Chicago Grains Fall Following Negative USDA Report

10/02/15 -- Soycomplex: Beans closed lower following a generally bearish USDA WASDE report. "Oilseed supplies are currently transitioning from a prolonged period of tightness to one of relative abundance. Global oilseed ending stocks are forecast to rise significantly this year led by a nearly 40 percent rise in soybean stocks," they said. As was generally anticipated they cut 1 MMT off their Brazilian crop estimate to 94.5 MMT, and added 1 MMT to Argentina, raising output there to 56 MMT. US soybean exports were raised from 48.2 MMT to 48.7 MMT. Imports for China, the EU and other leading players were all left unchanged from a month ago. The US crush was increased from 48.4 MMT to 48.9 MMT. US ending stocks were trimmed back a bit more than expected to 10.5 MMT, or 385 million bushels. World ending stocks were cut from 90.8 MMT to 89.3 MMT. The larger than anticipated cut to US carryout sparked a short-lived mini rally, but the reality of those stocks still being 320% higher than in 2013/14 soon bit back. World ending stocks are also sharply higher, up 35% on a year previously. "The Brazilian farmer was there to sell the rally along with the funds that upon further inspection of the report really found nothing bullish and piled back into short positions," said Benson Quinn. Dr Cordonnier estimated Brazil's bean crop at 93 MMT and went for 56 MMT in Argentina, both unchanged from his previous estimates. Aboive went for 92.3 MMT in Brazil. Mar 15 Soybeans closed at $9.69, down 9 1/2 cents; May 15 Soybeans closed at $9.74 1/4, down 10 3/4 cents; Mar 15 Soybean Meal closed at $326.90, down $2.70; Mar 15 Soybean Oil closed at 31.45, down 56 points.

Corn: The corn market closed around 3 cents or so lower. The firm US dollar and weaker crude oil were bearish influences. The USDA raised their forecast for the world 2014/15 corn crop up from 988 MMT in January to a record 991.3 MMT. "Larger crops in Ukraine, Argentina, and India more than offset lower production in Russia," they said. Argentina's crop was raised 1 MMT to 23 MMT and Brazil's was left unchanged at 75 MMT. Exports from Argentina and Ukraine were both hiked by 1.5 MMT from last month to 13.5 MMT and 18 MMT respectively. US exports were seen unchanged at 44.5 MMT. Chinese imports were increased by 0.5 MMT to 2.5 MMT. World ending stocks were raised by half a million tonnes to 189.64 MMT, despite those in the US being reduced a bit more than expected, from 47.7 MMT to 46.4 MMT (1.827 billion bushels). The USDA added 75 million bushels to the US ethanol grind. "To offset a portion of a higher ethanol grind, they reduced the feed usage by 25 million bu due to the expected rise in available DDG’s for feed use. They also narrowed the range of the season-average farm price by a nickel on both sides to $3.40-3.90," noted Benson Quinn. The USDA also raised their forecast for US sorghum exports from 6.8 MMT to 7.5 MMT, and increased Chinese imports from 6.2 MMT to 7.0 MMT. In other news, Taiwan's MFIG bought 60,000 MT of US corn for Apr/May shipment. Dr Cordonnier estimated the Brazilian corn crop at 74 MMT, pegging Argentina's output at 22 MMT, both unchanged from his previous forecasts. Mar 15 Corn closed at $3.88, down 3 1/4 cents; May 15 Corn closed at $3.96 1/4, down 3 1/4 cents.

Wheat: The wheat market closed around 6-9 cents lower across the three exchanges. The USDA painted a picture of record world wheat production, abundant stocks and lower US exports due to a variety of factors, not least the strong US dollar and fierce competition from Europe and elsewhere. "US wheat exports to Brazil are likely to drop significantly in 2014/15 compared to last year on competition from traditional South American suppliers. Brazil also has record production, and imports are forecast slightly lower than last year. Argentina, Paraguay, and Uruguay have recently harvested larger crops and are expected to export more to Brazil. Mercosur exporters have freight and logistical advantages in addition to tariff-free access, while others, including the United States, are subject to a 10% import duty. The situation is very different from last year, when US wheat filled an unusual gap left by short crops in both Argentina and Paraguay," they said. The world wheat crop was pegged at 725 MMT, up from 723.4 MMT previously and versus 716.1 MMT a year ago. Consumption was raised 1.5 MMT to 714.65 MMT, but ending stocks were still increased by the best part of 2 MMT to almost 198 MMT. US wheat exports were lowered from 25.5 MMT to 25.0 MMT, and Europe's increased from 30 MMT to 31 MMT, although still below last season's record near 32 MMT. Egypt's imports were raised 0.5 MMT to 10.5 MMT. In other news, South Korea bought 47 TMT of US milling wheat, and 50 TMT of Australian milling wheat. Bahrain bought 25,000 MT of Australian wheat for Mar-Apr shipment. Morocco are tendering for 360,000 MT each of US soft wheat and US durum wheat for May shipment. Mar 15 CBOT Wheat closed at $5.21 3/4, down 8 cents; Mar 15 KCBT Wheat closed at $5.54, down 9 1/2 cents; Mar 15 MGEX Wheat closed at $5.70, down 6 cents.