Chicago Market Regains Tuesday's Losses

11/12/13 -- Soycomplex: Beans reversed yesterday's losses, closing around 4-6 cents firmer on the day, on continued strong demand. The trade is expecting another robust week of export sales from the USDA tomorrow, with bean sales forecast to come in around 750-950 TMT, and with meal sales of 100-200 TMT. The USDA's office in Brazil estimated the soybean crop there at 88.5 MMT, half a million more than the USDA themselves said yesterday, noting generally ideal weather conditions. They peg Brazil's 2013/14 soybean exports at 45 MMT, which is 1 MMT more than the USDA said yesterday, but 0.9 MMT below Conab's estimate. Celeres pegged Brazil's 2013/14 soybean crop at 87.2 MMT, which is now one of the lowest estimates on the table, with others at 90 MMT, or even a little more. There's a little concern surrounding talk that China may be having a re-think on stockpiling agricultural commodities, according to Deutsche Bank. The theory is that this would allow domestic prices to fall closer to world levels (soybeans on China's Dalian Exchange have been trading at the equivalent of around $20/bu lately). What the government need to concentrate on of course is how not to de-incentivise Chinese farmers from producing crops at all if they perceive prices as being too low. Direct farm subsidies is the way, say Deutsche Bank. Don't expect any sudden announcement on this front overnight, but it's something to be mindful of going forward. The funds are long beans, and may be looking to trim that length heading into the year-end. Whether they will fancy re-establishing fresh longs in January with a potentially monster South American crop then imminent is debatable. The threat of a large output from Brazil and Argentina is often enough to see the market put in lows early in the new year. The USDA's Outlook Forum on Feb 20-21 is expected to indicate farmers' intention to "go large" with spring US soybean plantings too, potentially providing a bit more downside. Jan 14 Soybeans closed at $13.44, up 5 3/4 cents; Mar 14 Soybeans closed at $13.28 1/2, up 6 1/2 cents; Dec 13 Soybean Meal closed at $464.60, up $0.50; Dec 13 Soybean Oil closed at 40.20, up 29 points.

Corn: The corn market regained yesterday's losses, and then some, closing around 3-4 cents higher. The US Energy Dept reported the weekly ethanol grind leaping from 913,000 barrels/day last week to 944,000 bpd - the biggest week since January 2012 - as margins in the sector remain robust. The USDA's revised projections for corn demand from the ethanol sector means that production needs to average around 911,000 bpd to hit that target. Also supportive was the USDA reporting the sale of 120 TMT of US corn to "unknown" for 2013/14 delivery. Brazil exported 3.91 MMT of corn in November, according to customs data. That's similar to the volume exported in Nov 2012, and only marginally less than the 3.95 MMT shipped in October. Ukraine's corn harvest is 98% complete at 29.572 MMT. The USDA raised their Ukraine crop estimate from 29 MMT to 30 MMT yesterday - easily a record production and one which they are keen to export into Europe and Asia. Chinese think tank CNGOIC estimated the corn crop there at a record 217.7 MMT, up 6% on last year and versus their previous forecast of 215 MMT. Chinese government support prices for corn are said to be around the equivalent of around $9/bushel. Large US corn shipments to China are still being held up due to some containing traces of the non-approved MIR 162 strain. Chinese Authorities in the eastern province of Zhejiang are said to have rejected a 59 TMT cargo of US corn today. With demurrage rates what they are, US shippers will have to think seriously about loading vessels for China at the moment until this problem is resolved. Trade estimates for tomorrow's weekly export sales for corn are in the region of 600-750 TMT. Dec 13 Corn closed at $4.31 1/4, up 3 3/4 cents; Mar 14 Corn closed at $4.39 1/4, up 3 1/4 cents.

Wheat: The wheat market posted nominal gains, but fell well short of recovering all of yesterday's losses. The spectre of a record large 711 MMT world wheat crop hangs over the market, particularly with wheat prices at such a big premium to corn. Egypt saw the recent price fall as an opportunity to tender for wheat, picking up three cargoes of Romania and two of French origin for Jan shipment. Tomorrow's weekly export sales report for wheat will be interesting (with the trade expecting sales of around 300-500 TMT). Brazil has gone a bit quiet lately, and Conab yesterday forecast their crop significantly higher than the USDA's 4.75 MMT at 5.36 MMT, which is also up sharply on where they were a month ago (4.81 MMT). There's also some talk that Argentina's crop might not be as low as the Ministry suggest, and that their low ball estimate is politically motivated. The USDA yesterday surprised the market by leaving their forecast for the Argentine wheat crop unchanged at 11 MMT. Demand from Brazil has been one of the main factors supporting US wheat lately. So too has been fresh interest from China, and they also seem to have gone quiet - certainly as far as buying US wheat is concerned - as they are said to now be more interested in Australian wheat. We also this week have had the news that Japan is buying Canadian wheat in preference to US origin. All these things conspired to see the USDA raise their forecast for US wheat ending stocks in yesterday's report, whereas the trade had been expecting a drop of 20 million bushels. Dec 13 CBOT Wheat closed at $6.30 1/4, up 3/4 cent; Dec 13 KCBT Wheat closed at $6.96 1/2, up 2 cents; Dec 13 MGEX Wheat closed at $6.58 1/2, down 1/4 cent.