Chicago Market Comments - Tuesday
16/07/13 -- Soycomplex: The market closed sharply higher, adding to yesterday's gains, with the nears supported by strong demand and the cash basis at or near record levels. For soybeans we still have a picture of "jam tomorrow" - but tomorrow isn't today is it? Oil World said that China will import a record 7 MMT of beans this month versus the 5.87 MMT imported in July 2012. They also said that China’s soybean stocks will fall to a 4 year low of 8.0 MMT at the end of July versus 11.8 MMT a year ago. They estimated the 2013/14 global soybean crop at 284.22 MMT up 6.8% from 2012/13 and 14 MT higher than world consumption. Michael Cordonnier left his estimate for the 2013 US soybean yield unchanged at 42.0 bu/acre. There are conflicting weather forecasts for the US, with the European model saying hot and dry and the US model predicting cooler and wetter conditions. Last night's two point drop in soybean good/excellent ratings was supportive and unexpected, no change is what the market was anticipating. So too was yesterday's NOPA crush numbers, which suggest that the USDA is around 15 million bushels too low on their crush estimate of 1.66 million bushels this season. Aug 13 Soybeans closed at USD14.75 1/4, up 21 1/2 cents; Nov 13 Soybeans closed at USD12.86 1/4, up 22 1/2 cents; Aug 13 Soybean Meal closed at USD466.80, up USD15.30; Aug 13 Soybean Oil closed at 45.71, down 13 points and a new 33 month low for a front month.
Corn: The corn market closed higher, essentially reversing yesterday's losses on the surprise news after the close last night that good/excellent crop ratings fell two points to 66%. The trade was looking for conditions to hold steady near 68%. "In the Great Plains, good-excellent corn shrank by 5% or more in Nebraska, Kansas, North Dakota and Texas. Drought has worsened over the past 3 weeks with a stubborn ridge of high pressure. Nebraska, the 3rd leading US corn state, lost 5% in the good-excellent category, the top rated corn now 71%. Kansas corn conditions worsened to 40% good-excellent a 9% decline in just one week. Growing conditions in the heartland were not only dry, but also very hot," said Martell Crop Projections. Also supportive was news that only 16% of the crop was silking as of July 14th, up from 6% last week but down sharply from the 5-year average of 35%. Michael Cordonnier left his estimate for 2013 US corn yield unchanged at 153.0 bu/acre. Weather developments will dictate market direction for the coming weeks with the trade nervous that this year's crop will all be pollinating at the same time, and mindful of what happened last year. Taiwan tendered for 60 TMT of optional origin corn for October shipment. The weekly ethanol production numbers are out tomorrow. Last week’s grind was reported at 881,000 barrels/day. Sep 13 Corn closed at USD5.45 1/4, up 9 cents; Dec 13 Corn closed at USD5.10 3/4, up 7 1/4 cents.
Wheat: The wheat market was flat to slightly firmer. US wheat was "miles out" in the Iraqi wheat tender, offered at USD403 CIFFO versus Black Sea quotes of around USD302/310 from Russia, Romania and Ukraine. Significantly Canadian and Australian wheat were also much cheaper options at USD352 and USD360 respectively. Japan are tendering for their usual weekly purchase, this tie for 112 TMT split 49 TMT US origin along with 36 TMT of Canadian and 27 TMT of Australian wheat. US white wheat is still excluded following the Oregon GMO scare. A storm with strong winds, heavy rain and hail is said to have damaged crops in southwestern Manitoba. Stats Canada are out tomorrow with their July crop production estimates. According to a Reuters poll the all wheat average estimate is 29.7 MMT, from within a range of estimates of 27.4-30.0 MMT. Last month's estimate was 29.4 MMT and the 5-year average is 26.3 MMT. Production at the top end of the scale would be the largest crop since 1996/97. Talk that Brazil could import up to 3 MMT of wheat from outside the Mercosur trade group this year due to the supply shortage in Argentina is supportive. The Kazakh Ag Ministry suggested that this year;s wheat crop there might only come in at 13.5 MMT, which is not much better than last year's production and 1 MMT below the current USDA estimate. Sep 13 CBOT Wheat closed at USD6.69 1/2, unchanged; Sep 13 KCBT Wheat closed at USD7.03 3/4, up 2 3/4 cents; Sep 13 MGEX Wheat closed at USD7.59, up 4 cents.
