Chicago Market Closing Comments From Friday Night

11/04/14 -- Soycomplex: Beans closed sharply lower on profit-taking and fund selling (estimated at a net 4,000 in soybeans on the day) spurred by widespread reports of Chinese defaults and cancellations/deferrals of Brazilian soybean purchases. Chinese demand is after all almost single handedly responsible for keeping the global soybean market going. It is also the reason why US growers are expected to "go large" and plant a record soybean crop this year. MDA CropCast yesterday estimated US 2014 production at 97.2 MMT, a 12% hike on last year. Brazilian growers are of course also keen to continue to get a slice of the action. Their crop will rise 9% to 95.7 MMT in 2014/15, as world output increases by 7.5% to a record 292.1 MMT, MDA CropCast said. Note too, that they are often quite restrained in their production estimates. The USDA will give us their first 2014/15 crop production forecasts next month. As well as Chinese defaults/cancellations there are also now reports circulating that the Chinese government may start selling beans from its reserves in May. A cynic would say "they're just trying to get the market down" but it doesn't feel like that to me on this occasion. The Argentine Ag Ministry said that farmers there have currently sold 18% of their new crop soybeans versus 24% a year ago. The Buenos Aires Grains Exchange said that the Argentine harvest is 14% complete versus 9.5% a week ago and 24% a year ago. They estimated the crop at 54.5 MMT, unchanged from their previous estimate. MDA CropCast raised their forecast for the Brazilian 2013/14 soybean crop by 1.2 MMT to 87.6 MMT. That's now very similar to Lanworth and the USDA who both line up at 87.5 MMT, and above CONAB who gave us 86.08 MMT yesterday. The USDA announced 330,000 MT of US beans sold to unknown for 2014/15 shipment. The March NOPA crush report comes out on Tuesday, with the trade expecting a figure of around 146 million bushels, which would be the largest March crush in 4 years. May 14 Soybeans closed at $14.63, down 19 1/4 cents; Jul 14 Soybeans closed at $14.47 1/4, down 18 1/4 cents; May 14 Soybean Meal closed at $472.90, down $6.60; May 14 Soybean Oil closed at 42.10, down 40 points. For the week that still puts front month beans higher, up 26 1/2 cents, with meal $4.50 firmer and oil up 162 points.

Corn: The corn market closed around 2-5 cents lower, but like beans it still managed net gains for the week. Chinese demand, or lack of it is also an issue for corn, and US corn in particular as the dispute over the MIR 162 variety trundles on. Some suggest that this issue may not now be resolved until the second half of the year. China are said to have now rejected 1.45 MMT of US corn and US corn products since this spat began last November. The National Grain and Feed Association said that exports of US corn and corn products to China between January and April are down 85% versus the same period last year. The Argentine Ag Min said farmers there have sold 22% of their new crop corn versus 55% a year ago. The Buenos Aires Grains Exchange said that the Argentine corn harvest is 16.5% complete versus 13% a week ago and 28.2% a year ago. They estimated production at 24.0 MMT, unchanged from their previous estimate. Lanworth estimated the Brazilian 2013/14 corn crop at 71.0 MMT versus a USDA estimate of 72.0 MMT. MDA CropCast raised their forecast for Brazilian production to 71 MMT citing favourable conditions for 2nd crop corn. They forecast the US 2014/15 corn crop at 357 MMT, which is up 9.3 MMT on last year despite a lower planted area due to an anticipated rise in yields. A brief warm up this weekend will give way to much colder Midwest weather next week with heavy rain on the way, said Martell Crop Projections. The rain should be welcome, although the return to cold will not. "Moderating temperatures in April generated more optimism for corn planting in the Midwest. April temperatures to date have been near normal, promoting gradual thawing of frozen fields. Frost is still present in farm fields, however, especially the Upper Midwest. Southern Minnesota's topsoil temperatures are still 37-40 F, a far cry from the 50 F needed to germinate seeds. January-March temperatures were among the coldest on record causing deep penetrating frost in Midwest corn farms. Yet, deep frost that delays planting is not necessarily a prescription for a reduced corn yield. Similar cold occurred in 1978 and 1979 abut in both years the corn yield finished better than average," they observed. The USDA are expected to release their first national corn planting progress report on Monday night. On a national level around 3-5% of the corn crop is expected to have been sown in southern states. May 14 Corn closed at $4.98 1/2, down 2 3/4 cents; Jul 14 Corn closed at $5.04 1/2, down 2 3/4 cents. May 14 corn posted a 6 1/2 cent gain for the week.

Wheat: The wheat market closed mostly lower on the day, and lower for the week, across the three exchanges. Egypt bought Romanian, Ukraine and Russian wheat in their tender. US and French wheat proved too expensive. Algeria bought what was considered to most likely be French wheat. Grain exports continue out of the Black Sea unabated. However, tensions between Ukraine (and the West) and Russia continue, with reports of pro-Russian groups seizing control of police buildings n some cities in eastern Ukraine, and reports of ensuing gun battles breaking out as Ukraine forces try to regain control, emerged over the weekend. The Russian taking of Crimea was of course one of the primary catalysts responsible for fund/spec money coming flooding back into the grains markets, sending Chicago wheat prices surging by almost 30% in 6 weeks from the beginning of February through to mid-March. We shall have to see how these latest developments pan out, and whether this encourages more spec money to re-enter the market. The latest Commitment of Traders report shows managed money reducing their net long holding in wheat, corn and soybeans for the week through to Tuesday night, although not by that much. In the case of wheat, they cut their net long by less than 2k contracts to 43k. Last week's position was said to be their largest spec long holding in CBOT wheat since November 2012. Their net corn long was reduced by under 6k lots this week to 270k and their long in beans reduced by just over 12k to 181k contracts. Talk of 2014 developing into an El Nino year would probably come too late to be of much benefit to US winter wheat on the Plains. El Nino, if it occurs, would usually be positive for Midwest crops as it typically brings wetter and cooler summer growing conditions, said Martell Crop Projections. That would probably be beneficial for spring wheat and also of course US corn and soybean production. The USDA attaché in Turkey forecast the 2014 wheat crop there to fall from 18.0 MMT last year to 15.8 MMT this time round on drought. The Turkish 2014 barley crop was estimated falling from 7.3 MMT to 5.8 MMT and the corn crop dropping from 5.1 MMT to 4.9 MMT. CONAB yesterday pegged Brazil's 2014/15 wheat production at 6.7 MMT, which is a 1.2 MMT increase from last year. Beneficial rains are expected there over the weekend. May 14 CBOT Wheat closed at $6.60 1/4, down 2 cents; May 14 KCBT Wheat closed at $7.19 1/2, down 3 cents; May 14 MGEX Wheat closed at $7.01 3/4, up 3/4 cent. For the week Chicago wheat lost 35 1/4 cents, with Kansas down 44 cents and Minneapolis losing 38 cents.