Chicago Rallies - Even Soybeans

20/03/13 -- Soycomplex: Soybeans closed higher for the first time in over a week on what looks like short-covering after a pretty substantial fall. There's been a lot of talk about waning Chinese demand on the back of falling pig numbers lately, coupled with cancellations of Brazilian purchases due to shipping delays, but the latter news could be construed as bullish for US soybean demand - particularly until the Argentine harvest is in full swing. The latter are estimated to only have around 4-5% of their soybeans harvested to date. Brazil meanwhile were 58% done as of Mar 15, according to Celeres. How much of the cancelled Brazilian business will end up going to Argentina, and how much will go to the US is unclear. Talk continues of Chinese interest in nearby US soybeans out of the PNW. This makes tomorrow's weekly export sales report interesting, especially with the US 97% sold already. Trade estimates for soybeans are for sales of 6-800 TMT. Looking further ahead, those Brazilian beans will have to come onto the market at some time, making them more active in the further forward months than would normally be the case. They could still be aggressive exporters when US new crop comes along in the late summer/early autumn. Interesting then that US farmers could also have a record harvest of their own to market, weather permitting of course. Lanworth Inc today forecast US soybean plantings at a record 81.3 million acres this spring, with production pencilled in at 3.455 billion bushels. Lanworth estimated the Brazilian soybean crop at 81.1 MMT versus 80.8 MMT previously and pegged Argentine output at 50.5 MMT versus 49.4 MMT last time. Macquaire today forecast the average Q2 US soybean price at USD13/bu. May 13 Soybeans closed at USD14.19 3/4, up 13 cents; Jul 13 Soybeans closed at USD13.99 1/4, up 11 1/4 cents; May 13 Soybean Meal closed at USD413.80, up USD2.20; May 13 Soybean Oil closed at 49.84, up 36 points. Net fund buying in beans today was estimated at 3-5,000 lots.

Corn: The corn market continues to press on higher on ideas of increased domestic demand. Valero Energy say that it will soon have all 10 of its ethanol plants back online and operating at or close to capacity. Data from the US Energy Dept today showed an increase in weekly ethanol production of 12,000 barrels/day to 809,000 bpd as more US plants come back online. Even so this is still behind the pace required to hit the USDA's projected demand target for 2013, said to need to be 838,000 bpd. This number does not appear to take into account a partial switch to wheat and sorghum as a feedstock either, so it would appear at this stage that the ethanol sector will not ultimately require the 4.5 billion bushels of corn that the USDA currently project. They did surprise the market with a forecast for increased domestic feed usage of corn earlier this month however. Lanworth Inc forecast that US farmers will plant 96.5 million acres of corn this spring, around 1% down from a year ago. Production might rebound to 13.64 billion bushels they say, depending on the weather. They said that they expect the USDA to estimate the 2013 US corn planted area somewhat lower, at 95.7 million acres, next week. They pegged the 2012/13 Argentine corn crop at 25.5 MMT versus their previous estimate of 24.9 MMT, but still below the USDA's 26.5 MMT. They have the Brazilian corn crop at 76.4 MMT versus 76.9 MMT previously, but well above the USDA's 72.5 MMT. Opinions over Brazil's 2012/13 corn potential are still divided, with more than half of this season's production set to come from "safrinha" or second crop corn which is still being planted. Macquaire are less bullish on production prospects for this, estimating a total net 2012/13 Brazilian corn crop of 69 MMT. Trade estimates for tomorrow's weekly export sales report are 3-600 TMT. May 13 Corn closed at USD7.32 1/2, up 4 cents; Jul 13 Corn closed at USD7.17 1/4, up 5 1/4 cents.

Wheat: Chicago wheat posted impressive gains, pushing on to near one month highs on signs of improved demand and short-covering ahead of next week's USDA stocks report. Additional support may also have come from a colder temperature outlook for the US Midwest and Plains in the week ahead. The forecast in Canada and Northern United States remains unseasonably cold, say Martell Crop Projections. Lanworth estimated the US all wheat crop at 2.023 billion bushels versus a previous estimate of 2.026 billion, which is nearly 11% down on last year. They have the 2013 Russian wheat crop at 49.8 MMT and the Ukraine crop at 23.3 MMT, both are unchanged from their previous estimates. Production in 2012 was 37.7 MMT and 15.8 MMT respectively, so these numbers calculate out as increases of 32% and 47%. Ag Canada estimated all wheat plantings there at 25.229 million acres, up 5.8% from a year ago. Algeria bought 350,000 MT of optional origin milling wheat (most likely French) for June shipment. Libya bought 50 TMT of optional origin milling wheat for April shipment. Oman bought 10,000 MT of Indian wheat for April shipment. Jordan, Bangladesh and Iraq all have wheat tenders pending. Trade estimates for tomorrow's USDA weekly export sales report for wheat are at 6-800 TMT. Last week's combined crop year sales topped 1 MMT, including a hefty 888,500 MT of old crop. Old crop sales now only need to be 353,300 MT/week to hit the USDA estimate for the season, although that assumes that everything that is sold for 2012/13 gets shipped in 2012/13. With wheat prices having improved in the past couple of weeks though we appear to be back in the zone where the Indians may be prepared to sell. They reportedly picked up bids in excess of USD305/tonne FOB in a wheat tender today, which takes us back above the level at which they last traded, although they recently put up 5 MMT for tender setting a minimum price of USD320/tonne. May 13 CBOT Wheat closed at USD7.36, up 14 cents; May 13 KCBT Wheat closed at USD7.66 1/4, up 14 1/2 cents; May 13 MGEX Wheat closed at USD8.09 1/2, up 10 3/4 cents.