Chicago Grains Rally Ahead Of USDA Report

09/03/15 -- Soycomplex: Beans closed higher on short covering and position squaring ahead of tomorrow's USDA report. Weekly export inspections of 625,713 MT were slightly down on the previous week, but in line with expectations. There's some talk that the Brazilian truckers strike could re-ignite if this week's talks with the government don't go well. Reuters reported 82 vessels waiting to load soybeans in the country as of Friday, up from 51 ships the previous Friday. The USDA's FAS estimated China's soybean import needs at 73 MMT, up 3.7% on last season but 1 MMT below the current USDA number. They see 2015/16 imports continuing to rise though, up 6.2% to a record 77.5 MMT next season. Chinese soybean production next season meanwhile will fall to a 23-year low of 11.7 MMT, they said. Dr Cordonnier said that soybean yields in Brazil's top producing state of Mato Grosso are only up 3% in the last 15 years, versus 17% nationally and up 46% in Rio Grande do Sul. The retarded growth is due to the new trend towards planting more and more early maturing varieties so that a second corn crop can be squeezed in, he said. The safrinha corn area in Mato Grosso has expanded 12-fold in the same time period, he added. Brazil's 2014/15 harvest is said to be around 40-50% complete, with production estimates getting trimmed to around the 93 MMT mark. The USDA were 94.5 MMT last month. The average trade guess for Argentina tomorrow though is closer to 57 MMT than the 56 MMT forecast by the USDA in February. US soybean ending stocks are forecast to be pared back from last month's 385 million bushels to around 377 million. Mar 15 Soybeans closed at $9.88 1/4, up 9 cents; May 15 Soybeans closed at $9.93 1/4, up 8 1/4 cents; Mar 15 Soybean Meal closed at $343.90, up $6.90; Mar 15 Soybean Oil closed at 30.88, down 26 points.

Corn: The corn market closed around 2-4 cents firmer. Another robust set of weekly export inspections, almost reaching 1.2 MMT, added some support despite the strong US dollar. This figure was slightly lower than last week's near 1.3 MMT total, but still beat expectations. Notable destinations were Korea (260,840 MT), Japan (175,587 MT) and Columbia (153,783 MT). Even so, year to date inspections are still lagging the 5-year average pace of 47.5% of the USDA target for the season by 3 percentage points. Tomorrow's USDA report isn't expected to reveal anything too different for corn than the February report. The range of US carryout expectations is from 1.777 – 1.899 billion bushels. The average guess is 1.822 billion, which is only slightly lower than their February figure of 1.827 billion. As with soybeans, there could be a small reduction to the size of the 2014/15 Brazilian crop, although this could be counterbalanced by a corresponding rise in Argentina. South Africa's crop will likely be cut. Brazil's first corn crop harvest is well advanced and sowning of the safrinha crop is past three quarters done. Argentina's 2014/15 harvest is just getting going, held back by heavy rain. Ukraine is now concentrating almost all of it's export effort on corn. APK Inform Agency said that Ukraine seaports exported 648,600 MT of grains last week, with corn shipments accounting for 563,300 MT, or 87%, of that total. Russia said that as of Mar 4 they had exported 1.6 MMT of corn this season. The early planting state of Texas is 6% sown with their 2015 corn crop already, although that's less than the 15% 5-year average at this time. "Today’s trade felt a lot more about tomorrow’s reports than today’s news with pre-report positioning taking place. Weak shorts seemed to be in the market early trying to cover and the balance of the day was quiet," said Benson Quinn. Mar 15 Corn closed at $3.83 1/4, up 4 cents; May 15 Corn closed at $3.88 3/4, up 2 3/4 cents.

Wheat: The wheat market made a fair attempt to lead the entire complex higher overnight, although ending with decent gains it only finished around the middle of the day's trading range. Much of today's gains can probably be linked to the fact that fund money is now sitting on a very sizable short in Chicago wheat, and decided to bank a few profits ahead of tomorrow's USDA report just in case Washington decides to spring a surprise. We all know that they are capable of throwing in a bit of a curveball sometimes, although it may be unlikely that the March report is the one in which they will do so. "Talk of dry conditions in the near term in the southern plains, N. Europe and portions of the Black Sea region complemented today’s technical move. Given the time of the year and a slightly drier bias for many key wheat growing areas, some weather premium in these markets is merited," said Benson Quinn's Brian Henry. Few would bet that the wheat market, particularly that in the US, has turned around just yet though. The US dollar continues to thwart US export hopes. Weekly export inspections today were 376,210 MT, well below the 480,754 MT inspected last week, as Europe keeps picking up the lion's share of the business aided by the weak euro. The lack of US exports means that the USDA are expected to raise US all wheat ending stocks for 2014/15 by around 10 million bushels to 703 million in tomorrow's WASDE report. Russia said that they'd exported 24.7 MMT of grains so far this season, of which almost 19 MMT, or 77%, was wheat. The European Commission forecast the 2015/16 EU-28 wheat crop at 150.8 MMT, a 4% decline on last year. However, with exports falling 12% to 28.2 MMT, next season's ending stocks will rise by 40% to 19.5 MMT, they predict. Texas winter wheat was rated 50% in good to excellent condition, and 13% poor/very poor, which isn't bad for that particular semi-arid state. Mar 15 CBOT Wheat closed at $4.94 1/4, up 8 1/2 cents; Mar 15 KCBT Wheat closed at $5.29, up 8 1/4 cents; Mar 15 MGEX Wheat closed at $5.48 1/4, up 6 1/4 cents.