Chicago Dives Despite Fiscal Cliff Deal

02/01/13 -- Soycomplex: Jan 13 Soybeans closed at USD14.05 1/2, down 13 1/4 cents; Mar 13 Soybeans closed at USD13.92 1/4, down 17 1/4 cents; Jan 13 Soybean Meal closed at USD407.10, down USD13.50; Jan 13 Soybean Oil closed at 50.52, up 136 points. It was a choppy session with beans trading within a range of around 45-47 cents. Early gains were quickly eroded though, maybe on the realisation that the last minute deal to avoid the US tumbling over the fiscal cliff was not much more than a sticking plaster over a gaping wound. That issue, along with that of the US debt ceiling, are in reality far from resolved. Funds finished up as estimated net sellers of around 7,000 soybean contracts on the day as liquidation mode returned. Despite the rampant pace of US soybean exports the trade seems to be focusing more on the upcoming potentially monster South American harvest. Soyoil got a boost from news that the last gasp deal pushed through Congress would include the reinstatement of the USD1/gallon biodiesel tax break through to the end of 2013. Very small volumes of early new crop soybeans have been harvested in Brazil so far, it will be February before the harvest is in full swing. Customs data shows that Brazil only exported 135 TMT of soybeans in December, less than a tenth of the volume exported in December 2011. Argentine soybean plantings are said to be 82% complete.

Corn: Mar 13 Corn closed at USD6.90 3/4, down 7 1/2 cents; May 13 Corn closed at USD6.93 1/2, down 6 3/4 cents. Corn also failed to hold early session gains, with funds estimated to have finished up as net sellers of around 8,000 contracts on the day. Argentine corn planting is still only seen around 75% complete as rains refuse to go away for longer than a couple of days, making the USDA's production estimate of 27.5 MMT this year seem way too high. "Showers returned to northeastern areas over the past two days, including northern Santa Fe and northern Entre Rios, which maintained abundant moisture there. Meanwhile, drier conditions across central and southern areas have allowed wetness there to continue to ease. Showers should once again return to northeastern areas this weekend, which will keep planting there a bit slow," say MDA CropCast. There may still be more fund repositioning/rebalancing in to get through yet, leaving corn vulnerable to further selling. The USDA release their January WASDE report next Friday. Before that we have Brazil's CONAB out with their production estimates on Jan 9th. Last month they estimated the 2012/13 corn crop at 71.9 MMT and 2012/13 corn exports at 15.0 MMT.

Wheat: Mar 13 CBOT Wheat closed at USD7.55 1/4, down 22 3/4 cents; Mar 13 KCBT Wheat closed at USD8.11, down 20 cents; Mar 13 MGEX Wheat closed at USD8.41 1/2, down 24 cents. Funds were judged to have been net sellers of around 5,000 Chicago wheat contracts on the day as part of their overall liquidation phase despite the notion that US wheat is now amongst the cheapest in the world. India said that it plans to export 2.5 MMT of wheat over the next 5–6 months. Egypt's GASC said they have enough wheat supply to last them almost 6 months including what is already purchased but not yet shipped. Whilst the USDA's weekly crop condition reports have ceased until the spring, the Kansas Agricultural Statistics Service said that 31 percent of the state's wheat crop ended 2012 in poor to very poor condition, that's 6 points worse than the USDA last reported at the end of November. The agency noted that only three of the 53 reporting stations around the state received more than an inch of precipitation in December. A similar report out of Oklahoma pegged 61% of the wheat crop as poor to very poor versus 44% from the USDA in November.