Chicago Ends Turbulent Session Lower

11/07/12 -- Soycomplex: Jul 12 Soybeans closed at USD16.23, down 25 3/4 cents; Nov 12 Soybeans closed at USD15.22 1/2, down 16 cents; Jul 12 Soybean Meal closed at USD478.00, down USD4.20; Jul 12 Soybean Oil closed at 53.62, down 59 points. Despite a bullish USDA report in which they pegged US soybean yields this year at just 40.5 bpa, a 3.4bpa, or 7.7% drop from last month, the market turned lower at the end of a very turbulent session. Old crop ending stocks were lowered to 170 million bushels, in line with expectations, whilst new crop carryout was pegged at a very tight 130 million, down 16 million from last month and below trade forecasts. Funds took profits on an estimated 9,000 soybean contracts on the day as weather quickly usurped the USDA data and midday models turned wetter. In the end beans finished well off the highs and lows of the day, with the Nov 12 contract posting a 70 cents trading range, hitting 33 cents lower at one stage.

Corn: Jul 12 Corn closed at USD7.50 3/4, down 10 1/4 cents; Dec 12 Corn closed at USD7.04, down 13 1/2 cents. The USDA knocked a stunning 20bpa off their June yield estimate to surprise the trade. Even so the official 146bpa figure suggested merely falls into line with other private estimates kicking around, indeed some are significantly lower. The USDA however are normally much more conservative in their approach, and the trade was expecting them to line up around the 154bpa mark, so this was quite a shock. Cynics would wonder if they were being deliberately aggressive to create a "state of emergency" mentality in order to "force" a reduction in the ethanol mandate. Only time will tell. As with soybeans weather forecasts quickly took over an the market moved lower, but again finished well off both the highs and lows of the day. Funds were said to have sold around 20,000 contracts on the day. Weekly US ethanol production was reportedly at a two year low last week.

Wheat: Jul 12 CBOT Wheat closed at USD8.07 3/4, up 3 cents; Jul 12 KCBT Wheat closed at USD8.21, up 9 cents; Jul 12 MGEX Wheat closed at USD9.14, unchanged. Wheat too had a volatile session, ending in the middle of a wide daily trading range, with funds net sellers of a more modest 2,000 Chicago contracts on the day. US 2012/13 all wheat production was pegged at 2.224 million bushels, slightly below expectations, with 2012/13 ending stocks at 664 million, some 61 million below the average trade guess. Despite the sharp drop in anticipated US corn production this year the USDA cut 2012/13 wheat usage in domestic feeding by 20 million bushels. World wheat ending stocks were reduced 3 MMT to 182 MMT, the lowest since 2008/09, although at 27% stocks to usage, still a very comfortable amount. Production in Russia and Kazakhstan was reduced, with Ukraine's left on hold. The combined production of the three is now seen at 75 MMT, nearly 26% down on last year's 101 MMT.