Chicago Closing Comments: Wheat Rises On EU Quality Issues

05/08/14 -- Soycomplex: Beans closed lower after overnight rains proved to be more extensive, and covered an area farther into the heart of the US corn/soybean belt than expected, according to Benson Quinn Commodities. The latest forecasts have also adopted a wetter outlook. "The Midwest forecast calls for heavy soaking rains and very cool temperatures. The near term forecast is extremely wet. At least 1 inch of rain is predicted but 3-4 inches locally in corn and soybean farms. This would be due to a stalled trough of low pressure with recurring showers. Soaking rains are welcome in corn and soybeans, as field conditions have grown progressively drier in recent weeks. Soybeans especially need heavy rainfall in August to optimize the yield. This is the key period for seed development in pods, wetness promoting larger beans. Cool temperatures are predicted again this week the forecast calling for 2–6 F below normal," said Martell Crop Projections. Informa estimated US 2014 soybean yields at 44.5 bu/acre and production at 3.7 billion bushels, unchanged from last month and a bit lower than many others (including the USDA's 45.2 bu/acre and 3.8 billion bushels). FCStone yesterday forecast yields at 46 bu/acre with production at 3.865 billion bushels. They see average yields in Illinois at a record 55 bu/acre, and those in Iowa at a record 53 bu/acre. AgRural estimated Brazil’s 2014/15 soybean plantings at 31.0 million hectares, up 4.9% from a year ago. They see production in 2014/15 at an all-time high 94.0 MMT versus the USDA estimate of 91.0 MMT and the current 2013/14 record crop of 85.6 MMT. A Reuters survey forecast Q4 2014 US soybean prices at $10.27/bu,which would represent a 21.8% fall year-on-year. The range of estimates was $9.42-11.30/bu. Aug 14 Soybeans closed at $12.22 3/4, down 9 3/4 cents; Nov 14 Soybeans closed at $10.65 3/4, down 13 3/4 cents; Aug 14 Soybean Meal closed at $382.20, down $6.00; Aug 14 Soybean Oil closed at 35.47, down 55 points - just 2 points away from Friday's 5-year closing low.

Corn: The corn market closed a couple of cents lower. The wetter forecast is seen as being beneficial for corn, even if the crop could also use some heat units. Preliminary data shows July 2014 to be the 3rd coolest on records dating back to 1950, according to Martell Crop Projections. The coolness has at least conserved soil moisture by reducing evaporation, they said. "The forecast remains cooler than average this week and also in the 6-10 day outlook," they added. Informa estimated US 2014 corn yields at 168.0 bu/acre versus a previous estimate of 165.0 bu/acre and compared to the current USDA estimate of 165.3 bu/acre. They see production at 13.988 billion bushels, up from a previous estimate of 13.73 billion and higher than the USDA's July estimate of 13.86 billion. They are record numbers, although not as ambitious as they might have been, FCStone yesterday estimated yields at 172.4 bu/acre, with production of 14.455 billion bushels. It's interesting to see such a disparity on yield estimates so relatively late in the season. Everybody seems to think that this year's yields will set new records, but nobody seems sure exactly how high the bar will be raised. The widely followed Pro Farmer US Midwest crop tour may shed some more light on things. That takes place August 18-21st. Informa also estimated the 2013/14 Brazilian total corn crop at 78.1 MMT versus a previous estimate of 76.55 MMT. They said that the 2014 EU corn crop would come in at 67.8 MMT versus a previous estimate of 66.4 MMT. CONAB come out on Thursday with their latest Brazilian crop estimate updates. The USDA attaché in Argentina estimated their 2014/15 corn crop at 23.5 MMT versus the current official USDA estimate of 26.0 MMT. There's talk of developing dryness in Ukraine and Russia harming potential corn yields there. A Reuters survey estimated Q4 2014 US corn prices at $3.52.bu, from within a range of estimates of $3.02-4.15/bu. That would represent a year-on-year decline of 16.6%. Sep 14 Corn closed at $3.56 1/4, down 2 1/2 cents; Dec 14 Corn closed at $3.67 1/4, down 2 cents.

Wheat: The wheat market closed higher, aided by repeated talk of serious quality issues in Europe. With fund money short in CBOT wheat, that prompted some to scramble to exit those positions, explaining why Chicago wheat gained more than Minneapolis or Kansas. Funds were estimated as net buyers of around 2,000 Chicago wheat on the day. There are also reports of reduced quality in Ukraine wheat, plus addition talk of a build up of Russian troops on the Ukraine border to keep the shorts nervous. Russia's wheat crop keeps getting bigger by the day though. Informa today estimated wheat production there at 56.0 MMT versus a previous estimate of 52.5 MMT and the current USDA estimate of 53.0 MMT. Local analysts IKAR this week raised their projection to 58.5 MMT, making it look increasingly likely that the USDA will have to increase their estimate next week. Informa also now have the Kazakhstan wheat crop estimated at 15.5 MMT versus a previous estimate of 13.5 MMT. In addition they forecast the 2014 US all wheat crop at 1.986 billion bushels versus a previous estimate of 1.960 billion. The USDA attaché in Argentina estimated the country's 2013/14 wheat exports at 2.5 MMT versus the official USDA estimate of 2.0 MMT. A decision on what quality is acceptable for delivery against the French MATIF milling wheat contract is expected this week, according to a report on Reuters. The situation certainly needs clarifying, although opinion remains divided on exactly how demanding the spec will be. "I think the silos will accept all the crop or set criteria that are not very restrictive, otherwise they're going to cut themselves off from half the market," one trader told Reuters. If they are relatively relaxed about the quality that is acceptable then we could see the French market give up some of the existing premium of around $25/tonne that it presently commands over London feed wheat. More rain was reported overnight in eastern France, Germany and Poland. A Reuters survey estimated CBOT wheat prices in Q4 of this year at an average $5.52/bu, from within a range of $5.02-5.92/bu. Sep 14 CBOT Wheat closed at $5.52 1/2, up 8 1/2 cents; Sep 14 KCBT Wheat closed at $6.42 3/4, up 4 1/4 cents; Sep 14 MGEX Wheat closed at $6.29 1/4, up 5 3/4 cents.