Chicago Market Rebounds On Short Covering

14/08/13 -- Soycomplex: The soy market rebounded on what seems to be short covering. China was confirmed as buying 110 TMT of US soybeans for shipment in 2013/14. Argentine soybean crush workers were said to be staging a one day strike today in the port of Rosario. World Weather said yesterday that they expect favourable crop development weather in the Midwest for the next 10 days. Whilst the Midwest forecast is dry, soil moisture should be high enough to support crop development in most of the Midwest, they said. "The key to the soybean yield is how much rain occurs in the pod-filling period. Very wet conditions in August promote the highest yields from larger seed formation inside pods. With very wet conditions four seeds may develop inside pods, instead of only three. So far in August soybeans have received near normal rainfall. The slow development in soybeans due to coolness means the key pod filling period may extend into September. Warming temperatures would be appreciated to drive development. However, the 5-day outlook is cool and dry," said Martell Crop Projections. The NOPA July crush report comes out tomorrow with the trade expecting a crush of 117-119 million bushels compared to 144 million in July 2012. Trade estimates for tomorrows weekly export sales report for beans are from 0 to 100 TMT for old crop and 900 TMT to 1.1 MMT for new crop. Aug 13 Soybeans expired at USD13.68, up 8 1/4 cents; Nov 13 Soybeans closed at USD12.39, up 11 1/4 cents; Sep 13 Soybean Meal closed at USD407.90, up USD6.10; Sep 13 Soybean Oil closed at 42.34, down 28 points.

Corn: The corn market also got a what looks like short-covering boost after Sep 13 closed at the lowest level for a front month in almost 3 years last night. Friday will bring the latest Commitment of Traders report. Last week's report had funds sitting on a record short position in corn. Weekly ethanol production came in at 857,000 barrels per day, up 4,000 bpd versus a week previously. South Korea KFA bought 68 TMT of US or South American origin corn for Feb shipment. South Korea's Kocopia cancelled a tender for 55 TMT of optional origin corn for Dec shipment, saying that it expects prices to decline further. The Taiwan Sugar Corp is tendering for 29 TMT of US corn and 5 TMT of US beans for Sep/Oct shipment. There's still much debate over potential US corn yields this year. "The July temperatures in the Midwest were cool, 1.5 degrees below normal, alleviating moisture stress to a degree. However 'rain makes grain' during the key pollination stage. History confirms the wettest July's produce the highest yields. Pollination is a moisture-intensive period, demanding very heavy rainfall to optimize the yield. July rainfall this season was below normal 2.9 inches against 3.8 inches for the long-term mean. Indeed this July was the driest since 1991 when the corn yield finished 6.7% below trend. Another close match is 2002 when the national yield fell 7.5% below trend. However, in the latter case, hot July temperatures made moisture stress worse," noted Martell Crop Projections. Trade estimates for tomorrow's weekly export sales report are 250-450 TMT. Sep 13 Corn closed at USD4.64 3/4, up 9 1/2 cents; Dec 13 Corn closed at USD4.55 1/4, up 8 cents.

Wheat: Wheat closed higher on all three exchanges on profit-taking after Sep 13 CBOT wheat last night closed at the lowest close for a front month since June 2012. A rebound in corn prices also helped provide some support. Funds are also sitting on a sizable short position in CBOT wheat, not record short but not far off it. Russia's Ag Ministry lowered their 2013 grain production estimate from 95 MMT to 90 MMT on an anticipated fall in yields as harvesting of spring grains progresses. They said that Russia has harvested 47.0 MMT of grain so far versus 41.8 MMT a year ago. Ukraine's Ag Ministry meanwhile are forecasting a record grain crop this year, combined with record exports in 2013/14. "Russian cash offers aren’t reflecting record production. This may be the result of interior locations bidding aggressively away from the port, but it could also be an indication that USDA’s 17 MMT estimate on Russian exports is perhaps 3 to 4 MMT too high," said Benson Quinn Commodities. Weekly export sales of 726,200 MT last week were at the top end of expectations of 500-700 TMT. The trade is looking for a similar volume in tomorrow's report. EU weekly soft wheat export licences were the largest of the marketing year so far at almost 700 TMT. With the USDA forecasting the EU to harvest its third largest crop ever, and exports predicted to rise from the 20 MMT predicted last month to 22 MMT, US offers will need to remain sharp to pick up any non traditional business. Jordan bought 50 TMT of feed barley for April shipment in a tender. Sep 13 CBOT Wheat closed at USD6.30 1/2, up 2 1/4 cents; Sep 13 KCBT Wheat closed at USD6.98 3/4, up 2 1/2 cents; Sep 13 MGEX Wheat closed at USD7.36, up 3 1/2 cents.