Chicago Flat To Higher, Corn/Wheat Differential Widens
02/10/13 -- Soycomplex: Beans closed modestly higher, with meal more impressively so and soyoil slumping to a fresh 3-year low. Midwest rains are seen disrupting the harvest this week, just as it was threatening to go full throttle. Linn Group forecast US 2013 soybean yields at 42.0 bu/acre, with production at 3.184 billion bushels. Lanworth are a bit less optimistic, forecasting a crop of 3.112 billion bushels, unchanged from their previous estimate. FCStone yesterday said 41.4 bu/acre and 3.163 billion bushels versus the USDA's estimates of 41.2 bu/acre and 3.149 billion. The ballpark seems to be getting a little smaller, at least as far as the final production number goes. Harvested acres are still a bit of a wild card though. Nobody currently seems to know when we will get any more data from the USDA due to the US budget problems. Tomorrow would normally bring the weekly export sales numbers, Monday the crop progress/crop conditions figures and next Friday the October WASDE report. For now, like the USDA website, we remain in the dark. Stats Canada are open for business though, and they are expected to estimate a record 2013 canola crop on Friday. The average trade estimate for that is 16.6 MMT, versus their previous forecast of 14.7 MMT and last year's crop of 13.9 MMT. Some private estimates are at 17 MMT or even higher. Rabobank forecast CBOT soybean prices at USD12.25 in Q4 of this year versus a previous estimate of USD13.00 a month ago. Then then see prices at USD12.50 in Q1 of 2014, followed by USD12.05 in Q2 and USD12.00 in Q3 as potentially record South American production comes on tap. They forecast US 2013 yields at 41.5 bu/acre, incidentally. South Korean buyers are said to have bought more than 200 TMT of soymeal over the past 2 days of a mixture of US, South American and Indian origin. Nov 13 Soybeans closed at USD12.73 3/4, up 5 3/4 cents; Jan 14 Soybeans closed at USD12.75 3/4, up 5 3/4 cents; Oct 13 Soybean Meal closed at USD417.60, up USD9.10; Oct 13 Soybean Oil closed at 39.12, down 89 points. The alarming slump in soyoil values, which have been in decline all year, is seen shifting the crush margin burden to meal - supporting the latter relative to the former.
Corn: The corn market settled unchanged - matching yesterday's more than 3-year closing low. Trade was in a very narrow range. Linn Group estimated US 2013 corn yields at 159.4 bu/acre, with production coming in at 13.979 billion bushels. As with beans, Lanworth are less bullish on production at 13.483 billion. FCStone yesterday gave us yields at 157.8 bu/acre and production at 14.15 billion. The USDA are currently at 155.3 bu/acre and 13.843 billion bushels. Whilst production there ranges from 13.5 to in excess of 14.0 billion bushels, all those numbers are record production and represent an increase of at least 25% on last year, and in the case of FCStone more than 31% up on 2012's crop. Stats Canada are expected to report a Canadian corn crop of around 13.2 MMT on Friday, a modest increase on 13.06 MMT last year. Whilst the USDA stay out of the picture, Informa Economics are said to be due to release their latest production estimates on Friday. Lanworth also estimated the 2013/14 global corn crop at 949.0 MMT, unchanged from their previous estimate. Rabobank estimated Q4 CBOT corn prices at USD4.35 versus a previous estimate of USD4.75, with prices rising modestly in 2014 to USD4.45 in Q1, USD 4.50 in Q2 and USD4.60 in Q3. The Energy Dept did report on US ethanol production, pegging that at 875,000 barrels/day, up sharply on last week’s figure of 832,000 bpd. South Korea's NOFI bought 52 TMT of Black Sea origin corn for March shipment. South Korea's FLC bought 63 TMT of optional origin corn for March shipment. South Korea is also buying US DDGS instead of corn. Israel bought 40 TMT of optional origin corn, possibly from Ukraine for Dec/Jan shipment. Harvesting in Ukraine and Russia is only making slow progress. The Ukraine corn harvest is said to be 18% done at 4.69 MMT. A "back of the fag packet" calculation there suggests a final crop of 26 MMT not the 29 MMT that many like the USDA have been forecasting. Russia's crop is 14.4% harvested at 1.7 MMT. Dec 13 Corn closed at USD4.39, unchanged; Mar 14 Corn closed at USD4.51 3/4, also unchanged.
Wheat: Wheat was higher on all three exchanges. Chicago wheat has now only closed lower in three sessions out of the past eighteen. Serious delays in planting winter grains, mostly wheat, in Russia and Ukraine for the 2014 harvest have caught the market's attention. When the funds have been holding a near record short position in wheat it doesn't take too much to spark a bit of panic. Various government and private estimates are indicating that perhaps 20-30% of the planned Ukraine winter grains area won't get planted, along with maybe a slightly smaller 15-20% of Russia's winter grains. Most of that will be winter wheat. Some spring wheat will likely get sown instead on this area of course, but there will also be the possibility of a significant switch into sunflower, soybeans even, as well as corn and barley. Russia has sown 7.9 million hectares of winter grains so far, less than half of the planned 16.4 million and 35% fewer than were sown this time a year ago, and 31% less than at this time in 2011. Rusagrotans said that reduced 2013 winter plantings could cut Russia's 2014 grain output by 2.5-5.0 MMT. Strong global demand for wheat, from the US and EU as well as the Black Sea is also underpinning the market. The fact that corn is now trading in the USD4-4.50 range though would suggest that wheat could have a hard time of it getting above USD7.00 and staying there. Stats Canada are expected to report a monster 32.9 MMT all wheat crop on Friday, although some estimates suggest that output could be even higher (Rabobank are at nearly 35 MMT). Last year's production was only 27.2 MMT. They've also now begun the 2013/14 wheat harvest in Western Australia. Late rains have proven a life-saver for this crop and there's talk of "the best crop in years" in some areas of the state. Bangladesh picked up a best offer of USD289.86 C&F in it's wheat tender. The origin is believed to have been Ukraine. Dec 13 CBOT Wheat closed at USD6.86, up 4 3/4 cents; Dec 13 KCBT Wheat closed at USD7.54 1/2, up 9 1/2 cents; Dec 13 MGEX Wheat closed at USD7.47 3/4, up 11 cents.
