Chicago Falls In Buy The Rumour, Sell The Fact Trade
31/10/13 -- Soycomplex: Beans closed with losses of around 7 to 10 cents on the day despite the USDA reporting 3 weeks worth of export sales totalling 4.74 MMT, far higher than the 2.5-3.0 MMT that the trade was expecting. Meal sales of only 805 TMT over the period were however a disappointment. These were actually lower than the total reported last week alone and fell short of the 1.0-1.5 MMT that the trade was hoping for. Not surprisingly China was the largest buyer of US beans taking 2,112,300 MT. Reports that Goldman Sachs were recommending the closing out of open long beans/short corn positions may also have caused some selling in beans. The $13 level seems to have been proving attractive as far as producers are concerned, certainly versus selling corn at around $4.30 - a ratio of 3:1 being historically high. Jan 14 meal posted it's lowest close since August and Jan 14 beans finished within fractions of a cent of doing the same. The USDA attache's office in Argentina estimated soybean production there in 2013/14 at 57.5 MMT, up 16.4% on a year previously and 4 MMT more than the USDA's September forecast. Argentine soybean exports were forecast to jump 58.5% to 13.0 MMT. Linn Group forecast the 2013 US soybean crop at 3.265 billion bushels, with yields at 43.1 bu/acre. In September the USDA said 3.149 billion bushels, and pegged yields at 41.2 bu/acre. Informa and FCStone are said to be due out with their estimates tomorrow. Nov 13 Soybeans closed at $12.80 1/4, down 7 1/4 cents; Jan 14 Soybeans closed at $12.66 1/4, down 10 1/4 cents; Dec 13 Soybean Meal closed at $403.60, down $8.20; Dec 13 Soybean Oil closed at 41.33, down 29 points.
Corn: The corn market closed a couple of cents easier, in what also looks like "buy the rumour, sell the fact" trade, similar to soybeans. The USDA said that America had sold 4.56 MMT of corn for 2013/14 in the past three weeks, well ahead of the 2.0-2.5 MMT that the trade was anticipating. In addition to that the USDA also reported the sale of 738 TMT of corn for 2014/15, along with an additional 123,040 MT sold to Japan and 174,000 MT sold to South Korea for 2013/14 delivery under the daily reporting system. Mexico (1,689,400 MT for 2013/14 and 734,400 MT for 2014/15) was the largest buyer in both crop years. Heavy sales to Asia earlier in the week seem to confirm that US corn is finally competitive with South American origin material (and also Black Sea origin corn and feed wheat), at least for delivery in the new year. MDA CropCast (who frequently issue low-ball estimates) raised their forecast for US corn production this year by 94 million bushels to 13.451 million. Linn Group estimated the US crop much higher at 14.33 billion bushels, with yields averaging 163.4 bu/acre. The USDA were at 13.843 billion and 155.3 bu/acre in September. Consider here that MDA CropCast's number is a record and represents a 31.6% increase on their estimate of 2012 production and the sheer size of this year's US crop comes into perspective. Russia's corn harvest is now 50.8% complete at 6.5 MMT. The USDA attache in Moscow raised his estimate for production there this year from 9.0 MMT to 9.7 MMT (the USDA themselves were at 9.0 MMT in September). The IGC increased their global corn production estimate for 2013/14 by 5 MMT to a record 948 MMT. Dec 13 Corn closed at $4.28 1/4, down 2 cents; Mar 14 Corn closed at $4.39 1/4, down 2 1/2 cents.
Wheat: Wheat was the only one of the three main agri-commodities that got export sales below expectations for the past three weeks - a total of 1.31 MMT versus trade forecasts of 1.5-2.0 MMT. Brazil (393,300 MT) was the biggest customer, although in the overall scheme of things that's only around 2.25 cargoes/week over the period. The IGC raised their world wheat production forecast in 2013/14 by 3 MMT to 696 MMT. The USDA's attache's office in Moscow cut it's forecast for the 2013/14 grain crop there from 90.0 MMT to 88.5 MMT, a 25% increase on last year. They reduced their wheat production forecast from 53.0 MMT to 51.5 MMT, although that's still a 36.6% rise on last season. They also trimmed their 2013/14 export forecasts, cutting grain shipments from 22.0 MMT to 20.0 MMT, of which wheat was reduced from 16.0 MMT to 15.0 MT and barley pared back from 3.0 MMT to 2.5 MMT. They said that Q1 2013/14 grain exports had totalled 9.0 MMT, including 7.46 MMT of wheat, 1.22 MMT of barley and 17 TMT of corn. The Russian Ministry said that the grain harvest there is 92.5% done at 90.8 MMT in bunker weight. Plantings for the 2014 harvest are stalled at 14 million hectares versus 15.5 million this time a year ago. SovEcon said that Oct 20 is the ideal last planting date. The Kazakh Ministry said that their 2013/14 grain crop will total 18.5-19.0 MMT in clean weight versus 12.8 MMT a year ago. They raised slightly their export hopes from 9.0-9.5 MMT to "up to 10 MMT" versus 7.1 MMT in 2012/13. There's talk of frost damage to winter wheat in Australia's eastern states. The Argentine Ministry have yet to issue a corrected version of their "erroneous" 8.8 MMT wheat estimate of a week ago. Dec 13 CBOT Wheat closed at $6.67 1/2, down 7 1/2 cents; Dec 13 KCBT Wheat closed at $7.40 1/2, down 7 1/4 cents; Dec 13 MGEX Wheat closed at $7.30 1/4, down 1 3/4 cents.
