Chicago Close - Friday

08/06/12 -- Soybeans: Jul 12 Soybeans closed at USD14.26 1/4, down 1 3/4 cents; Nov 12 Soybeans closed at USD13.32 1/2, down 8 3/4 cents; Jul 12 Soybean Meal closed at USD429.80, up USD4.30; Jul 12 Soybean Oil closed at 49.46, down 93 points. For the week Jul 12 beans were up 82 cents and with new crop Nov 12 gaining 74 1/2 cents. Meal advanced USD35.50 and oil a more modest 87 points. Funds were said to have been net sellers of around 4,000 soybean contracts on the day in what can probably be attributed to profit-taking at the end of a week where beans put on some pretty decent gains. The USDA announced the sale of 410,000 MT of mostly new crop beans to China along with 120,000 MT of old crop to Egypt, indicating that robust demand for US soybeans is still out there. US weather continues to be far less than ideal too. The main bearish factor out there is the European debt crisis, with strong rumours that the Spanish will bite the bullet and request a bailout over the weekend. . For soybeans it seems like the US is pretty much the only shop in town. Argentina's crop has slid from an anticipated 52 MMT in December to around 40 MMT now, whilst Brazil's has shrunk from 75 MMT to around 66 MMT. The latter is widely considered to be virtually "sold out" and in the former producer selling is light, dogged by the usual strike action and arguments with the government over taxes.

Corn: Jul 12 Corn closed at USD5.98, up 4 cents; Dec 12 Corn closed at USD5.44, up 7 1/2 cents. On the week as a whole Jul 12 was up 46 1/2 cents and Dec 12 rose 34 cents. Funds were said to have been a buyer of around 4,000 corn contracts on the day. Weekend weather forecasts aren't great, offering on a limited chance of rainfall for much of the Midwest. Looking towards the second half of June things are also turning hot and dry. Respected and widely-followed analyst Lanworth, which uses satellite imagery to forecast crop production in the US, came out with a forecast for US corn output this year of just 13.65 billion bushels (346.7 MMT), which is well below the current USDA estimate of 14.79 billion bushels (375.7 MMT) - 29 MMT below to be specific. Monday's price direction will likely depend on what happens with Spain over the weekend, and how that impacts on the dollar, and money flows into or out of the grains. The market will also be looking to the revised weekend weather models and have an eye on Tuesday's upcoming supply & demand and stocks report from the USDA. Trade estimates for corn are that old crop US ending stocks will be trimmed 30 million bushels to 821 million, and with new crop carryout cut 131 million to 1.75 billion bushels.

Wheat: Jul 12 CBOT Wheat closed at USD6.30 1/4, down 11 1/2 cents; Jul 12 KCBT Wheat closed at USD6.56, down 12 1/2 cents; Jul 12 MGEX Wheat closed at USD7.69 1/4, up 2 1/2 cents. For the week Chicago wheat was 18 cents higher, with Kansas up 19 cents and Minneapolis climbing 29 3/4 cents. The overall picture for wheat is less bullish than it is for corn or soybeans. For one, there's much more competition around when it comes to making sales on the global market. A possible period of further dollar appreciation, should we get one on the back of an escalation of the European debt crisis, won't help US export prospects. In addition, the US is in the middle of the winter wheat harvest (and the spring wheat crop is looking great with 78% of the crop rated good/excellent as of last Sunday). Hence, wheat stocks are plentiful, unlike they are for corn and soybeans where the harvest is still a few months away yet and where yield prospects are still highly uncertain. Next week's USDA report will give us revised estimates for 2012 US wheat production, with the trade expecting an all wheat crop of around 2.2 billion bushels (59.9 MMT) versus 2.0 billion (54.4 MMT) last year. US old crop ending stocks are expected to fall slightly, down 13 million bushels from last month to 753 million bushels.