Chicago Market Closing Commentary For Friday Night

31/01/14 -- Soycomplex: Beans closed firmer in relatively quiet trade. China is closed for the next few days for the Lunar New Year celebrations, so maybe the market is thinking that will keep cancellations at bay for a little while longer yet? Yesterday's export sales report still showed China featuring as a buyer of old crop beans even if there were some decreases from unknown destinations. All eyes are now on South America: Brazilian harvest progress, Argentine weather, and how exports from the former will advance this month. Some are forecasting a February record 2.5 MMT of soybeans to be shipped out of Brazil you will recall. After that the trade will start to ponder on US soybean plantings this spring, with the USDA's Outlook Forum later this month due to give us a first initial projection on that. Allendale estimated the 2014 US soybean area at 81.6 million acres, up 6.7% on last year's 76.5 million. They said that Nov beans may fall as low as $9.20 by October versus $11/04 1/2 at the close tonight. A Reuters poll came up with an average trade guess for the price of CBOT soybeans at the end of the year of $10.76/bu, from within a wide range of estimates of $9.25–$13.75/bu. The Buenos Aires Grains Exchange said that Argentine soybean planting is just about done and forecast the 2013/14 crop at 53 MMT, unchanged from last week and 1.5 MMT below the USDA, although up 4.5 MMT (+9.3%) on last year. Cargill announced that they are to idle soybean processing activities at their facility in Raleigh, North Carolina, later this spring. They said that "US soybean processing has become more variable and seasonally driven.” The plant may resume operations if conditions change, they added. Mar 14 Soybeans closed at $12.82, up 7 cents; May 14 Soybeans closed at $12.67 3/4, up 6 3/4 cents; Mar 14 Soybean Meal closed at $427.70, up $2.50; Mar 14 Soybean Oil closed at 37.36, up 29 points. For the week that puts nearby beans down 2 3/4 cents, with meal up $2 and oil down 18 points to the lowest level on the continuous weekly chart since July 2010.

Corn: The corn market closed little changed in narrow trade. The USDA flashed up a 110,000 MT sale of US corn to Spain for 2013/14 shipment under the daily reporting system - the second such sale in a week. It may be that the current political and civil unrest in Ukraine, along with frigid temperatures and logistical problems mean that more international buyers are looking to the US for their corn needs. The pace of US export sales is therefore supportive. As of Jan 23, cumulative corn sales stand at 86.5% of the USDA forecast for the current marketing year versus a 5-year average of 63.4%. Sales of just 157 TMT are needed each week to reach the USDA forecast for the season. Yesterday's sales topped 1.8 MMT. In short, corn seems to have found a level at which the record US and world crop is finding a home. Fund money is also trimming it's net short position in corn. The latest Commitment of Traders report shows them holding their smallest net short position (-52k contracts) since last July. Early thoughts are that US farmers may plant around 93 million acres of corn this spring, down on last year, but not by that much (-2.5%), despite US prices falling by nearly 40% during the course of 2013. A Reuters poll came up with an average anticipated US corn price at the end of 2014 of $4.37/bu, from within a wide range of estimates of $3.45–$6.00/bu. Mar 15 will be the front month then, and that closed at $4.59 1/4 tonight. The Buenos Aires Grains Exchange said that the Argentine corn crop is 95.8% planted versus 90% a week ago and 98.7% a year ago. In absolute numbers more than 3.16 million hectares have been planted versus an anticipated total of 3.3 million, they said. The Rosario Grain Exchange said that highly variable Argentine corn yields are likely this year - from only 4-5 MT/ha up to 8-10 MT/ha versus the USDA's current projection of an average 7.35 MT/ha. The USDA attaché in Brazil estimated the 2013/14 corn crop there at 70.0 MMT, down 13.6% from 81.0 MMT a year ago. Mar 14 Corn closed at $4.33, down 1/2 cent; May 14 Corn closed at $4.39 1/4, down 1/4 cent. For the week Mar 14 was 3 cents lower.

Wheat: The wheat market closed around 2-4 cents firmer on the day, but 10-14 cents lower for the week. A bit of light pre-weekend profit taking may have been a contributory factor. The jury is still out on what damage may have been done to US winter wheat from a series of recent hard freezes, along with ongoing drought on the Plains. Recall though that crop conditions were far better in the last USDA report of 2013 than they had been a year previously - 62% good/excellent versus 33% at the end of November 2012. Bad weather in the Black Sea region, with high winds and heavy snow, may provide a short-term boost to US export prospects. So too could Egypt's new penchant for max 13% moisture wheat. The blizzard-like conditions around the Black Sea will ultimately provide protection from frost and a moisture boost later in the spring though. A Reuters poll came up with an average CBOT wheat price forecast at the turn of the year at $5.73/bu, from within another wide range of estimates of $4.75–$8.50/bu. Mar 15 CBOT wheat closed at $5.92 3/4 tonight. How the world wheat crop emerges from winter dormancy and spring/summer weather conditions will of course be the over-riding deciding factor on whether we end up at the top, or bottom, end of that range - or even outside it completely! Fund money isn't currently displaying a renewed appetite for returning to the fray to own ag commodities in 2014 with anything like the same enthusiasm displayed in some of the previous years of the last decade. That may remove some of the extreme volatility from the market at least. From the demand side the wheat market can draw some solace from the fact that in January we saw some large volume global interest in owning wheat. Egypt topped the list of international buyers last month, but Saudi Arabia, Algeria, Iraq and China too were all significant end users encouraged into the market to cover some of their requirements. Mar 14 CBOT Wheat closed at $5.55 1/2, up 2 cents; Mar 14 KCBT Wheat closed at $6.13, up 2 1/4 cents; Mar 14 MGEX Wheat closed at $5.99, up 1 3/4 cents. For the week CBOT wheat was 9 3/4 cents lower, with KCBT down 14 1/4 cents and MGEX losing 14 cents.