Chicago Markets Firm, Helped By Renewed Tensions In Ukraine

22/08/14 -- Soycomplex: It was a case of "same story, different day" for soybeans, with the front end surging higher on continuing availability (or rather, lack of availability) problems in the US. There are reports suggesting that various US crushing plants are being forced into taking temporary downtime until new crop becomes available. That's also supporting nearby meal, which also posted strong gains again today. It's a different story on the new crop though, as the market anticipates record US 2014 production waiting in the wings, and knows that price rises will only encourage further increased plantings in South America, with Brazilian growers preparing to begin sowing around a month from now. Even new crop months managed more modest gains in beans and meal today though, although the trade is ever conscious of a deluge of new crop beans to come. The high nearby premiums will also of course encourage US growers in the South to get stuck into their new crop as soon as it is humanly possible to do so. "Once the squeeze on the front end is over, downside risk in the beans looks sizeable with weather forecasts supporting (a) big crop outlook," said Benson Quinn Commodities. The USDA announced 120,000 MT of US new crop beans sold to China. Keep in mind though that this is nothing more than routine business, China needs to buy 1.4 MMT of soybeans each and every week of 2014/15 if they are to match the USDA's prediction that they will import 73 MMT next season. The end results of the ProFarmer Midwest Crop Tour were released after the close. They estimated US soybean yields at 45.3 bu/acre, and production at 3.812 billion bushels. Both were fractionally under the USDA's current estimates of 45.4 bu/acre and 3.816 billion bushels. It may be worth noting that the 2013 ProFarmer tour put yields at 41.8 bu/acre versus the final USDA estimate of 43.3 bu/acre. They had production at 3.158 billion bushels a year ago versus the USDA's final 3.289 billion. Managed money was reported to have net short in beans of 16,698 contracts, their second largest short position since October 2006. Sep 14 Soybeans closed at $11.66, up 29 3/4 cents; Nov 14 Soybeans closed at $10.42, up 3 3/4 cents; Sep 14 Soybean Meal closed at $433.30, up $19.50; Sep 14 Soybean Oil closed at 32.36, down 42 points. For the week that puts Sep 14 beans up 63 1/2 cents, and Nov 14 down 10 cents. Front end meal gained $45 during the course of the week and oil fell 51 points to new 5-year lows.

Corn: The corn market closed around 2-3 cents firmer, aided by spill over support from wheat which posted some decent gains early in the session on renewed tensions between Russia and Ukraine as Moscow sent it's "aid" convoy across the border without permission from anybody but itself. The final day of the ProFarmer crop tour estimated Iowa corn yields at 178.75 bu/acre versus 171.94 bu/acre a year ago and the 3-year average of 157.94 bu/acre. In Minnesota they pegged the average corn yield at 170.76 bu/acre versus 181.09 bu/acre a year ago and the 3 year average of 171.07 bu/acre. On a national level they placed 2014 yields at 169.3 bu/acre, up on the USDA's current 167.4 bu/acre estimate, but maybe not as high as some would have thought - even if that is a record number. ProFarmer put production at 14.093 billion bushels, higher than the USDA's 14.032 billion, but again not as high as it might have been. Lanworth today estimated US corn yields at 174.5 bu/acre. For what it's worth, this time last year ProFarmer forecast US corn yields at 154.1 bu/acre versus a final USDA estimate of 158.8 bu/acre. It would seem that whilst there is still some upside potential on final 2014 US corn and soybean yields then, the market has maybe found its place for now until more accurate final yield figures can be given. That will only happen once the harvest starts. On the weather front: "Hotter temperatures are developing this week in the Midwest. A warm ridge of high pressure – the Bermuda High – is expanding northward taking control of the eastern third of the United States. Midwest temperatures are expected to heat up into the high 80s F – low 90s F. With extreme heat comes high evaporation. Rainfall is expected to be heavy on most Midwest farms. These would be recurring showers, heavy some days, light on others, over the next 7 days. The best rainfall, 2.5 – 4 inches, is predicted in a wide swath of Nebraska and Iowa. Very substantial rainfall, 1.5 – 2 inches, is projected in southern Minnesota, western Wisconsin and northern Illinois. Elsewhere in the Midwest, lighter amounts of rainfall are predicted. The message is that corn and soybeans that miss heavy rainfall would be stressed by the extreme heat and high evaporation," said Martell Crop Projections. Managed money is tonight reported to be net long 64,719 contracts in corn as of Tuesday night. Sep 14 Corn closed at $3.65 1/2, up 3 1/4 cents; Dec 14 Corn closed at $3.71 1/2, up 2 1/2 cents. Sep 14 was virtually unchanged - down 1/4 cent - for the week.

Wheat: The wheat market closed higher across the three exchanges, although ultimately finishing well off the highs of the day. Chicago wheat performed the least well of the three, ending around 8-10 cents below the intra-day highs. Kansas and Minneapolis wheat finished the session around 4-6 cents off the highs of the day. Once more, any sign of an increase in tension between Russia and Ukraine/the West sends the wheat market into a short-covering tizz. As well as sending it's "aid" convoy into Ukraine without permission, Russia is also again said to be building air and ground forces close to the border. Kiev is now said to be lining up a "show of strength" over the weekend, as it marks its independence day with a military parade in Kiev. The BBC report that pro-Russian separatists in Donetsk say that they will stage their own parade, including displaying captured soldiers. "As has been the case (recently), renewed tensions in the Black Sea region come to light on a Friday. They have helped, if not caused higher trade on Fridays. Through the last couple of late week dealings, news from this region over the weekend has been benign. Only time will tell, if issues escalate this weekend," noted Benson Quinn. This may be encouraging some to think that sitting out of the wheat market might be the best course of action at the moment, even if few seem to want to play it from the long side. Managed money was reported to have reduced their net short position in Chicago wheat by more than 10k lots for the week through to Tuesday night, although they still remain short in excess of 50k contracts. The wetter upper Midwest and northern US Plains might be welcome news for corn and soybeans, but there's some talk of it causing damage to spring wheat. The USDA cut the proportion of the crop rated good to excellent by 2 percentage points this week, and a further reduction could be on the cards on Monday night. These conditions will also be holding up the harvest, which was only 17% done a week ago, around half the pace of normal. Reports also suggest that newly harvested wheat in North Dakota and Canada is testing high in vomitoxin after a wet growing season. Quality problems remain an issue in Europe too, where Strategie Grains say only 59% of the crop will make milling standard versus 71% a year ago. Egypt might be back in the market next week it is thought. It will be interesting to see what, if anything, gets offered out of France and/or Germany. Sep 14 CBOT Wheat closed at $5.52, up 5 3/4 cents; Sep 14 KCBT Wheat closed at $6.33 1/2, up 11 1/2 cents; Sep 14 MGEX Wheat closed at $6.26 3/4, up 11 cents. For the week that puts the Chicago market little changed, up 3/4 of a cent with Kansas 13 3/4 cents higher and Minneapolis up 14 3/4 cents.