Chicago Soymeal Ends At Highest Levels Since 2009

20/04/12 -- Soybeans: May 12 Soybeans closed at USD14.46 3/4, up 31 cents; Nov 12 Soybeans closed at USD13.56, up 13 1/2 cents; May 12 Soybean Meal closed at USD406.00, up USD14.10; May 12 Soybean Oil closed at 55.83, up 66 points. Despite the sharp rally May 12 beans only finished 10 cents higher on the week, and with Nov 12 actually down 5 3/4 cents. Meal was almost USD10 higher and oil fell 69 points. This was the first time that meal has finished above USD400 since 2009. Today's exaggerated move appears to have a lot to do with the large volume of open interest in May options heading into expiry. Prices surged on rumours that China had bought several cargoes of US soybeans after hearing that Brazil was to slow or halt soybean exports, an idea subsequently dismissed by the Ag Ministry there. Other reports now suggest that the reality of the situation is that the large volume of export business that Brazil already has on the books means that its antiquated infrastructure can't cope with making any more sales for shipment this side of August. With Argentina's soybean crop shrinking by the week - the Agriculture Ministry cut their soybean production estimate there from 44 MMT to 42.9 MMT today - that could see a significant shift in purchases from the likes of China to the US. Rapid corn planting progress in the Midwest may mean that we don't get much of a switch into soybeans after all, that's the way the trade seems to be viewing it. Soybeans really do not need a weather scare this summer if that is the case.

Corn: May 12 Corn closed at USD6.12 1/2, down 8 1/2 cents; Dec 12 Corn closed at USD5.36 3/4, down 5 cents. On the week overall May 12 was 16 3/4 cents lower, with new crop Dec down just a quarter of a cent. Despite all the rhetoric concerning tight old crop stocks the May 12 contract has succumbed to heavy fund selling across the week, and the month. Today they were said to have liquidated around 14,000 contracts on the day, bringing their estimated sales for the month to around 55,000 contracts. Unwinding of old crop/new crop spreads is also putting the nearby month under pressure. Yesterday's disappointing export sales, along with a lack of confirmation of the rumoured Chinese business from the USDA added to the negative sentiment. So too did near perfect sowing weather in many parts as US farmers progress rapidly with early corn plantings. The market will be eager to see some confirmation of the rumoured 1 MMT plus sales to China in the early part of next week, it will also be looking to Monday night's crop progress report to see how much of the intended 75-year high corn acreage is already in the ground.

Wheat: May 12 CBOT Wheat closed at USD6.15 3/4, down 9 cents; May 12 KCBT Wheat closed at USD6.26, down 11 1/2 cents; May 12 MGEX Wheat closed at USD7.91, down 18 1/4 cents. Chicago wheat finished the week with modest losses of 7 3/4 cents, with Kansas down 17 cents and Minneapolis losing 33 1/4 cents. Wheat followed corn lower on the day, lacking a storyline of its own. Funds were said to have been further sellers of around 4,000 Chicago wheat contracts on the day, likely taking their net short position to something in excess of 60,000 contracts. That seems to be a position that they are fairly comfortable to hold, but does continue to leave the market vulnerable to a swift short-covering bounce for little or no reason. The decline in European wheat prospects for the 2012 harvest should have stabilised with recent rains, which are now forecast to last into May. Australia will have a wheat crop of 26.1 MMT in 2012/13, according to the National Australia Bank, noting excellent subsoil moisture in the east. That's 12% down on last year's record harvest, plenty of which will probably get carried into 2012/13.