Chicago Jumps On Weather Concerns

19/06/12 -- Soybeans: Jul 12 Soybeans closed at USD14.33 1/2, up 49 1/2 cents; Nov 12 Soybeans closed at 13.86, up 46 3/4 cents; Jul 12 Soybean Meal closed at USD427.90, up USD15.00; Jul 12 Soybean Oil closed at 50.44, up 168 points. Funds bought an estimated 12,000 soybean contracts on the day in an extension of yesterday's "risk-on" mode. Hot and dry US weather and declining crop conditions encouraged establishment on fresh long positions. Strong demand and tight old crop stocks were underlined by the USDA announcing the sale of 140,000 MT of beans to unknown for 2011/12 delivery. Citi Group estimated US 2012 soybean yields at 43.3 bu/acre versus their previous estimate of 43.7 bu/acre and the USDA's figure of 43.9 bu/acre. Another respected analyst Dr Michael Cordonnier came out with an even lower forecast of 42.5 bu/acre.

Corn: Jul 12 Corn closed at USD6.12 1/2, up 13 cents; Dec 12 Corn closed at USD5.63 1/2, up 29 1/2 cents. Funds were said to have bought 20,000 corn contracts on the day, doubling up on yesterday's purchase of a similar volume. The same weather concerns exist for corn. The USDA cut the percentage of the crop rated good/excellent by three points to 63% yesterday, versus 66% a week ago and 70% a year ago. There are dryness concerns in Northern China too, with their Ag Ministry saying this may hurt the corn crop there. Citi Group estimated the US 2012 corn yield at 161.0 bu/acre, down 1.2 bu/acre from their previous estimate of 162.2 bu/acre and fully 5 bu/acre below the USDA's estimate of 166.0 bu/acre. Dr. Cordonnier lowered his forecast to 159.0 bu/acre. Old crop corn stocks are also extremely tight, there's some talk of ethanol plants slowing down or even closing and selling their corn purchases back onto the market.

Wheat: Jul 12 CBOT Wheat closed at USD6.49 1/2, up 19 1/4 cents; Jul 12 KCBT Wheat closed at USD6.70, up 19 1/2 cents; Jul 12 MGEX Wheat closed at USD7.98 1/2, down 4 cents. Funds were said to have been net buyers of around 4,000 Chicago wheat contracts on the day. SovEcon cut their forecast for Russian grain production this year to 85 MMT versus their previous estimate of 89 MMT and compared with 94 MMT in 2011 due to dry weather and winterkill. The wheat crop was cut 3 MMT to 50 MMT, down more than 10% on last year's 56 MMT. They went on to say that their existing Russian wheat export forecast of 14 MMT for 2012/13 is also likely to be cut further. Exports in the current season drawing to a close are seen at 21 MMT, so foreign sales in 2012/13 are likely to fall by more than a third. The Australian Bureau of Statistics said that Australia's May 31 wheat stocks were 15.9 MMT, 4% higher than in May 2011. The largest quantity was stored in Western Australia with 6.6 MMT, or 41% of the national total.