Chicago Slips On Fund Selling

01/05/13 -- Soycomplex: Beans took a bit of a battering on what was generally a bad day for commodities on the back of worse than expected manufacturing data from China which saw crude, gold, silver, the stock market and dollar all lower to start the day. With the notion that 1-3 million acres of corn might not get planted this spring, Michael Cordonnier says up to 5 million in a worst case scenario, then the trade is expecting that much of this area could be switched into beans. The USDA's March planting estimate for soybeans was 77.1 million acres. Lanworth Inc estimated the 2013 US soybean crop at 3.425 billion bushels, up slightly from a previous estimate of 3.420 billion. Fund selling in beans was estimated at around 7,000 contracts on the day. Trade estimates for tomorrow's weekly export sales report for beans are 600-900 TMT, and for meal 150-250 TMT. Old crop meal commitments already exceed the USDA target for the season and soybean commitments are at 99%. May 13 Soybeans closed at USD14.37 1/2, down 30 1/4 cents; Jul 13 Soybeans closed at USD13.73, down 26 cents; Nov 13 Soybeans closed at USD12.09 1/4, down 14 3/4 cents; May 13 Soybean Meal closed at USD415.60, down USD12.70; May 13 Soybean Oil closed at 48.64, down 49 points. Note how old crop beans fell more than new crop despite tight old crop supplies, strong exports and the fact that the bearish switching of corn into beans storyline has nothing to do with old crop. Funds generally only trade the most active months.

Corn: Corn fared better in the general sell-off due to the record matching slow pace of US spring plantings. The immediate 7 day outlook doesn't look great either. Whilst reduced plantings might be a threat it is too early to write off corn yields just yet, say Martell Crop Projections. "July weather is far more influential in the yield potential affecting the number of kernels developing on ears. July drought is very detrimental for corn yields interfering with fertilization, and causing fewer kernels on ears. August heat stress is another potential yield reducer, leading to smaller, lightweight kernels in the grain filling stage," they say. Lanworth Inc estimated the 2013 US corn planting area at 96.2 million acres versus the USDA March estimate of 97.3 million. They pegged the 2013/14 US corn crop at 13.90 billion bushels versus a previous estimate of 13.93 billion, but still up 29% on last year. Lanworth estimated the 2013/14 Ukraine corn crop at 25.9 MMT, down versus a previous estimate of 26.4 MMT (but still a record) and up 24% compared to production of 20.92 MMT in 2012/13. Weekly ethanol production data was bullish, with output increasing 4,000 barrels/day to 857,000 bpd - the highest level seen since June of last year. Nevertheless, fund money's apparent re-ignited interest in owning corn appeared to only last one day, with Monday's limit up rally followed by two days of net fund selling. They sold an estimated 10-12,000 yesterday and a further 4-5,000 corn contracts today, meaning that they've already dumped around half the 30,000 lots bought on Monday. Trade estimates for tomorrow's weekly export sales report are 600 TMT - 1 MMT. May 13 Corn closed at USD6.81 3/4, down 1 1/2 cents; Jul 13 Corn closed at USD6.46 3/4, down 3 1/4 cents.

Wheat: Day one (Tuesday) of the Kansas wheat tour reported an average yield potential of 43.8 bu/acre versus 53.4 bu/acre on day one in 2012 and 40.0 bu/acre in 2011. Day two reported potential yields of 37.1 bu/acre, down from 43.7 bu/acre the previous year. That gives a 2-day average for the state of 40.5 bu/acre so far. Thursday is the concluding day, and yields are expected to decline further in that. Statewide yields in 2012 were 42.0 bu/acre, the 10-year average is 39.4 bu/acre. The Director of Colorado Wheat estimated that state's wheat yield at 34.0 bu/acre, the same as the 2012 final yield. However he said that abandonment rates may be 20% versus the 10-year average of 11.4%. The Director of the Nebraska Wheat Growers Association estimated the state's average winter wheat yield at 30.0 bu/acre versus 41.0 bu/acre last year. "By tomorrow morning, freezing temperatures are predicted in the High Plains winter wheat area. The later the freeze, the greater the potential damage, as wheat is advancing into the sensitive heading stage when a hard freeze kills pollen causing irreversible losses. April will go down as one of the coldest on record in the Great Plains featuring frequent freezes," said Martell Crop Projections. Trade estimates for tomorrow's weekly export sales report are 300-500 TMT. Old crop commitments currently stand at 92% of the USDA target for the season. Although that includes almost 3.9 MMT worth of outstanding unshipped sales, some of which would appear unlikely to be shipped in this marketing year. Funds were judged to have been net sellers of around 2-3,000 CBOT wheat contracts on the day. May 13 CBOT Wheat closed at USD7.10 1/2, down 11 1/4 cents; May 13 KCBT Wheat closed at USD7.94 1/4, down 3 3/4 cents; May 13 MGEX Wheat closed at USD8.30, down 7 1/2 cents.