Chicago Closes Higher, Although USDA Report Bearish Beans And Corn
11/07/13 -- Soycomplex: The USDA report came in bearish for beans, but the market closed higher. What does that tell us? Maybe that the market doesn't believe the USDA? It wouldn't be the first time and it sure won't be the last. Or maybe the market is an ass? Time will tell. US soybean carryout at the end of the current season will be 125 million bushels, the same as last month and the month before that. That's what the USDA insist anyway. The trade was expecting a reduction (nobody at all was expecting an increase), but it's no great surprise that they didn't get it given that the USDA have clearly decided that 125 million bushels is as far into their comfort zone as they are prepared to eat. For 2013/14 the trade was expecting a small increase in US ending stocks versus last month, from 265 million bushels to 270 million. Instead the USDA came in at 295 million. The US 2013 soybean crop was forecast at a record 93.08 MMT, up from 92.26 MMT last month and up 13.4% on last year. Brazilian soybean production in both 2012/13 and 2013/14 was left unchanged from last month at 82.0 MMT and 85.0 MMT respectively. Argentine output was trimmed slightly in both crop years, from 51.0 MMT to 50.2 MMT in the case of the harvest just ended (2012/13) and from 54.5 MMT to 53.5 MMT for the crop that hasn't yet been planted (2013/14). World ending stocks for both crop years were increased slightly, to 61.5 MMT in 2012/13 and to 74.1 MMT in 2013/14. China's import requirement in 2013/14 was left unchanged at a record and ambitious looking 69.0 MMT. In other news, weekly export sales were negative 70,900 MT for old crop beans and 410,800 MT for new crop beans versus trade expectations of 150-500 TMT. Jul 13 Soybeans closed at USD16.01 1/4, up 9 1/2 cents; Nov 13 Soybeans closed at USD12.90 3/4, up 6 cents; Jul 13 Soybean Meal closed at USD525.70, up USD5.20; Jul 13 Soybean Oil closed at 46.49, down 49 points.
Corn: The corn market closed higher too, helped by strong weekly export sales of 392,000 MT of old crop and 657,800 MT of new crop, versus trade forecasts for sales of only 300-600 TMT. In addition the USDA announced another 120 TMT of new crop sales to China under the daily reporting system. The USDA lowered slightly their estimate for US 2013 corn production twixt either side of the magical 14 billion bushel mark, from 14.005 billion to 13.95 billion. The latter would still comfortably be a record output and represent a 29.4% increase on production last year. Old crop ending stocks were not cut quite as much as expected, trimmed from 769 million bushels to 729 million, which was 7 million more than the average trade guess. The large 2013 crop however sees 2013/14 ending stocks estimated 10 million bushels higher than last month at 1.959 billion bushels versus the cut to 1.874 billion that the trade was expecting. There were no changes to Brazilian or Argentinian corn production for either 2012/13 or 2013/14. World corn ending stocks for both marketing years came in a little below expectations, but only marginally so. China's 2013/14 corn crop was lowered 1 MMT, from 212 MMT to 211 MMT, with their import requirement left unchanged at 7 MMT. I guess that the market now goes back to trading the weather and fretting over a US corn crop, much of which was planted all in the same week, all pollinating at the same time and whether or not weather conditions will be conducive to producing a near 14 billion bushel crop. We won't have long to wait to find out as this is likely to happen around the end of the month/first week in August. In other news Taiwan bought 60 TMT of Brazilian corn for Sep/Oct shipment, and another Taiwanese buyer passed on a US corn/soybean tender saying that the prices quoted were too high. Jul 13 Corn closed at USD7.16 3/4, up 7 cents; Dec 13 Corn closed at USD5.27, up 5 1/2 cents.
Wheat: The wheat market was mixed, with Chicago higher and Kansas and Minneapolis a little lower. Weekly export sales of 1.47 MMT comfortably outstripped expectations of 600 TMT to 1 MMT and included 1 MMT to China. The USDA raised their projection for Chinese wheat import by much more than was anticipated by most, from 3.5 MMT to 8.5 MMT, a 166% increase on imports in 2012/13 and the highest since 1995. Chinese feed usage was raised by a corresponding 5 MMT, and carry-in from 2012/13 was lowered by 4.6 MMT from last month. Elsewhere though they raised a few eyebrows by leaving both Russian and Indian production unchanged for 2013/14. Just about everyone else, apart from the local Ministry, are seeing Russian wheat production in the 50-52 MMT region, but the USDA left their forecast unchanged at 54 MMT. The USDA's own FAS this week pegged the Indian crop at 87 MMT, but the USDA themselves held steady at 92 MMT. They also left production in Ukraine the same as last month at 19.5 MMT, an increase could have been justified here. Kazakhstan's potential was cut 0.5 MMT to 14.5 MMT. They pegged the US 2013 all wheat crop a bit higher than the market expected at 57.52 MMT. One of the largest surprises came with regards to world inventories. Global wheat ending stocks in 2012/13 crop were cut 5.37 MMT and those for 2013/14 shrank 8.87 MMT to 172.38 MMT, the lowest since 2008/09. US wheat stocks for 2012/13 were cut from 746 million bushels to 718 million, well below trade forecasts of 745 million and below the lowest trade estimate. US carryout in the 2013/14 crop year also was also cut far more than anticipated, from 659 million bushels last month to 576 million versus the average trade guess of 624 million. Jul 13 CBOT Wheat closed at USD6.79 1/4, up 7 1/4 cents; Jul 13 KCBT Wheat closed at USD7.11 1/2, down 1/2 cent; Jul 13 MGEX Wheat closed at USD7.96 1/2, down 1 cent.
