Chicago Jumps On News Of Chinese Interest Rate Cut

07/06/12 -- Soybeans: Jul 12 Soybeans closed at USD14.28, up 41 3/4 cents; Nov 12 Soybeans closed at USD13.41 1/4, up 42 cents; Jul 12 Soybean Meal closed at USD425.50, up USD10.90; Jul 12 Soybean Oil closed at 50.39, up 114 points. Funds bought an estimated 6,000 soybean contracts on the day, enthused by the news that China had dropped interest rates for the first time since 2008. Outside markets and US weather concerns also provided support. Weekly export sales at a combined 495 TMT versus expectations of 600-850 TMT tempered a little of today's enthusiasm. China sold less than 14,000 MT of the 600,000 MT of soybeans on offer in today's auction. That would seem to indicate that the quality of whatever state-owned stocks they do have is questionable. CNGOIC estimated China’s May and June soybean imports at above 12 MMT, with imports during Jul–Sep at 13.5 MMT. Tuesday's upcoming USDA report is expected to see 2011/12 US soybean ending stocks fall from 210 million bushels to around 190 million. Carryout for 2012/13 is also seen being reduced. Dryness in the US is seen thwarting some farmers plans to double crop wheat with soybeans.

Corn: Jul 12 Corn closed at USD5.94, up 7 3/4 cents; Dec 12 Corn closed at USD5.36 1/2, up 17 cents. Funds were said to have been net byers of 14,000 corn contracts on the day. The news of a cut in Chinese interest rates also lent support to corn. The USDA attaché in China estimated their 2011/12 corn imports at 5.5 MMT, unchanged from the previous estimate, with 2012/13 corn imports rising to 7.0 MMT. How much of that will come from the US remains to be seen with recent analysts estimates for Brazilian corn production this year rising on the back of bumper winter corn output. Whilst US weather forecasts are turning cooler, much of the promised rain is also being taken away. Nevertheless the USDA's chief economist Joseph Glauber stuck by his forecast for record production, a substantial rebuilding of ending stocks and "significantly" lower corn prices in 2012/13. Corn export sales were a bit lower than the 450-750 TMT expected at a combined 399 TMT. China was in there, but only taking 18,600 MT of the old crop and cancelling 15,000 MT of the new crop.

Wheat: Jul 12 CBOT Wheat closed at USD6.41 3/4, up 17 1/2 cents; Jul 12 KCBT Wheat closed at USD6.68 1/2, up 13 1/2 cents; Jul 12 MGEX Wheat closed at USD7.66 3/4, up 22 3/4 cents. Funds were said to have been net buyers of around 3,000 Chicago wheat contracts on the day. Short-covering on spillover support from the other pits was a feature with firmer outside markets and a weaker dollar also helping. Weekly export sales of just 165,700 MMT for the first week of the 2012/13 marketing campaign was well below expectations of 400-500 TMT. A total of 1.3 MMT in sales were carried over from the 2011/2012 marketing year. Next week's USDA WASDE report is seen reducing the size of the US winter wheat crop by around 50 million bushels and also trimming 2012/13 ending stocks by around 15 million. The Russian Ag Ministry said that drought concerns have passed and maintained their 2012/13 grain crop forecast at 92-94 MMT and estimated exports at 22-23 MMT. Most observers think that these numbers are overstated by around 4 MMT.