Chicago Closing Comments; Corn, Crisis, What Crisis?
02/05/14 -- Soycomplex: Beans closed higher on the day, but lower for the week following yesterday's rout. Meal ended the week about even, and oil was down heavily compared to last Friday. After yesterday's heavy fall I guess that we could call today consolidation/bargain hunting. There's no denying that nearby US soybean supply is tight, and looks set to remain so through to harvest time. Yesterday's USDA export sales report showed that the US has already shipped nearly 42 MMT of soybeans this season, and has a further 2.6 MMT of as yet unfulfilled sales to execute. The USDA forecast for the season is "only" for exports of 43 MMT. The forecast for the Midwest is drier and warmer, which will be welcomed. The USDA will update us on US soybean planting progress on Monday, with the trade predicting that something in the region of around 10% of the crop will be in the ground, up from 3% a week ago. A year ago only 2% of the crop had been planted by the end of first weekend in May. The Brazilian Ministry said that the country exported 8.25 MMT of beans in April, versus 6.23 MMT in March and 7.15 MMT in April 2013. Meal exports were 1.33 MMT in April versus 727,000 MT in March and 1.26 MMT in April 2013. Stats Canada come out on Monday with their March 31st stocks report. A Reuters survey estimated canola stocks at an average of 9 MMT, which would be a record high for this time of year, and almost double the 4.553 MMT held a year previously. Fund buying in beans was estimated at around 3-4,000 lots on the day. The latest Commitment of Traders report shows them increasing their net long in beans for the week through to Tuesday night by 3,725 contracts, bringing their total net long position to 168,876 lots. May 14 Soybeans closed at $14.80 3/4, up 7 1/4 cents; Jul 14 Soybeans closed at $14.70 3/4, up 9 3/4 cents; May 14 Soybean Meal closed at $491.20, up $4.50; May 14 Soybean Oil closed at 41.29, up 37 points. For the week, May 14 beans fell 17 1/4 cents, with May 14 meal up half a dollar and May 14 oil down 163 points.
Corn: The corn market closed lower, adding to yesterday's declines. An improved weather forecast for the weekend and into the first half of next week maybe got fund money rethinking their strategy to attempt to get a weather market going in corn this early in the season. The USDA are expected to estimate US corn plantings at around 35-40% done on Monday night. That would compare with only 12% done for the first weekend in May twelve months ago. Crisis, what crisis? The CFTC Commitment of Traders report shows fund money increasing their net long position in corn by 27,756 contracts as of Tuesday night, giving them a net long position of 264,391 contracts. They were estimated to have been net sellers of around 7-9,000 contracts today, on top of the 10,000 that they were thought to have jetisonned yesterday. Private exporters reported the sale of 101,600 MT of US old crop corn to unknown destinations. Israel bought 108,000 MT of optional origin corn for Jul/Aug shipment. There were 226 overnight deliveries against the May contract, adding to the bearish tone today. The Brazilian Ministry reported April corn exports at 562,400 MT versus 577,700 MT in March and 606,100 MT in April 2013. Informa estimated the Argentine corn crop at 23.3 MMT and the Brazilian crop at 70.5 MMT. The Buenos Aires Grains Exchange yesterday estimated the Argentine corn crop at 24 MMT. Safras e Mercado recently raised their outlook on Brazil to 73.9 MMT. The USDA will issue revised WASDE estimates of their own next Friday. Last month they had the Argentine corn crop and 24 MMT and Brazilian output at 72 MMT. The USDA will also issue it's first estimates for crop production around the world for the coming 2014/15 season. MDA CropCast yesterday estimated the US corn crop at a record 14 billion bushels, up 2.4% on last year despite a 2.2 million acre decline in planted area. They said that US corn yields would rise by an average 5.3% this year. May 14 Corn closed at $4.94, down 9 1/4 cents; Jul 14 Corn closed at $4.99 1/2, down 7 1/2 cents. For the week May 14 corn was 13 cents lower.
Wheat: The wheat market closed higher, with Kansas wheat leading the way on the back of deteriorating crop conditions on the Plains. Sub-zero temperatures are forecast for the state over the weekend, potentially adding to recent drought woes. Informa Economics estimated the US winter wheat crop at 1.496 billion bushels, down 120 million from last month. That's a 2.5% fall on last year's 1.534 billion bushel crop. MDA Crop Cast yesterday estimated the US winter wheat crop at a very similar 1.5 billion bushels. Informa apparently put the crop in Kansas at 311 million bushels, which is far higher than the 260.7 million finding of this week's Kansas wheat tour. It is also only fractionally down on last year's 319.2 million output. They have Oklahoma's winter wheat crop at 87.5 million bushels, a 17% decline on last year. That may sound a lot, but it's actually far better than the 40% loss in yield being reported by the Oklahoma crop tour this week. The trade clearly thinks/hopes that Informa are wrong. The latest Commitment of Traders report shows fund money increasing their net long in Chicago wheat for the week through to Tuesday night by 15,500 lots, a more than 50% increase, to a net long position of 42,590 contracts. On Monday Stats Canada are expected to report March 31st all wheat stocks there at an average trade estimate of 21.5 MMT, from within a range of estimates of 20.0-22.2 MMT and far higher than 14.471 MMT in 2013 following last year's bumper crop. For Canadian barley stocks the average estimate is 4.7 MMT, from within a range of estimates of 4.5-5.0 MMT and versus 3.044 MMT in 2013. Egypt bought 110 TMT of Russian and Ukraine wheat, with US wheat priced out by around $16/tonne. Dr Cordonnier said that Brazil could produce a record wheat crop this year, with plantings expected to rise to a 10-year high. The state of Parana's output could nearly double to 3.8 MMT, with plantings likely to be completed by the end of May, he said. May 14 CBOT Wheat closed at $7.07 3/4, up 9 cents; May 14 KCBT Wheat closed at $8.31 3/4, up 25 1/2 cents; May 14 MGEX Wheat closed at $7.63, up 14 1/4 cents. For the week May 14 CBOT wheat rose 7 1/2 cents, with Kansas up 56 cents and MGEX up 15 1/2 cents.