Chicago Grains Rally To Post Daily And Weekly Advances
05/12/14 -- Soycomplex: Beans and meal closed strongly higher, with the gains in each spread fairy evenly across the months, rather than concentrated at the front end for once. Fund money was given credit for being a net buyer of around 12,000 soybean contracts on the day, along with around 5,000 in meal. Demand for US soybeans (and meal too) remains very strong, with weekly export sales topping 1 MMT in six of the last seven weeks. Cumulative sales on beans are already 85% of the USDA's target for the season, which is a record percentage given that we are only a quarter of the way into the season. The late planting of Brazil's crop will also likely keep this demand focused on US origin beans just that little bit longer than last year too. The USDA also reported 240 TMT worth of new sales to unknown under the daily reporting system today, adding to the bullish vibe. Next week brings the USDA's December WASDE report due on Wednesday. Given the frenetic pace of US soybean exports, most thing that the USDA will drop 2014/15 US soybean ending stocks from the 450 million bushels forecast last month to around 427 million this time round. Jan 15 Soybeans closed at $10.36, up 25 1/2 cents Mar 15 Soybeans closed at $10.42, up 24 3/4 cents; Dec 14 Soybean Meal closed at $394.20, up $8.50; Dec 14 Soybean Oil closed at 32.01, up 41 points. For the week, on a front month basis, beans were up 20 cents, with meal $3.10 higher and oil 17 points lower.
Corn: The corn market closed around 5 cents higher on the day, and for the week. Yesterday's better than expected weekly export sales was supportive, although it only takes total commitments so far this season to 51% of the USDA's target, which is just about in line with average. US corn offers FOB the Gulf are said to be reasonably competitive at around $185/tonne versus $188 in Bordeaux and $194 in Argentina. Brazil and Ukraine offers however are around the $180/tonne mark. The trade is expecting the USDA to raise their forecast for US corn carryout in 2014/15 from the 2.008 billion bushels estimated a month ago to around 2.025 billion. Argentine production will probably be left unchanged at 23 MMT, but Brazil's might be lowered from the current 75 MMT. Informa estimated that Brazilian 2014/15 corn production will drop to 68.7 MMT earlier in the week. Agrimoney report that Chinese authorities may be starting to question the GMO credentials of corn from other origins, besides the US, as well as pondering over the "safety" of the country's soaring sorghum imports. Ukraine said that it had harvested 63.6 MMT of grains of 98% of the planned area, including just over 27 MMT of corn off 97% of plan. They said that the country had exported 15.66 MMT of grains so far this season, including 4.62 MMT of corn. Russia said that it had harvested 110.4 MMT of grains, off 99.8% of the planned area. Corn accounts for 11.2 MMT of that off 96.7% of the projected area. Dec 14 Corn closed at $3.81 1/2, up 5 1/2 cents; Mar 15 Corn closed at $3.95, up 5 1/4 cents. For the week Dec 14 corn was 5 3/4 cents higher.
Wheat: The wheat market closed mostly higher on the day, but mixed for the week. Russia continues to officially refute trade rumours of any upcoming export restrictions. When is an export ban not an export ban? When the Russian Veterinary and Phytosanitary Surveillance Service (VPSS) say it has only toughened up the requirements for the quality of grain exports, it would seem. Remember that buyers haven't asked for this, it's something that has been done voluntarily. The Russian rouble is dropping like a stone, due to Western sanctions against the country and also the slumping value of crude oil. Grain that hasn't been exported is dollars essentially, so there's plenty of incentive to hang onto it and keep it in Russia, at least until the rouble stabilises. However, if you don't want the WTO on your case (as well as just about everybody else), and to be accused of deliberately driving domestic food prices up, at a time when they are already rising anyway, then what do you do? Especially when you promised that you wouldn't introduce an export embargo again the last time that you did so in 2010. Well, you could introduce some vague new rules that slow exports down so much that buyers end up going elsewhere. Is that what's happening here? Only time will tell, but reports of delays awaiting the right paperwork are already circulating. In other news, next week's USDA report is expected to show US 2014/15 ending stocks a bit higher than the 644 million bushels shown last month at 651 million. The Russian Ministry said it's wheat harvest was over at 62.3 MMT in bunker weight. Dec 14 CBOT Wheat closed at $6.09, up 9 1/4 cents; Dec 14 KCBT Wheat closed at $6.32 1/2, up 5 1/4 cents; Dec 14 MGEX Wheat closed at $6.19 1/2, down 3 3/4 cents. For the week that pegs Chicago wheat 31 3/4 cents higher, with Kansas down 4 1/2 cents and Minneapolis down 1 1/2 cents.
