the CHCK to push it beyond 9 cents
carry. Historically the usage to quarterly stocks relationship doesn’t appear to imply wider carry.
The USDA announced a sale of 132 tmt to Mexico. Brazil confirms they are moving to a 27%
ethanol blend in their motor fuel. This is response to a waning profit margin in the cane industry.
Below I have included a graph of the relationship of Brazil’s ethanol usage, production and
mandate. As you can see the projections put the higher mandate pushing ethanol usage to match
the production which would imply Brazil would exit the export market eventually without banner
year of cane production. If so the world would turn to the US for its oxygenate needs.
The “exit” won’t be immediate as the ethanol industry has been building stocks at least initially in
anticipation of the mandate expansion. This is not the first time the mandate has been projected
to pull the country out of the export market. It seems that ethanol production increases as
necessary to maintain a decent sized export program.
---------------------------------------------------------------------------------------------------------------------------------This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to
refer to any particular trading strategy, promotional element or quality of service provided by FCStone, LLC. FCStone, LLC is not responsible for any
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obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact FCStone designated personnel for specific trading advice to
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FCStone Grain Recap
February 2, 2015
Cattle inventories surprised the trade on Friday afternoon with almost every metric used to
measure herd size exceeded expectations. All cattle and calves is expected to be 101.4% over
last year. The overall trend in cattle numbers is declining but this year the inventories are higher
than the multi-decade lows of last year.
Funds were absent in the corn futures today.
SOYBEANS:
After an initial rally driven most likely by an algorithm of some sort the market quieted down to
close down a little more than a cent/bu. South American rains were disappointing compared to
what the models were projecting. There is another couple rounds of rain in the forecast, which
even conservatively interpreted will bring beneficial rains to Central and Northern Brazil. Dry
weather is headed to Argentina which is needed at this time. Most crops estimates are running
93 to 95 mmt for Brazil despite the dryness in Goias, MGDS, and MG. With the bigger crop
coming, the total exports of meal and soybeans from Brazil and Argentina combined is likely to be
98 mmt. Or 5 mmt over last year.
Page 2
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FCStone Grain Recap
February 2, 2015
US export inspections were quite robust with a 1.7 mmt total shipment made last week. The trade
was expecting at most a figure of 1.3 mmt. Shipments are running 19% ahead of last year. The
trade keeps hoping for a major slowdown to offset the early season surplus of shipments but so
far the reports are now showing a pace below last year’s second semester’s program.
Page 3
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FCStone Grain Recap
February 2, 2015
Weather models still holding to a neutral to weak El Nino forecast for the next 6 months. El Nino
or a weak one would cause favorable weather for the soybeans grown in the upper Midwest.
WHEAT:
Values were weak all day with good fund selling behind the break. Funds were noted as selling
6000 contracts for the session. Upper Midwest wheat areas were covered with a good depth of
snow over the weekend to protect it from cold temperatures. Rains fell in the southern plains to
aid soil moisture in that region during the same period. Chicago wheat futures have fallen below
the psychological support of 500 and are nearing contract lows of 480. The US has yet to price
itself into Egyptian business and the strength in the dollar isn’t helping. Export inspections were
on the upper end of estimates though they are accumulating less shipments than are needed to
meet the pace of the USDA’s estimate. If this pace is maintained then the USDA will need to trim
100 million bushels from its export number, raising carryout to 800 mln bushels.
The USDA will release more of its long term projections for crops out to 2024 on Feb 11th this
year.
Page 4
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515-223-3788
FCStone Grain Recap
February 2, 2015
ECBOT
HIGH
LOW
CLOSE
CHANGE
Mar Corn
May Corn
3.785
3.8675
3.675
3.7575
3.6975
3.7775
- 1/4
- 3/4
Mar Beans
May Beans
9.705
9.77
9.565
9.63
9.595
9.6625
- 1 1/2
- 1 1/2
Mar wheat
5.054
4.9225
4.9275
- 10
Regards
Bevan Everett
Page 5
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