Chicago Extends Recovery, Will It Last?

31/07/13 -- Soycomplex: The volatility continues, with front end beans and meal putting back in some of the premium they'd given up lately. The prospect of a very large, and probably record, US crop looms but it just isn't here yet. Lanworth Inc actually lowered their forecast for US soybean production a fraction to 3.31 billion bushels, with yields trimmed to 42.9 bu/acre. They left world output in 2013/14 unchanged at 283 MMT. Analysts are lining up to predict increased soybean plantings in South America for the 201314 harvest, despite the recent price dip. Michael Cordonnier today estimated Brazilian plantings up 3-5%, broadly in line with estimates earlier in the week from Safras e Mercado (+3.8%) and AgRural (+6%). Argentina's Agritrend meanwhile see plantings there rising at least 2.5%, with output possibly as high as a record 55 MMT. For these reasons most analysts remain bearish on price prospects going forward, with Rabobank forecasting CBOT prices down to USD11.75/bu in Q4 of this year, a Reuters survey came up with an average of USD11.56/bu. Today was first notice day on Aug 13 contracts, as expected there were no deliveries registered against either beans or meal, but 846 deliveries against friendless soyoil. The Energy Dept said that soyoil usage in biodiesel production in May fell to 416 million pounds, down from 423 million in April and down from 428 million in the same period a year ago. The USDA reported the sale of 120 TMT of new crop soybeans to unknown. Estimates for tomorrow's weekly export sale report for beans are 450-600 TMT. New crop Nov 13 beans fell below USD12 for the first time since January 2012, but recovered to close back above that level by the end of play. Aug 13 Soybeans closed at USD13.74, up 24 cents; Nov 13 Soybeans closed at USD12.06 1/4, up 3 1/4 cents; Aug 13 Soybean Meal closed at USD435.10, up USD5.90; Aug 13 Soybean Oil closed at 42.09, down 2 points.

Corn: The corn market closed modestly higher for a second session, despite not really having much of a bullish story to hang onto. A firmer wheat market added some support. US weather remains generally non threatening and demand from the US ethanol sector shrank for a fourth week in a row. The Energy Dept said that ethanol output was down to 832,000 barrels/day versus 853,000 bpd a week earlier. Also bearish was news that Lanworth Inc estimated this year's US corn crop at a record 14.0 billion bushels, up from a previous estimate of 13.65 billion - courtesy of a yield increase to 158.5 bu/acre. The USDA are currently at 156.5 bu/acre. They now have the world corn crop at 965.0 MMT versus a previous estimate of 956.0 MMT. The EU Commission pegged the corn crop in Europe at 70.9 MMT, up sharply from 58.1 MMT last year and well above the USDA's current estimate of 65.6 MMT. Rabobank forecast CBOT corn prices falling to USD4.60/bu in Q4 of 2013, a Reuters survey averaged USD4.80/bu. Whilst private analysts are forecasting another year of increased soybean acreage in South America, they see much of that extra area coming from corn. Argentina's Agritrend said that the corn planted area there may fall from 4.5 million ha to around 4.2-4.3 million this year. Michael Cordonnier today said that the Brazilian corn area might fall 10-15%. Earlier in the week Safras e Mercado had Brazil's 2013/14 corn crop down 5.4% to 77.57 MMT. South Korea's NOFI cancelled a tender for 70 TMT of corn for Jan shipment saying that they expect prices to fall further. The cheapest offer was apparently from Toepfer at USD234.73 on a C&F basis. FCStone are due out tomorrow with their August US crop production estimates, with Informa due out next week ahead of the USDA's official numbers on Aug 12. Trade estimates for tomorrow's weekly export sales report are 400-600 TMT. Sep 13 Corn closed at USD4.99, up 3 1/2 cents; Dec 13 Corn closed at USD4.79, up 1 1/2 cents.

Wheat: Wheat posted fairly decent gains on all three exchanges. Whereas the market is thinking that the USDA stocks and production numbers on corn might currently be too low, they think that the opposite might be true for wheat. The USDA surprised the market last month by lowering global wheat ending stocks in the 2012/13 crop year by 5.37 MMT and with those for 2013/14 shrinking by 8.87 MMT to 172.38 MMT, the lowest since 2008/09. Those cuts were made despite leaving unchanged Russian wheat production at 54 MMT and Indian output at 92 MMT. Lanworth Inc today cut their forecast for this year's Russian wheat crop from 50 MMT to 48.4 MMT. The USDA's own attache in India is calling the wheat crop there at only 87 MMT. We also have the new wild card of Chinese demand suddenly outstripping everyone else, making them potentially the largest importer in the world. The USDA did acknowledge that to a degree by increasing Chinese wheat imports in 2013/14 from 3.5 MMT to 8 MMT, but other estimates are now in the 10-15 MMT area. Meanwhile the effects of last week's Brazilian freeze in Parana state are still being assessed. This was "the most intense cold snap in the state since the year 2000 with some areas of the state recording temperatures in the low 20's," according to Michael Cordonnier. He says that state-wide crop losses could be in the 20-30% region, and Parana normally produces around 50% of Brazil's wheat crop. "Before the cold snap, the State Secretary of Agriculture had estimated that 79% of the wheat in the state was in good condition with 4% in poor condition. After the frost, they now estimate that 47% in good condition and 18% in poor condition," he adds. Brazil may need to import more wheat this year than originally expected therefore, and all the above factors potentially cut world wheat stocks further in the year ahead. Trade estimates for tomorrow's weekly export sales report are 500-700 TMT. Look out for China. Sep 13 CBOT Wheat closed at USD6.64 1/4, up 9 cents; Sep 13 KCBT Wheat closed at USD7.06 3/4, up 10 1/2 cents; Sep 13 MGEX Wheat closed at USD7.41 1/4, up 4 cents.