Chicago Markets Tumble On First Trading Day Of 2014

02/01/14 -- Soycomplex: March beans closed below the 50-day moving average for the first time since Nov 20 last night, potentially opening the door for a long liquidation sell-off, and so proved to be the case today. An improved South American weather outlook was all that was required to see fund money scrambling to get out of the last remaining long position that they have amongst the three principal ag commodities. They were estimated as being net sellers of around 8,000 soybean contracts on the day, sending the market crashing below the $13/bushel mark. Anything like normal weather in South America potentially means a deluge of new crop soybeans is just around the corner. Bear in mind too that US farmers are also expected to "go large" with soybean plantings this spring. MDA CropCast forecast the Brazilian soybean crop at a record 88.16 MMT, with Argentine output at a record 57.46 MMT this year. Rains in both Brazil and Argentina in the past week have improved moisture for soybean growth, they noted. Domestic US DDGs prices are said to have fallen off a cliff on the news that China is now rejecting some shipments of those as well as US corn, putting soymeal under pressure. Trade estimates for tomorrow's weekly export sales report for beans are around 400-800 TMT. Jan 14 Soybeans closed at $12.87, down 25 1/2 cents; Mar 14 Soybeans closed at $12.70, down 22 1/2 cents; Jan 14 Soybean Meal closed at $423.80, down $13.90; Jan 14 Soybean Oil closed at 38.51, down 31 points.

Corn: The corn market closed with only nominal losses, which was a fair achievement given the sharp declines seen in wheat and soybeans. The news that China has now begun rejecting US DDGs shipments due to "contamination" with the non-approved MIR 162 variety is bearish. With US DDGs prices said to be $20-50 down in a week, and as much as $85 lower versus a month ago, there could certainly be some negative impact there on ethanol margins and thus domestic US demand for corn. Some think that the USDA are likely to raise their estimates for US 2013 corn yields and production next week, adding more bearish pressure. South American weather is also improving, adding another bearish influence to corn, whist wheat prices seemingly in terminal decline - now below $6/bushel in Chicago for the first time since May 2012 - offer little in the way of support either. There's talk that some US corn originally destined for China has been resold into Europe at discount prices. Asian buyers are said to have been holding off tendering for corn, preferring instead to wait and see if they can pick up a bargain distressed cargo or two to be redirected from China. Few expect this dispute to get resolved until after Chinese Lunar New Year. Trade estimates for tomorrow's weekly export sales report are around 500-850 TMT. The weekly ethanol production report from the Energy Dept is also delayed until tomorrow. Mar 14 Corn closed at $4.20 1/2, down 1 1/2 cents; May 14 Corn closed at $4.29, down 1 1/4 cents.

Wheat: The wheat market crashed to new lows, finishing around 8-10 cents lower across the three exchanges. There's talk that the Jan 10 planted acreage report from the USDA could show a 2-3% jump in US winter wheat acres. Egypt released a tender for wheat for Jan/Feb shipment after the close. US wheat could finally be competitive, although there's some talk that logistics may be the next barrier to get over, even if it is now priced cheap enough to overcome the freight hurdle. The current heavy shipping program for soybeans and corn out of the US Gulf in Q1 of 2014 could make getting a slot to ship wheat difficult, some suggest. Nearby delivery slots for wheat are also said to be tight in Europe, the Black Sea, Canada, and even Australia too. India are tendering to sell 220 TMT of wheat for Feb through to early March shipment as part of a drive to sell 2 MMT prior to the start of their 2014 harvest. Plantings for that are nearing completion, and could be record large. Crop conditions are said to currently be favourable, with decent moisture and reasonably benign temperatures. The sharp cold snap gripping the US Midwest is thought unlikely to cause too much damage to wheat which is generally well protected by a good snow covering. Trade estimates for tomorrow's weekly export sales report are 200-600 TMT. Funds were estimated as being net sellers of around 3,000 Chicago wheat lots on the day. There's a suggestion that this might be new money coming in. Mar 14 CBOT Wheat closed at $5.97, down 8 1/4 cents; Mar 14 KCBT Wheat closed at $6.31 1/4, down 9 1/4 cents; Mar 14 MGEX Wheat closed at $6.25 1/4, down 10 cents.