Chicago Dips Following USDA Data - Led By Wheat
10/12/13 -- Soycomplex: The much-awaited USDA report was neutral to a little friendly for beans, subsequent modest losses may have been down a bit of pre-year end profit-taking. Maybe this report simply wasn't bullish enough, even if the USDA did trim US soybean ending stocks from 170 million bushels to 150 million? Whilst world production was raised from 283.5 MMT to 285 MMT, and ending stocks upped from 70.2 MMT to 70.6 MMT, these increases were less than the market expected. Argentine soybean production was raised from 53.5 MMT to 54.5 MMT, and Brazil's crop was left unchanged at 88 MMT. Chinese imports were also unchanged at 69 MMT. Separately, Brazil's Conab pegged the 2013/14 soybean crop there at just over 90 MMT. Abiove estimated Brazil’s 2013 soybean crush at 35.4 MMT (only 60% of the current crushing capacity), down from 36.4 MMT in 2012. They are clearly looking to major on soybean exports rather than crush, with Conab estimating these at 45.9 MMT in 2013/14. China's Nov soybean imports were 6.03 MMT, up 44% versus October. Cumulative Jan/Nov imports now stand at 56 MMT versus 52.5 MMT in 2012. The Chinese are said to have crushed 60.2 MMT of soybeans so far this year, up 9% from a year ago. Jan 14 Soybeans closed at $13.38 1/4, down 5 1/2 cents; Mar 14 Soybeans closed at $13.22, down 4 3/4 cents; Dec 13 Soybean Meal closed at $464.10, up $2.50; Dec 13 Soybean Oil closed at 39.91, down 14 points.
Corn: The corn market closed around 1-2 cents lower on an overall neutral to slightly friendly USDA crop report. They raised world production from 962.8 MMT to 964.3 MMT and cut global ending stocks from 164.3 MMT to 162.5 MMT (versus the expected 163.3 MMT). There was a 1 MMT increase for the Ukraine crop to a record 30 MMT, and production in both Brazil and Argentina was left unchanged at 70 MMT and 26 MMT respectively. Local analysts Conab and Safras e Mercado both see the Brazilian corn crop far higher. Conab today estimated production at 78.8 MMT, and Safras said 77.2 MMT earlier in the week. The USDA cut US corn ending stocks from 1.887 billion bushels to 1.792 billion, versus the average trade guess of 1.871 billion due to increases in US ethanol use and exports. China’s production estimate was unchanged at 211 MMT as were imports at 7 MMT. There's talk of China maybe starting to test DDGS for traces of the non-approved MIR 162 variety that is currently holding up corn imports from the US. The US Energy Dept will report on weekly ethanol production tomorrow, last week's report gave us a weekly grind of 913,000 barrels/day. Russia's corn crop is 89% harvested at 11.3 MMT, with yields at record levels. Morocco imported 580 TMT in Q1 of 2013/14, with most of it coming from South America, according to local customs data. A second shipment of Ukraine corn is said to have landed in China as part of an inter-governmental deal for Ukraine to ship 2 MMT to the Chinese in 2013/14. Dec 13 Corn closed at $4.27 1/2, down 1 cent; Mar 14 Corn closed at $4.36, down 2 cents.
Wheat: This report has come in bearish for wheat in two out of the last three years, and today the USDA made that three out of four. The market was expecting maybe a 20 million bushel cut to US wheat ending stocks in 2013/14, and instead it got a 10 million increase to 575 million bushels. They also raised their global wheat production estimate from 706.4 MMT to 711.4 MMT, usurping last week's 711 MMT forecast from the FAO. World ending stocks were increased from 178.5 MMT to 182.8 MMT versus the 179.1 MMT expected. Argentine production was expected to fall 1 MMT to 10 MMT, but instead was left unchanged. Canadian output was raised from 33.2 MMT to 37.5 MMT, bringing the USDA into line with last week's Stats Canada number. Australian output was also increased 1 MMT to 26.5 MMT. Clear evidence that Japan is switching away from US spring wheat to Canadian origin is unsettling for US export prospects. Japan imported almost 900 TMT of Canadian Western Red Spring wheat in Apr/Nov, a 40% increase on last year. Imports of US Dark Northern Spring wheat meanwhile have slumped by a third to less than 600 TMT in the same period. Today the Japanese bought 111,173 MT of Canadian Western Red Spring wheat in a tender and no US origin material. Conab forecast the Brazilian wheat crop at 5.32 MMT, up 11% from their previous estimate and versus the USDA's 4.75 MMT. Strong buying interest from Brazil is what has been supporting the US market of late. Dec 13 CBOT Wheat closed at $6.29 1/2, down 9 1/2 cents; Dec 13 KCBT Wheat closed at $6.94 1/2, down 9 cents; Dec 13 MGEX Wheat closed at $6.58 3/4, down 9 1/4 cents.
