Chicago Soybeans Within Sight Of All-Time Highs

05/07/12 -- Soybeans: Jul 12 Soybeans closed at USD16.26 1/2, up 54 1/4 cents; Nov 12 Soybeans finished at USD15.26 1/2, up 51 3/4 cents; Jul 12 Soybean Meal ended at USD474.30, up USD20.20; Jul 12 Soybean Oil closed at 54.15, up 120 points. The day after the market has been closed for Independence Day, frequently coinciding with an ongoing weather market, is often spectacular. Today's price action didn't disappoint with Jul 12 soybeans surging higher from the opening and not failing by much to hit the all-time front month high set the day before the 2008 Independence Day holiday of USD16.58 (incidentally, on the first day back after the holiday in 2008 Jul beans closed 69 cents down at USD15.89). Funds were said to have been net buyers of around 13,000 soybean contracts on the day along with 3,000 meal and 4,000 oil. All bean positions posted new contract highs. The US drought is ongoing, although at least temperatures are expected to cool down significantly across the weekend. There isn't much rainfall relief in the forecast however. There may still be a small window of opportunity for US soybeans to make a decent crop though, the most important period for them is the pod filling stage, which isn't due to start for another 3 weeks or so. Decent rains then could still bring beans, originally a desert crop, back from the dead.

Corn: Jul 12 Corn closed at USD7.68, up 49 1/4 cents; Dec 12 Corn closed at USD7.08 1/2, up 34 cents. Funds clearly made their minds up what they wanted to do across the Independence Day holiday, coming in for an estimated 27,000 corn contracts on the day. That would place them adding around 60,000 to their net long position so far in this holiday shortened week and over 130,000 in the past fortnight. A plethora of private analysts are now placing the US corn yield in the 145-149 bushels/acre region versus the USDA's current 166 bushels/acre estimate up for revision next week. It remains to be seen how, and indeed if, they will attempt to tackle this problem without estimating ending stocks too low. One solution may be to lower demand from the ethanol sector under pressure from rising corn prices and a sharp slump in crude oil values over the last couple of months - even allowing for the appreciation of the past week. US ethanol production for the week ending June 29 was 36 million gallons, the lowest weekly total of the year so far. There is some talk of the ethanol mandate being changed to compensate for substantially lower than anticipated production this year. Exports could also take a hit, with Brazil seen flexing its muscles on the international stage following a bumper second crop this year. Conab yesterday raised their Brazilian corn production estimate to 69.5 MMT and increased export potential by 1 MMT to 12 MMT.

Wheat: Jul 12 CBOT Wheat closed at USD8.22 1/2, up 40 1/4 cents; Jul 12 KCBT Wheat closed at USD8.27 1/4, up 42 1/4 cents; Jul 12 MGEX Wheat closed at USD9.38 1/2, up 52 1/2 cents. This was the highest close for a front month in Chicago wheat since April 2011. Funds were said to have been estimated buyers of a net 6,000 Chicago wheat on the day, that would place them net long around 60,000 contracts. Having been closed for a day and a half, the wheat market drew support from sharply higher European wheat futures during this period. Much lower yields than last year out of the Black Sea look like potentially ruling out the usual suspects amongst the "pile it high and sell it cheap" brigade for much of the 2012/13 season. Demand out of North Africa, Asia and the Middle East however remains sluggish, with few tenders around at the moment. The Taiwan Flour Millers' Association is tendering for 44,250 MT of US milling wheat tomorrow. Jordan cancelled a 100,000 MT tender for optional origin wheat earlier in the week. Trade estimates for tomorrow's weekly export sales report are 300 to 450 TMT.