Chicago Consolidates Heading Into USDA Report

07/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.86 3/4, down 3/4 cent; Aug 13 Soybeans closed at USD14.31 1/2, down 8 cents; Mar 13 Soybean Meal closed at USD437.60, up USD0.50; Mar 13 Soybean Oil closed at 51.85, down 60 points. Deferred months fell relative to the nears as shipping delays and wet weather in northern Brazil continued to hamper grains movement out of the region. Bloomberg reported that there were 135 ships loading/waiting to load soybeans, feed or corn on Feb. 5 at the five major Brazilian ports versus 67 vessels a year ago. Talk of loading delays of around 50 days are already commonplace. This should continue to maintain front-end premiums for some time yet. The USDA reported weekly export sales for soybeans of a combined 1.667 MMT, the second highest weekly number for the marketing year. Contrary to recent weeks, sales were split roughly 50:50 between old and new crop, which maybe indicates some degree of switching back into old crop US beans due to South American logistical problems. Heading into tomorrow's Feb WASDE report we now have total US soybean commitments for the 2012/13 at a whopping 93.5% of the USDA's target for the season. No wonder then that the trade is anticipating the USDA to further tighten US soybean ending stocks to an average guess of 130 million bushels tomorrow, which on a stocks to usage basis of 4.2% would be the tightest in almost 50 years. CONAB estimated the Brazilian soybean crop at 83.4 MMT versus a previous estimate of 82.68 MMT. Exports were estimated at 37.78 MMT versus their previous estimate of 36.4 MMT.

Corn: Mar 13 Corn closed at USD7.10 3/4, down 11 3/4 cents; May 13 Corn closed at USD7.12, down 12 cents. Funds were active sellers once more, dumping an estimated 10,000 contracts heading into tomorrow's USDA report. Corn export sales were poor at 169 TMT of old crop and net reductions of 8,500 MT for new crop, even though that just about managed to scrape in at the bottom end of modest expectations of 150-400 TMT. Whilst exports are lagging behind the target set by the USDA for 2012/13, demand from the ethanol sector has also started to decline in recent weeks. That has the trade anticipating a modest rise in US 2012/13 ending stocks to 615 million bushels from 602 million last month. There are some however who think that if we are to get a bearish surprise from the USDA then this is where it might come from. Others suggest that increased domestic feed usage will mop up any reduction in export or ethanol demand. World corn inventories are expected to be little changed in tomorrow's report at 115.74 MMT. CONAB estimated the Brazilian corn crop at 76.0 MMT versus a previous estimate of 72.19 MMT. They see more than half that total (40.9 MMT) coming from "safrinha" or second-crop corn. They also voiced their concern about Brazilian port logistics.

Wheat: Mar 13 CBOT Wheat closed at USD7.56, down 5 1/2 cents; Mar 13 KCBT Wheat closed at USD8.01, down 8 3/4 cents; Mar 13 MGEX Wheat closed at USD8.39 1/4, down 5 1/2 cents. Fund selling was estimated at around 2,000 Chicago contracts on the day. Weekly export sales of just over 300 TMT were almost exclusively old crop, versus expectations for sales of 200-500 TMT. There was no sign in the official report of any of the rumoured sales to the UK or Russia. As with corn the slow pace of US exports is seen nudging the USDA to raise ending stocks in tomorrow's WASDE report, with the trade anticipating a modest increase from 716 million bushels last month to 728 million this time round. Also as with corn there is talk of increased domestic feed usage of wheat keeping those ending stocks from rising too much. World wheat ending stocks are seen around 1 MMT lower at 175.54 MMT. Serious concerns remain for US winter wheat. "Drought still covers approximately 92% of the central and northern Plains and 56% of the southern Plains and Delta, but the Midwest has been reduced to 47.5% (down from 51%)," report MDA CropCast. Warmer and even drier is the 31-60 day outlook for winter wheat on the Plains.