Chicago Close Mixed, Wheat Turning The Leader?

Posted by Nogger - a legend in his own mind at 09:38 | Categorized as

07/11/12 -- Soycomplex: Nov 12 Soybeans closed at USD15.08 3/4, down 8 cents; Jan 13 Soybeans closed at USD15.07, down 8 1/2 cents; Dec 12 Soybean Meal closed at USD469.500, down USD3.20; Dec 12 Soybean Oil closed at 48.62, down 6 points. Fund selling in beans was estimated at 3,000 soybean contracts on the day ahead of what the trade is expecting, at least for beans, to be a mildly bearish WASDE report on Friday. Ahead of that we have the weekly export sales report tomorrow, with the trade expecting soybean sales of 400-700 TMT versus 760 TMT last week. China will also auction 400 TMT of soybeans from reserves tomorrow. China’s Sinograin said that China’s bean imports will grow by 3-4 MMT a year for the next 5 years. They also said that the country had imported 44.3 MMT of beans between January 1st – September 30th, up 18% from a year ago. The USDA are expected to reaffirm record South American production of soybeans in 2013 on Friday. Last month's report pegged Brazilian output of 81 MMT, Argentina at 55 MMT and Paraguay at 8.1 MMT. Given the very strong pace of US soybean exports since the start of the new season it will be interesting to see if the USDA raise their forecast on export potential for 2012/13. Last month this was increased by a hefty 5.7 MMT. CONAB come out tomorrow with their latest Brazilian crop estimates. Last month they placed soybean production at 80.1-82.8 MMT.

Corn: Dec 12 Corn closed at USD7.44 1/4, up 3 1/4 cents; Mar 13 Corn closed at USD7.46, up 3 cents. Funds were said to have been net buyers of around 6,000 corn contracts on the day. US ethanol production was up marginally on the week to 827,000 barrels/day - the highest in seven weeks. Imports however are also up, and more US refineries are closing. A Bloomberg survey says that US producers are losing about 36 cents on each gallon of ethanol they produce versus a 24 cent profit a year ago. The trade will be looking to see if the USDA make any adjustments to demand from the ethanol sector on Friday. They will also be scrutinising the USDA's export projections, as these are also lagging. Tomorrow's weekly export sales report for corn is only expected to be a modest 100-300 TMT. Maizar estimated Argentina’s 2012/13 corn crop at 26-27 MMT versus a previous estimate of 28.0 MMT, but still a record and a good deal more optimistic than Michael Cordonnier's 22.5 MMT forecast released earlier this week. They also placed Argentina’s 2012/13 corn exports at a record 16.4 MMT. CONAB will also issue a revised 2012/13 Brazilian corn production estimate tomorrow, previously they put the corn crop there at 71.9-73.2 MMT. Michael Cordonnier goes 72 MMT. In the US the earliest corn harvest on record is wrapping up. "Dry weather has now returned to the eastern Midwest, which is allowing late harvesting of corn and soybeans to improve," say MDA CropCast.

Wheat: Dec 12 CBOT Wheat closed at USD8.94, up 17 cents; Dec 12 KCBT Wheat closed at USD9.31 1/2, up 12 cents; Dec 12 MGEX Wheat closed at USD9.59 3/4, up 11 3/4 cents. Fund buying in Chicago wheat was estimated at around 5,000 contracts on the day. Wheat is shaping up like being the leader of the sector going forward, with European wheat setting contract highs every day this week so far. US winter wheat is heading into dormancy in its worst state since records began. European winter wheat is struggling to get planted under adverse weather conditions. Winter wheat conditions in Argentina and southern Brazil, where the harvest is underway, have been badly affected by excessive rain. Russia's wheat harvest is 99% complete and is lower than 40 MMT. A crop of 41 MMT sparked the export ban in 2010. ANZ estimated Australia’s 2012/13 wheat crop at 20.0 MMT versus 29.5 MMT a year ago, whilst NAB go for 20.6 MMT. Both are well below the USDA's 23 MMT October estimate. Rabobank estimated China’s 2012/13 wheat imports at 3.6 MMT (an 8 year high) and more than double the USDA's forecast of 1.5 MMT. They have already imported more than 1 MMT in Q1 of the season. Trade estimates for tomorrow's weekly export sales report are 200-400 TMT versus 363 TMT last week. "Southern Russia, the main winter wheat area, has grown very dry from a stable, warm ridge of high pressure. Russia wheat producers have the same issues with severe drought as their counterparts in the US Great Plains. Fields are dry through a very deep layer, due to drought persisting summer into the fall," say Martell Crop Projections.