Chicago Market Little Changed In The Dark

09/10/13 -- General Comment: The dollar rose from it's recent demise on news that President Barack Obama has nominated Federal Reserve Vice Chair Janet Yellen to replace Ben Bernanke at the head of the US Central Bank. Essentially the market sees Yellen as Bernanke in a dress, a woman who is unlikely to change her predecessor's relaxed stance on continued financial stimulus. The market seems to neither know nor care where the money comes from, even amidst the US budget deadlock, as long as the cheap money era looks like continuing. There's a feeling that the US debt ceiling will be raised within days, by hook or by crook, as default isn't viewed as much of an alternative. And so the whole merry jamboree goes round one more time. Will that be enough to encourage a "risk on" mentality to return to the grains sector? There wasn't much change across the grains sector today, as the market remains largely reliant on guesswork with the USDA closed. Some now suggest that the October WASDE report (originally due Friday) may be scrapped altogether. Who is collating the information whilst the respective departments are shut? It may be therefore that we have to wait until November for the next raft of global supply and demand estimates from Washington, although weekly export sales/crop progress data will hopefully resume before then.

Soycomplex: Beans closed slightly lower on light fund selling. With no CFTC report to go on, it is estimated that funds have been net sellers of around 12-15,000 soybean contracts since the last report based on positions as at the close of business on Sep 24. That includes selling an estimated 1,000 lots today. The US weather looks good for harvest advancement, at least through to the weekend, when the harvest might be as much as 40% done. Better than expected yields are continually being reported. Lanworth Inc upped their US yield estimate to 42.0 bu/acre, with production increased from 3.112 to 3.160 billion bushels. They also raised their global soybean crop estimate from 284 MMT to 286 MMT. Lanworth said that soybean yields in Illinois and Nebraska are above expectations. Conab estimated the Brazilian 2013/14 soybean area at a record 28.663-29.356 million ha. They have production at a record 87.6–89.7 MMT versus the USDA estimate of 88.0 MMT, and up significantly from the previous record crop of 81.5 MMT in 2012/13. Domestic Brazilian soybean consumption was estimated at 40.7 MMT, with exports at 45.9 MMT. Southern Brazil has rain in the forecast, but there's precious little in the north. Argentina waits for rain before they start planting beans. Back from holiday, China will auction 500 TMT of soybeans from reserves tomorrow. China are said to have bought a few cargoes of US beans off the PNW for Dec/Jan shipment earlier in the week. Nov 13 Soybeans closed at USD12.87 3/4, down 1 cent; Jan 14 Soybeans closed at USD12.84, down 3 3/4 cents; Oct 13 Soybean Meal closed at USD425.20, down USD3.50; Oct 13 Soybean Oil closed at 40.55, up 35 points.

Corn: Corn closed with modest gains in light fund buying/unwinding of long wheat/short corn spreads. Funds were estimated as net buyers of around 4,000 corn contracts on the day. That still leaves them as an estimated net seller of around 4-5,000 since the last CFTC report however, so they are still potentially sitting on a near record short position. Amidst unconfirmed rumours that China had bought up to 900 TMT of US corn last week, Reuters today carried a report that one Chinese buyer confirmed that they had bought 420 TMT of corn from the US for May/Jul shipment. The US Energy Dept are still open (although it is suggested that their funding will run out by the time that next week's report is due unless a budget deal gets done before then). They said today that US ethanol production dropped 7,000 barrels/day from last week to 868,000 bpd. Production needs to average around 900,000 bpd to meet the USDA's estimate of 4.9 billion bushels of US corn going into the ethanol sector in 2013/14. Lanworth estimated the 2013 US corn crop at a record 13.708 billion bushels versus a previous estimate of 13.483 billion. They said that corn yields in Nebraska and Illinois are near record levels. They also increased their world corn crop estimate from 949 MMT to a record 953 MMT. Conab estimated the Brazilian corn crop in 2013/14 at a surprisingly high 78.0-79.6 MMT versus the USDA estimate of only 72.0 MMT, that's very similar to the 2012/13 record crop of 79.6 MMT. Dec 13 Corn closed at USD4.43 1/2, up 1 3/4 cents; Mar 14 Corn closed at USD4.56 1/4, up 1 3/4 cents.

Wheat: Wheat was modestly lower on light fund selling/profit-taking and unwinding of spreads with much cheaper corn. Fund selling was estimated at around 1-2,000 CBOT wheat on the day. They are said to have covered in around 20-25,000 of their CBOT wheat short position since the last CFTC report. USD7/bu is starting to look like it will be a tough nut to crack for Dec 13 CBOT wheat in the midst of a record US corn harvest. "North Dakota spring wheat production finished near average this year, despite the smallest area for harvest since 1988. Favourable production occurred due to a cool summer that sharply boosted wheat yields. The 46 bushels per acre yield tied with 2009 for the highest on record. A good crop in North Dakota wheat is significant, since this is the United States second largest wheat producing state behind Kansas," said Martell Crop Projections. Meanwhile "Winter wheat conditions on the Great Plains are much improved over a year ago when serious drought was present," they add. Algeria bought 500 TMT of optional origin, probably French, milling wheat for Dec shipment in a tender. Jordan, Iraq and Bangladesh are also in the market. Russia's wheat harvest is approaching the final leg at nearly 88% done. They've already harvested a crop of 50.2 MMT so far (in bunker weight), although an unusually high proportion of that is likely to be only feed grade. Egypt issued a late tender for wheat for Nov 21-30 shipment, which should provide a useful barometer for the market tomorrow. Dec 13 CBOT Wheat closed at USD6.90 1/2, down 3 cents; Dec 13 KCBT Wheat closed at USD7.59, down 1 1/2 cents; Dec 13 MGEX Wheat closed at USD7.53, down 1/4 cent.