Chicago Markets Decline Following USDA Numbers
10/03/14 -- Soycomplex: Beans closed sharply lower, with front end months showing the biggest declines, with funds dumping an estimated 14,000 of their length - simply a volume that the market was unable to comfortably absorb. Talk of Chinese cancellations abound, although there was no official confirmation of any today. The USDA increased their 2013/14 US soybean export forecast only a little from 41.1 MMT to 41.64 MMT. That's versus existing commitments of 44.2 MMT, of which 37.2 MMT has already been shipped. Brazil's crop was trimmed from 90 MMT to 88.5 MMT, putting the USDA in line with other trade estimates. Argentina was left unchanged at 54 MMT. Brazil and Argentina's soybean export potential was also left unchanged at 45 MMT and 8 MMT respectively. World soybean ending stocks were cut from 73 MMT last month to 70.64 MMT this time round, which was below the average trade guess of 71.5 MMT. US ending stocks this season were cut from 150 million bushels to 145 million, which was a little less than the market expected. "For the most part, these aren’t numbers that scream sell on the old crop, but given the strong move of the last couple of months, the spec trade got ahead of itself," said Benson Quinn Commodities. I'd tend to agree with them. Net cancellations of over 2.5 MMT, and no further sales whatsoever for the rest of the season are what's needed to eek out US soybean stocks through to new crop. Mar 14 Soybeans closed at $14.19 1/4, down 38 1/4 cents; May 14 Soybeans closed at $14.18 3/4, down 39 cents; Mar 14 Soybean Meal closed at $452.70, down $12.30; Mar 14 Soybean Oil closed at 43.64, down 45 points.
Corn: The corn market stumbled around 10 cents lower on what looks like buy the rumour, sell the fact trade. Funds were judged to have been net sellers of around 14,000 corn contracts on the day, despite the USDA cutting US corn ending stocks by 25 million bushels to 1.456 billion, versus trade expectations of a small increase to 1.488 billion. US corn exports were raised 1 MMT to 42 MMT. Brazil's and Argentina's production and exports were left unchanged from last month. The EU-28 was seen importing 0.5 MMT more corn than forecast last month as it continues to displace wheat in feed rations. Global corn ending stocks were raised by almost 1.2 MMT to nearly 158.5 MMT, which was over 2 MMT above the average trade guess. Weekly export inspections were reported at 933,974 MT, which is slightly above the level required to hit the USDA target for the season. Texas corn was said to be 10% planted versus 8% a week ago and 18% normally at this time. News over the weekend that Russian troops had reportedly taking control of a Ukrainian border guard post in Western Crimea could rekindle some supply side fears from the region again. The USDA didn't make any alteration to their forecast for Ukraine corn exports of 18.5 MMT in 2013/14. Russia's corn exports were also left unchanged at 3 MMT, whilst Europe's were dropped 0.5 MMT to 2 MMT. Mar 14 Corn closed at $4.72, down 9 cents; May 14 Corn closed at $4.78 1/4, down 10 3/4 cents.
Wheat: The wheat market finished down anywhere from a cent to over thirteen cents across the three exchanges. The USDA left US wheat ending stocks unchanged from last month at 558 million bushels, compared to trade expectations of a small increase to 570 million. World ending stocks came in virtually unchanged at 183.8 MMT, which was in line with expectations. Not a lot to get excited about there. The 2013/14 world wheat crop was increased from 711.9 MMT to a new record 712.7 MMT. Australia's crop was increased by 0.5 MMT and India's by around 1 MMT. World consumption was increased by just under 1 MMT to 704.8 MMT. Algeria, Iran, Iraq, Morocco and Turkey were all seen importing more wheat in 2013/14 than was forecast last month, in amounts ranging from 200 TMT to 1 MMT in the case of Iran. Weekly US wheat export inspections came in at a disappointing 429,081 MT, compared to the 609,867 MT inspected last week, and the 780,887 MT inspected during the same week last year. The trade continues to monitor US winter wheat crops on the Plains which have all demonstrated a significant deterioration in conditions over the winter. Texas wheat was rated 28% good/excellent today. Mar 14 CBOT Wheat closed at $6.45, down 1 1/4 cents; Mar 14 KCBT Wheat closed at $7.04 3/4, down 10 1/2 cents; Mar 14 MGEX Wheat closed at $7.46, down 6 cents.
