Chicago Market Sharply Higher On US Weather Concerns
26/08/13 -- Soycomplex: Beans closed sharply higher, with the November contract coming within 4 cents of the daily 70 cents limit up at one stage, on US weather worries. "A large, stable dome of high pressure has taken control of the North-Central United States, increasing heat and moisture stress. Maximum temperatures in the low-mid 90s F are predicted for the next several days, 6-10 F above normal," said Martell Crop Projections. The market perception is that soybean yields are at risk of being the biggest loser here. Friday's Pro Farmer crop tour pegged potential US soybean yields at 41.8 bu/acre versus 42.6 bu/acre from the USDA. They have production at 3.158 billion bushels versus 3.255 billion from the USDA. It is noted however that possibly due to the fact that the crop was under-developed compared to normal at the time of the survey that production potential could have been particularly difficult to accurately assess this year. Traders say that the tour does have a tend to under-estimate the soybean crop anyway, having done so in 8 out of the last 11 years. Only time will tell if they have done so again this year. After the close the USDA cut good/excellent crop condition ratings from 62% to 58%. Poor/very poor was upped from 10% last week to 13% as of Sunday night. The proportion of the crop setting pods was 84% versus 90% normally. Weekly export inspections for beans came in at a very poor 2.461 million bushels. Sep 13 Soybeans closed at USD14.27 3/4, up 62 1/2 cents; Nov 13 Soybeans closed at USD13.89 1/2, up 61 1/2 cents; Sep 13 Soybean Meal closed at USD458.60, up USD25.40; Sep 13 Soybean Oil closed at 44.44, up 180 points.
Corn: Corn also jumped on US weather concerns, with spillover strength from soybeans adding support too. Whilst Friday's Commitment of Traders report showed fund money cutting their short position in corn, they were still short 91,778 contracts for the week through to last Tuesday night. This obviously leaves the market vulnerable to an upside correction. Fund buying in corn today was estimated at a net 30,000 lots. Friday's Pro Farmer crop tour wrap up projected a US corn crop of 13.46 billion bushels, that's still a record although it's 300 million bushels below the current USDA forecast. Yields were averaged at 154.1 bu/acre versus the USDA's 154.4 bu/acre prediction. As with soybeans, some are noting that the under-developed corn crop may have led to yield potential to be under-estimated. The tour's track record on that front is that they have come in below final yields in 7 of the last 11 years. Japan customs data showed that Japan imported 997,627 MT of corn in June, down 12% from a year ago. Of that total 56.8% came from the US versus 78.6% a year ago. South Korea seek 600 TMT of optional origin corn for Feb shipment. After the close the USDA said that 59% of the US corn crop is now rated as being in good/excellent condition, down 2 points on a week ago. They have 70% of the crop at the dough stage versus 79% normally. Only 23% of the crop is dented versus 43% normally. Weekly export inspections were were 12.01 million bushels. Sep 13 Corn closed at USD5.15 3/4, up 20 1/4 cents; Dec 13 Corn closed at USD5.00 1/2, up 30 1/2 cents.
Wheat: Continuing with the recent theme, wheat followed corn, which today meant a move higher. The hot and dry weather outlook for the Midwest also puts a proportion of the late developing US spring wheat at risk. Saudi Arabia bought 720 TMT of EU, North America, South America, and Australia hard wheat for Nov/Dec shipment over the weekend. China is getting it's first cargo of French wheat since the 2004/05 season as part of a 220 TMT purchase made a few months ago. After an initial flurry of buying US, Australian, Canadian and French wheat they've gone a bit quiet of late. So too have Egypt. South Korea's NOFI cancelled a tender to buy 60 TMT of optional origin wheat for December shipment citing high prices. Israel seeks 110 TMT of corn, 75 TMT of feed wheat, and 20 TMT of barley, all of optional origin for Sep/Jan shipment. As with corn, a sizable fund short position in CBOT wheat leaves the market vulnerable to short-covering and an upside correction. They were estimated as being net buyers of a net 6,000 CBOT wheat contracts today. Freeze damage talk in South America has now spread from Brazil to Argentina. CONAB estimated wheat production in the Brazilian state of Parana at 1.98 MMT versus 2.7 MMT last year. The USDA said that the US spring wheat harvest was 42% complete, up from 18% a week ago but down versus 54% normally. They increased the proportion of the crop rated good/excellent by one percentage point to 67%. Weekly export inspections were a fair 31.192 million bushels. Sep 13 CBOT Wheat closed at USD6.54 3/4, up 20 1/4 cents; Sep 13 KCBT Wheat closed at USD7.08 1/4, up 12 3/4 cents; Sep 13 MGEX Wheat closed at USD7.29 1/4, up 13 cents.
