Chicago Market Mixed - Fails To Hold Early Gains

03/09/13 -- Soycomplex: Beans closed with good gains, although finishing well off the early session highs. Nov 13 failed to break through last Monday's high of USD14.09 1/2, reaching USD14.08 1/2, but subsequently falling back to close the day at USD13.86 3/4. Another dry week was seen trimming yield potential further in beans. "Hot or cool, the Midwest drought goes on. A cool front passed through the Midwest yesterday, dropping temperatures by 10 degrees F, but hardly any rain fell in corn and soybean farms. August finished with only 2.55 inches of rainfall in soybean farms. That represent 28% below normal rainfall, on average, in the Midwest. August is the key period for pod filling and the most sensitive time for yields. A significant yield loss is anticipated. Cumulative rainfall in July and August, together, is 5.5 inches, ranking among the lowest 10% on record. Cooler summer temperatures have eased moisture stress, to a degree, but prolonged drought has damaged soybean and corn yields," said Martell Crop Projections. After the close the USDA cut good/excellent crop ratings by 4 percentage points to 54%, the trade was anticipating a 4-6% decline. They said that 92% of the crop is setting pods versus 84% last week and 96% normally. The IGC estimated Brazil's soybean area to rise 5% for 2013/14 encouraged by the depreciating real and rising bean prices in relation to depressed local corn levels. Based on tonight's closes the Nov 13 bean: Dec 13 corn price ratio is over 2.9:1 versus 2.2:1 a year ago, which clearly favours soybean planting. Brazil is expected to produce a record crop again in 2013/14, currently estimated by most to be in the region of 85-88 MMT. Early season logistical problems, and the 2012/13 record crop, mean that Brazil still has plenty of beans left to sell. The Brazil Ministry said that they shipped 5.38 MMT of soybeans in August, more than double the 2.43 MMT exported in August 2012. US weekly soybean export inspections were very light at just 1.422 million bushels. Sep 13 Soybeans closed at USD14.35 1/2, up 11 1/2 cents; Nov 13 Soybeans closed at USD13.86 3/4, up 29 1/4 cents; Sep 13 Soybean Meal closed at USD485.40, up USD17.20 (the first four months were limit up at one stage); Sep 13 Soybean Oil closed at 43.82, down 7 points.

Corn: Corn traded higher in the overnight Globex market, but gave up all those gains and then some on all but the front month Sep 13 once the daytime open-outcry session opened. Reports from the country suggest that the basis, the differential between corn futures and cash prices, has "collapsed" as the harvest gathers momentum in the South and more new crop corn comes onto the market. "Minimal rainfall is predicted through Friday-Saturday in the primary corn and soybean states. A broad flat ridge of high pressure would effectively block rainfall from the central Great Plains, Midwest and Mid South. However, by the weekend, scattered rains are possible in Upper Midwest farms as high pressure weakens (flattens) along its northern rim. Light-moderate rainfall is expected from scattered showers in North Dakota, Minnesota, South Dakota, Iowa and Wisconsin. Short-wave disturbances tracking out of the Northern Rocky Mountains, across the Upper Plains and into the Great Lakes would eventually weaken the “heat dome” in northern corn and soybean growing areas. The 6-10 day forecast from the Climate Prediction Center indicates near-normal rainfall for the majority of the Midwest, though dry conditions would persist in the south-central United States and Southeast," said Martell Crop Projections. After the close the USDA cut corn good/excellent ratings by 3 percentage points, in line with the 2-4 point decline that the trade was expecting. The hot and dry weather has at least allowed crop maturity to improve closer to "normal" levels. The USDA said that 84% of the crop was at the dough stage versus 70% last week and 89% normally. They have 42% of the crop as dented versus 23% last week and 61% normally. Weekly corn export inspections came in at 17.436 million bushels vs. 12.059 million the previous week, better than the expected 10-13 million. The Brazilian Ministry reported August corn exports at 3.05 MMT versus only 733 TMT in July and 2.76 MMT a year ago. Sep 13 Corn closed at USD4.98, up 3 cents; Dec 13 Corn closed at USD4.75 1/4, down 6 3/4 cents.

Wheat: Once corn futures turned lower, wheat also quickly capitulated. The recent weakness in Minneapolis wheat was extended, with front month Sep 13 losing 16 1/2 cents and is now in danger of slipping below the USD7.00/bushel mark. The threat of a very large Canadian crop and improving US spring wheat conditions are behind the fall from grace. Mid-May Minneapolis wheat was a dollar and a half premium to Chicago wheat, tonight it's less than half that. Wheat also took a knock from news of just how far out US wheat is priced out into North Africa highlighted by the Egyptian tender over the weekend. The successful bids were around USD250-253/tonne, in the region of USD25/tonne lower than US wheat FOB the Gulf. That said, weekly export inspections came in better than the 24-28 million bushels expected at 36.410 million. After the close the USDA raised spring wheat good/excellent ratings by 3 percentage points from last week to 70%. They said that 64% of the crop is harvested versus 69% normally at this time. The Ukraine Ministry raised their forecast for grain production there to a record 57.9 MMT versus 56.7 MMT previously. Japan are tendering for 116,350 MT of milling wheat for Oct–Dec shipment in a routine tender with the results expected Thursday. US wheat accounts for 67,932 MT of the total. Turkey's Ag Ministry estimated their 2013 wheat crop at 22.0 MMT versus the 2012 wheat crop of 20.5 MMT. Turkish imports are likely to be lower in 2013/14. The Egyptian Supplies Minister last week suggesting that Egypt will only need to import 5 MMT of wheat in 2013/14, versus 8-10 MMT normally. Those two were Russia's largest wheat export homes in 2012/13. The Russian grain harvest is plodding on, and wheat yields continue to hold up well at 43% more than in 2012. The wheat harvest there so far stands at 39.8 MMT off 56.8% of the planned area. Rain has slowed progress in Siberia, and may also be damaging quality. Morocco are tendering for 50 TMT of durum wheat of EU origin. Sep 13 CBOT Wheat closed at USD6.36 1/2, down 6 3/4 cents; Sep 13 KCBT Wheat closed at USD6.96 3/4, down 4 cents; Sep 13 MGEX Wheat closed at USD7.03 3/4, down 16 1/2 cents.