Chicago Closing Comments

24/07/12 -- Soycomplex: Soybeans recovered from limit down losses at one stage to finish around 50 cents easier, with meal down USD14-15 and oil losing more than 200 points. Heavy fund selling, estimated at around 18,000 contracts in beans, was prompted by a wetter weather forecast and a slump in outside markets as Europe's debt problems look like taking several steps for the worse. The wetter forecast, should it prove to come to fruition where many before have disappointed this year, could still potentially bring the US soybean crop back from the dead. Although the crop is more mature than normal, having been planted early, almost two thirds is still to set pods. This is the period when rainfall matters the most.

Corn: Forward months only posted losses of around 4-5 cents on corn, where the feeling is that much of the damage is irreversible. Funds sold an estimated 12,000 corn contracts on the day, making them net sellers of around 20-25,000 lots over the last two sessions. Even so they are still heavily long. Reports suggest that Brazilian corn is now being shipped into the US. There is also some talk of significantly lower demand from the feed sector with corn prices around USD8/bu and of livestock being finished off at lower weights to partially compensate for prices at or near record highs. A Reuters survey reports corn yields now being estimated not much above 130bpa on a national level compared to the USDA's 146bpa that surprised the trade only a couple of weeks ago.

Wheat: Wheat finished the day with losses of around 30-35 cents across each of the three exchanges, with funds estimated to have been net sellers of some 8,000 contracts in Chicago. Harvesting in the EU is now moving on at a pace with some dry and fine weather for most. The US winter wheat harvest is 82% complete and the spring wheat harvest 12% done already, a testament to the dry weather. Yields for the latter look similar to last year. The sharply lower US corn crop will undoubtedly lead to increased wheat usage in the feed ration this year, but with wheat prices still a dollar a bushel more than corn the switch may not be as large as some might think. Meanwhile, the firm dollar and weak euro could dent US wheat exports too.