Chicago Slumps Further On Chinese Cancellations

20/12/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.08 3/4, down 28 1/4 cents; Mar 13 Soybeans closed at USD14.04 3/4, down 26 1/4 cents; Jan 13 Soybean Meal closed at USD427.70, down USD8.80; Jan 13 Soybean Oil closed at 47.91, down 50 points. The big news of the day for beans was Chinese cancellations of 540 TMT, meaning that they've cancelled around 1 MMT this week. That knocked the market for six even though the USDA reported actual shipments this week of 1.35 MMT, of which almost 1 MMT did go to China. That's the 12th week in a row that exports have topped 1 MMT, which in itself is a record. Weekly export sales were 619,400 MT (plus 20,500 MT for 2013/14), a little below trade expectations of 650-800 TMT. Nevertheless accumulated exports of 18.9 MMT, plus outstanding sales of 11.4 MMT, mean that the US already has 83% of the USDA's full season target on the books even with today's cancellations. Argentina is in for more rain, prompting MDA CropCast to cut their soybean production estimate there by 2 MMT from last week to 53.17 MMT. Ag Canada cut their forecast for Canadian 2012/13 canola ending stocks from 450 TMT to 350 TMT - less than half those of 2011/12.

Corn: Mar 13 Corn closed at USD6.96 1/2, down 6 1/2 cents; May 13 Corn closed at USD6.99 3/4, down 7 1/4 cents. Corn set new 5-month lows, aided by another disappointing set of weekly export sales. These came in at only 114,400 MT for 2012/13 (plus 5,800 MT for 2013/14) against trade expectations of 325-550 TMT, and only around a third of the pace needed to hit the USDA export sales target. South Korea’s Kocopia bought 55 TMT of what will probably be Brazilian corn, whilst South Korea’s largest animal feed miller, Nofi, is tendering for 210 TMT of corn specifically excluding US origin based on price. Japanese government data shows that corn utilisation in animal feed in October matched September's 20 year low of 42.5%. Japan imported 12.27 MMT of corn between January and October, 80% of which was came from the US versus 92.5% a year ago. The Argentine Ag Ministry cut their corn planting forecast from 5 million hectares to 4.6 million. They rate 90% of the crop as being good/very good.

Wheat: Mar 13 CBOT Wheat closed at USD7.90 1/2, down 15 1/4 cents; Mar 13 KCBT Wheat closed at USD8.43 3/4, down 14 1/4 cents; Mar 13 MGEX Wheat closed at USD8.83 3/4, down 11 3/4 cents. Like corn, wheat also stumbled to 5-month lows even though weekly export sales were higher than trade expectations, and of those for corn and soybeans. At 651 TMT (plus 20,000 MT for 2013/14) they were 46 percent above the prior 4-week average. Maybe we really finally are seeing a world demand switch? Whilst Japanese usage of corn in animal feed slumps to a 20-year low, for wheat it is running at a 20-year high, albeit only at an inclusion rate of 4.5% in October. Japan bought 121 TMT of mostly US wheat in their regular tender today. The Argentine Ag Ministry cut their wheat production forecast to 10.5 MMT, still a bit better than many other analysts who line up in the 9.5-10.0 MMT area. If the Ministry are correct then that would be a drop of more than 25% on last year. MDA CropCast left their estimate unchanged at 9.98 MMT. The Ministry said harvesting was 45% complete. A a new round of storms in the week ahead will do little to help.