Chicago Grains Consolidate At Year-End
31/12/13 -- Soycomplex: Beans closed around 15-16 cents lower as rain in Argentina encouraged some year-end profit-taking and lightening of fund length. Mar 14 closed below $13 for first time since late November. The latest Commitment of Traders report shows fund money cutting their soybean long position by around 6,600 contracts for the week through to Christmas Eve, with their net long now standing at almost 166,000 lots. For the year, front month beans lost just over a dollar, or 7.5%, a much better performance than that witnessed in the corn and wheat pits. The new year promises to bring with it record soybean production in South America (if the weather plays ball from here on in) and record spring plantings in the US. They've already begun harvesting in Brazil's Mato Grosso state. The relatively strong price of soybeans relative to corn seems certain to see US farmers plant more beans than ever before in 2014. Chinese demand however is also forecast to continue unabated, with imports at record levels. Nevertheless there appears to be more downside potential ahead. Jan 14 Soybeans closed at $13.12 1/2, down 15 3/4 cents; Mar 14 Soybeans closed at $12.92 1/2, down 16 1/4 cents; Jan 14 Soybean Meal closed at $437.70, down $12.60; Jan 14 Soybean Oil closed at 38.82, up 20 points.
Corn: The corn market closed modestly lower, sealing what was almost certainly the worst price performance ever over the course of a 12 month period - albeit from initial lofty heights of almost $7/bushel. Compared to last New Year's Eve's closing levels, front month corn tonight stands nearly 40% lower for a loss of $2.75 1/4. Rain in Argentina and Southern Brazil, and the promise of more "normal" temperatures and precipitation in the fortnight ahead gave a bearish tone. Record corn production in Ukraine and Russia, and the prospect for increased plantings there in 2014 also have the market under pressure. The Ukraine Ministry reported that the country had exported 18.48 MMT of grains so far this marketing year, up 30% versus a year ago. Over half of that total, 9.5 MMT, is corn. The Ukraine Ministry forecast 2013/14 full season exports at 32.5 MMT, and the bulk of the remainder of that will be corn, making them the second largest grain exporter in the world after the US. We've seen a bit of consolidation in corn these past few weeks, with fund money booking profits and squaring their short position up a little ahead of year-end. The latest Commitment of Traders report shows fund money reducing their net short by over 17,000 contracts for the week through to Christmas Eve. Mar 14 Corn closed at $4.22, down 1 1/2 cents; May 14 Corn closed at $4.30 1/4, down 1 1/2 cents.
Wheat: After a pretty torrid month for wheat, a bit of light consolidation was perhaps in order and that's what we got to end the month and year. Even so Chicago wheat finished 2013 around 22% lower than it began it on the front month. Minneapolis wheat lost even more, down 26.6% year-on-year. Record world wheat production coinciding with a record global corn crop has been behind wheat's demise in 2013. Fund selling has also been a problem for wheat this past couple of months, driving Chicago prices close to $6/bushel - the lowest levels on a front month since May 2012. The latest Commitment of Traders report shows fund money trimming their short position a little for the week through to Christmas Eve in light year-end positioning, that follows 7 weeks of increasing the size of that short. Even so they still sit on a net short of almost 70,000 contracts. US wheat is now amongst the cheapest in the world on an FOB basis, although it keeps missing out on tenders into North Africa and the Middle East on freight considerations. Nevertheless, US export commitments are 81% of the USDA projection for the 2013/14 season versus the five year average of 75% at this time. Mar 14 CBOT Wheat closed at $6.05 1/4, up 4 3/4 cents; Mar 14 KCBT Wheat closed at $6.40 1/2, up 4 3/4 cents; Mar 14 MGEX Wheat closed at $6.35 1/4, up 5 cents.
