Chicago Sharply Higher Heading Into USDA Report

09/08/12 -- Soycomplex: Aug 12 Soybeans closed at USD16.94 1/2, up 64 1/2 cents; Nov 12 Soybeans closed at USD16.31 1/4, up 50 cents; Aug 12 Soybean Meal closed at USD538.70, up USD16.80; Aug 12 Soybean Oil closed at USD52.39, up 81 points. If there was to be any pre-USDA report book-squaring there was absolutely no sign of it, with fund buying an estimated 12,000 soybean contracts on the day. The trade is clearly expecting a bullish report for beans, with US production seen falling from 3.05 billion bushels last month to less than 2.8 billion this time round. The USDA's renowned skill for creative accounting will be tested to the full when it comes to projected ending stocks for 2012/13 as there is little scope for reducing soybean demand giving China's continued appetite for US beans. Right on cue they were back again today to book 165,000 MT of new crop. Rumours circulate that they may have bought up to 1 MMT of US beans in the past week as prices fell to around USD16/bu from over USD17.50/bu less than three weeks ago. Goldman Sachs apparently said in a note that they expect CBOT soybeans to hit USD20/bu in the next three months. Trade estimates for tomorrow's 2012/13 US ending stocks range from 95-140million bushels, averaging out at 115 million versus 130 million last month. MOFCOM estimated China’s July bean imports at 5.29 MMT, but said that imports in August will fall to 4.37 MMT. Weekly export sales of a combined 300,400 MT were in line with trade expectations.

Corn: Sep 12 Corn closed at USD8.18 1/4, up 7 1/2 cents; Dec 12 Corn closed at USD8.23 3/4, up 7 1/4 cents. Funds were said to have been net buyers of around 10,000 corn contracts on the day. A Dow Jones survey sees the USDA placing US corn production at 10.97 billion bushels in tomorrow's report, fully 2 billion, or 15%, down on last month. Some pundits are forecasting production below 10 billion. Weekly export sales were at the low end of trade estimates at a combined 1.103 MMT, considering that the trade already knew about a substantial sale to Mexico for 2012/13. The USDA appear to have a bit more leeway when it comes to not letting 2012/13 corn ending stocks fall too low in that they could lower exports, domestic feed demand and usage from the ethanol sector. They may well also increase 2011/12 ending stocks, thereby increasing the amount of carryin into 2012/13. Conab estimated Brazil’s 2011/12 corn crop at a record 72.78 MMT versus a previous estimate of 69.48 MMT and up 26.8% from 2010/11. The East Kansas Agri Energy ethanol plant said that it will halt production on Oct 1st. The firm cited the prolonged US drought conditions as having a negative impact on availability of corn along with rising feedstock prices, they also said that the demand for gasoline is down resulting in surplus ethanol stocks.

Wheat: Sep 12 CBOT Wheat closed at USD9.13, up 13 3/4 cents; Sep 12 KCBT Wheat closed at USD9.15, up 11 1/4 cents; Sep 12 MGEX Wheat closed at USD9.59, up 13 3/4 cents. Funds were said to have been net buyers of around 5,000 Chicago wheat contracts heading into tomorrow's USDA report. That is only expected to show a very minor adjustment to US wheat production, with all wheat output seen down fractionally from 2.224 billion bushels last month to 2.220 billion this time round. It's the world production numbers that will be of more interest, with Russian output pegged at 49 MMT last month and trade estimates now centred around 45.5 MMT. Ukraine and Kazakhstan could also see cuts to their production in line with other trade estimates. For 2012/13 world wheat ending stocks the average trade estimate is 178.949 MMT from within a range of estimates of 172.5-184.0 MMT. The July USDA estimate was 182.44 MMT. Japan bought 106,530 MT of mostly US wheat for Sept/Nov shipment in its usual weekly tender. Weekly export sales of 665,300 MT were at the top end of trade estimates of 400-675 TMT. Ukraine exported 840 TMT of grain in July versus 1.47 MMT of grain in June, according to ProAgro. Shipments in the first week of August have slowed further to 110 TMT, they add.