Chicago Close - Wednesday

16/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.36 1/2, up 23 cents; May 13 Soybeans closed at USD14.21 1/4, up 21 1/2 cents; Mar 13 Soybean Meal closed at USD419.10, up USD7.20; Mar 13 Soybean Oil closed at 51.31, up 44 points. Beans were underpinned by the suggestion that China has been actively buying, booking a reputed 30 cargoes in the past week of US/South American beans. Demand from that quarter is expected to remain strong in the run-up to the Chinese New Year celebrations next month. "Accelerated by economic growth, China has rapidly become the world’s largest crusher of soybeans," the USDA said in last week's WASDE report. The FAO estimated Argentine soybean production at 53 MMT this year, 1 MMT less than the USDA predict. Satellite imagery firm Lanworth Inc are more optimistic, even if they did cut their forecast to 55.2 MMT versus a previous estimate of 56.6 MMT. For the Brazilian soybean crop they go for 79.8 MMT, unchanged from their previous estimate and 2.7 MMT less than the USDA predicted last week. There's some talk of dryness developing in parts of Argentina and Brazil, although it seems very early days to start calling it a problem. Fund buying in beans was estimated at around 4,000 contracts on the day. Trade estimates for tomorrow's weekly export sales are 550-750,000 MT.

Corn: Mar 13 Corn closed at USD7.31 1/4, up 3/4 cent; May 13 Corn closed at USD7.31 1/4, up 1/2 cent. Corn was doing quite nicely, thank you very much, in the overnight session until the US Energy Dept issued their weekly ethanol production data. That showed US output last week down 5% from the previous week to only 784,000 barrels per day, the lowest weekly total since they starting issuing data in mid-2010. That's well below the 826,000 barrels per day needed to keep pace with the USDA's projected demand forecasts for 2012/13. Very poor ethanol margins are said to be behind the slump. The FAO estimated this year's Argentine corn area at 4.6 million hectares, down 8% from a year ago. Production is pegged at 25.5 MMT, up from 21.0 MMT a year ago but well below the USDA's predicted 28.0 MMT crop. Lanworth Inc estimated this season's Argentine corn crop at 26.8 MMT versus previous estimate of 27.4 MMT. For Brazil they went 75.6 MMT versus a previous estimate of 76.0 MMT. Taiwan bought 60 TMT of Argentine corn for March shipment overnight. US corn exports have been consistently poor all season. Trade estimates for tomorrow's weekly export sales report are 250-475,000 MT. The level required to hit the USDA's newly reduced export target for 2012/13 is around 334,000 MT.

Wheat: Mar 13 CBOT Wheat closed at USD7.85, up 2 1/4 cents; Mar 13 KCBT Wheat closed at USD8.42 1/2, up 4 1/4 cents; Mar 13 MGEX Wheat closed at USD8.71 1/2, up 5 1/4 cents. Wheat was dragged off the highs by the demise of corn following the release of the weekly ethanol production data. An ongoing drought in winter wheat areas on the US Plains is grabbing more attention. "Drier weather should prevail across the Plains and western Midwest through next week, which will allow drought conditions there to persist," said MDA CropCast. Lanworth Inc cut their forecast for US 2013/14 wheat production from 54.3 MMT to 53.8 MMT, down 13% versus the USDA's estimate for the current season's crop of 61.8 MMT due to persistent drought on the Plains. Algeria bought 400 TMT of probably French wheat in their tender. The market will be looking to see how US wheat fares in the recent tenders from Iraq and Syria. Tomorrow's weekly export sales report will also be scrutinised for signs that demand for US wheat is picking up. Trade estimates for that are 275-425,000 MT. China is said to be buying spring wheat for shipment out of the west coast of the US due to the inferior quality of this season's crop. It's Jan/Nov 2012 grain imports (corn, wheat and rice) were up almost 300% on 2011.