Headlines:

  • Andersons shares follow ADM, Bunge in sharp fall
    Shares in The Andersons tumbled, extending the run of declines for stock in grain traders, as the rail-to-ethanol group reported a surprise loss, thanks in part to the grains glut which flagged by larger peers Archers Daniels Midland and Bunge. Stock in the US-focused group tumbled by 11% in early deals to a 10-month low, before recovering some ground to stand at $33.45 in late-morning trading, a decline of 7.1% on the day. The decline came on top of losses of nearly 4% previously this week, as the shares felt some of the pressure applied to larger, international peers Archer Daniels Midland and Bunge – whose stock has also tumbled, on disappointing results. Shares in ADM, which touched a nine-month low on Wednesday, remain down 8.3% for the week, with those in Bunge trading 12.9% lower. And, as with its rivals, the drop in Andersons’s stock was in part down to the knock-on effects of huge grain supplies, after three successive strong global harvests.
  • Wheat futures give back blizzard risk
    Wheat prices gave back all of the week’s gains, as the result of a crop tour showed crop quality holding up after a recent blizzard. US wheat markets surged on Monday, after an unseasonable blizzard hit the US plains. But prices have now given back almost of their gains, only slightly up from those seen at the end of last week. Markets seem to have been reassured by some un-concerning results coming out of the Kansas leg of the US Wheat Quality Council crop tour. Kansas wheat yield potential was seen at 46.1 bushels an acre. This is down from last year’s yield of 57.0 bushels, but above the 41.6-bushel five-year average forecast from the crop tour. Scouts warned that the extent of damage from the snowstorm was unclear, but the view is that the crop appears to be in good condition. “All in all, it looks like there is good potential for a large portion of this crop,” said Brain Henry, at Benson Quinn Commodities. “Conditions going forward look favorable,” Mr. Henry said.

Summary:

In the prospect of a global excess of grain has been crushing profits and raising concern about long-term prospects for the world’s big grain merchants. Bunge and Andersons share prices fell prey to big declines and ADM joined the party as well. Companies have suggested that a supply shock event is all that is needed to return to profitability that has been enjoyed previously. It appeared as though we got that shock event over the weekend but sentiment has reversed today sending commodity prices lower today reversing the gains from yesterday. Today, the USDA Weekly Export Sales Report showed higher-than-expected wheat sales, while soybean sales were not as strong. The breakdown for the three main markets were as follows:

  • Wheat was at 821,800 metric tons (258,400 for old crop and 563,400 for new) eclipsing the trade’s expectations that fell between 200,000 and 550,000 metric tons.
  • Corn was at 795,700 metric tons (771,600 for old crop and 24,100 for new) versus landing near the low end of the trade’s expectations which ranged from 700,000 to 1,100,000 metric tons.
  • Soybeans were at 331,300 metric tons (318,500 for old crop and 12,800 for new) showing that missed the low end of trade expectations.