Chicago Grains Rally - Led By Wheat

06/10/15 -- Soycomplex: Beans closed with relatively modest gains in what looked like part of a broader pick up in commodity buying by the fund community. The move higher came despite a surprise 2 point hike in US soybean good to excellent ratings from the USDA after the close yesterday. The trade is now looking to Friday's WASDE report from the USDA to provide some needed direction from here. There is a fairly strong traditional trait in place for beans (and corn) to put in a seasonal bottom around about now. The trade is expecting the USDA to cut US soybean production on Friday, by virtue of a reduction in harvested acres, which has been alluded to in other data recently. A Bloomberg poll puts harvested area down 650k acres compared to last month when the USDA had output at 3.935 billion bushels and yields at 47.1 bu/acre. Demand for beans remains strong, despite fears over the Chinese economy, but so too does competition from South America. Both Argentina and Brazil appear to have largely escaped the usual logistical and infrastructure problems that have plagued them in recent years when they've harvested bumper crops. Brazil is expected to increase soybean plantings again this year, and Argentina will probably do likewise too. Celeres sees Brazilian soybean plantings at 32.2 million ha this year. AgRural said that as of Oct 2 Brazil had planted 3% of their 2016 soybean crop, unchanged from a year ago. Planting in Mato Grosso is a bit retarded, waiting for rain. Further south in states like Parana things are more advanced. Nov 15 Soybeans closed at $8.88, up 3 3/4 cents; Jan 16 Soybeans closed at $8.92, up 3 3/4 cents; Oct 15 Soybean Meal closed at $301.80, up $0.80; Oct 15 Soybean Oil closed at 28.51, up 3 points.

Corn: The corn market closed around 4-5 cents firmer, also benefiting from a general bout of sudden modest interest in owning commodities. Fund money was estimated as being a net buyer of around 9,000 corn contracts today. The trade is expecting a downwards revision to US corn production potential from the USDA on Friday. Last month they had the US corn crop estimated at 13.585 billion bushels. A Bloomberg survey now places that at around 13.482 billion. That's due to lower forecasts for both harvested area and yields. Yields were pegged at 167.5 bu/acre last month, the Bloomberg survey now pegs those at 166.7 bu/acre. Some think  that they might cut 2-3 bu/acre off their September estimate this time round, but this is the USDA that we are talking about, they may chose to wait until the harvest is a bit more advanced than the 27% complete reported last night to do that. That harvest progress figure was incidentally lower than trade estimations of around 30% done. In other news, Ukraine was said to have agreed a cap on 2015/16 corn exports of 16 MMT, some 2.5 MMT lower than where the USDA currently sees them. The USDA also seem far to high on their Ukraine corn production estimate of 27 MMT and their yield forecast of 6.59 MT/ha. Current harvest figures say that with 30% of this year's crop cut, production so far has yet to reach 6 MMT, and yields are averaging only 4.72 MT/ha. Ukraine said that they'd exported 1.45 MMT of corn Jul 1 to Oct 5. As well as the USDA coming out on Friday, Brazil's CONAB are also due to release their first production estimates for the 2015/16 harvest. The regular weekly US ethanol production report is due out tomorrow. Production last week was 943,000 barrels/day, that was up 5,000 bpd from the previous week although still the second lowest weekly volume since the first week of May. Dec 15 Corn closed at $3.98 1/4, up 4 3/4 cents; Mar 16 Corn closed at $4.08 1/2, up 4 3/4 cents.

Wheat: The wheat market closed with double digit gains across the three exchanges. Talk of dryness issues in the FSU, the US and Australia were deemed supportive today. Switching the clock back 12 months, the Russian Ag Ministry said that 2.6 million ha of winter sown crops there failed or ended up as only suitable for silage versus the 1.4 million ha previously forecast. That was also up from 1.1 million ha the previous year. That led them to reduce the size of this year's grain harvest by 0.8 MMT. IKAR trimmed their Russian wheat production estimate from 60.8 MMT to 60.0 MMT, and reduced barley output this year from 17.1 MMT to 16.8 MMT. The Russian Ag Ministry said that the 2015 wheat harvest there is 96.1% complete at 62.5 MMT in bunker weight. Cleaning and screening would typically knock around 7% off that figure ie. around 4.4 MMT. Average yields are reported 5% lower than last year at 2.54 MT/ha. Barley production is said to be at 17.8 MMT off 96.2% of the planned area. Again that's bunker weight figure. Average yields are also officially 5% lower at 2.25 MT/ha. Some anecdotal reports suggest that growers may be being put under pressure to exaggerate yields this year, but we will probably never know the final "real" production numbers. They go on to report winter plantings for the 2016 harvest to now be 78.9% complete on 13.5 million ha, which is 600,000 ha more than this time last year. It's the health of these newly sown crops that the market will probably debate over all winter, much as it did 12 months ago. Kazakhstan said that it's harvest was 90.6% complete on 13.36 million ha for a crop of 16.88 MMT so far. Ukraine said that they'd exported 5.64 MMT of wheat Jul 1 to Oct 5, along with 2.94 MMT of barley. The Ukraine Ag Ministry are said to have agreed to cap wheat exports this season at 16.5 MMT and barley exports at 3.8 MMT. The USDA currently has these at 13.5 MMT and 4 MMT respectively. Dec 15 CBOT Wheat closed at $5.26 1/4, up 10 3/4 cents; Dec 15 KCBT Wheat closed at $5.15 3/4, up 13 3/4 cents; Dec 15 MGEX Wheat closed at $5.40 3/4, up 10 cents.