Chicago Rallies On Short-Covering Ahead Of USDA Report

08/04/13 -- Soycomplex: Today's price action can maybe be attributed to short-covering ahead of Wednesday's USDA report, following recent steep declines. Concerns over bird flu in China also seem to be easing a little. China took around two thirds of the 15.251 million bushels of soybeans inspected for export for the week through to Apr 4, according to USDA data today. That does appear to indicate a slow down in demand for US beans, and that maybe South America is starting to get a handle on its logistical problems, although it was bang in line with the expected 12-17 million bushels forecast by the trade. Year to date inspections are still running 18% ahead of last year. From here on in exports only need to average 5.2 million bushels/week to hit the USDA target for the season. The trade is expecting soybean ending stocks to come in near 135 million bushels in this Wednesday’s report, up from 125 million last month. The USDA may also lower soybean output in Brazil and Argentina, but could balance that with reduced Chinese imports. Safras e Mercado said in their weekly report that 76% of the Brazilian bean crop has been harvested versus 79% a year ago and 70% for the 5 year average. Funds were said to have been net buyers of around 4-6,000 soybean contract on the day. May 13 Soybeans closed at USD13.78, up 16 1/4 cents; Jul 13 Soybeans closed at USD13.58, up 14 1/4 cents; May 13 Soybean Meal closed at USD393.30, up USD1.50; May 13 Soybean Oil closed at 49.52, up 69 points.

Corn: The corn market closed modestly higher in what was probably also light short-covering ahead of Wednesday's USDA report. Weekly export inspections offered no support though, at little more than 10 million bushels, with the market expecting 14-18 million. Inspections for the marketing year to date are now 442.746 million bushels, less than half the 980.565 million of a year ago. Exports need to average 18.2 million bushels/week to hit the USDA target for the season. This slow pace gives the USDA room to potentially lower their export projection for 2012/13, and thereby possibly raise ending stocks, in Wednesday's WASDE report. The trade is expecting an increase from 632 million bushels last month to 812 million this time round. That would mean that US corn stocks as a percent of use would increase to 7.4% from 6% in last month’s report. Safras estimated that the Brazilian corn harvest is 57% completed versus 66% this time last year. The Argentine Ag Ministry say that the corn harvest there is 31% complete versus 28% a year ago. CONAB release their Brazilian crop estimates tomorrow, last month they had the corn crop estimated at 76.1 MMT. A Dow Jones survey estimated the Argentine corn crop at 25.7 MMT versus the USDA March estimate of 26.0 MMT. Funds were seen as net buyers of around 5-7,000 corn contracts on the day. May 13 Corn closed at USD6.33 1/2, up 4 1/2 cents; Jul 13 Corn closed at USD6.19 1/2, up 1 3/4 cents, new crop months were slightly lower.

Wheat: The wheat market drew support from ideas that all is not well with wheat production potential in the US, parts of Europe and also Russia, along with the apparent confirmation of large US SRW wheat sales to China. With funds holding a large net short position heading into Wednesday's report, wheat is the most vulnerable to an upside correction. Both Reuters and Bloomberg reported the sale of 14-16 cargoes of US SRW wheat to China for Jun/Dec 2013 delivery, quoting the website of the Chinese think tank organisation known as CNGOIC. There was no confirmation of any sales to China under the daily reporting system from the USDA today however. Weekly export inspections of 27.161 million bushels beat last week's 26.199 million and comfortably eclipsed the 17.859 MB reported in the same week last year. SovEcon estimated Russia’s 2013 grain crop at 83-89 MMT versus the Russian Ag Ministry estimate of 90-92 MMT, saying that crop conditions had deteriorated last week. There was talk that crop damage in Oklahoma from last week's freeze was worse than originally thought. After the close the USDA pegged 36% of the US winter wheat crop as in good/excellent condition, up from 34% a week ago. However, the proportion of the crop rated very poor also increased from 10% last week to 12%. Fund buying was estimated at around 4,000 CBOT wheat contracts on the day. May 13 CBOT Wheat closed at USD7.12 1/2, up 13 1/2 cents; May 13 KCBT Wheat closed at USD7.45, up 19 cents; May 13 MGEX Wheat closed at USD7.99 3/4, up 12 1/4 cents.