Chicago Grains Rally As Dollar Weakens Following Fed Statement
18/03/15 -- Soycomplex: Beans closed around 10 cents higher in a rebound from recent losses. May 15 beans opened near Tuesday’s low of $9.53 1/2 but edged higher after that level held. Yesterday's close of $9.54 1/2 was the lowest close for a front month since October, and took out the oft-seen early February low of $9.59 1/2 set on Feb 2. A Fed statement, which appeared to indicate that a US interest rate rise wasn't likely to be on the cards this year, sent the dollar tumbling from recent highs. It may also have encouraged a bit of spec money to come back into commodities, some are saying. Both will have helped the entire grains sector today. Oil World estimated the Brazilian soybean crop at 93.8 MMT, which is in line with other trade forecasts. Dr Cordonnier was unchanged on his forecast for Brazil at 93 MMT. Bear in mind of course that any rise in soybean prices is friendly for US spring plantings. Farm Futures Magazine estimated these at a record 87.3 million acres in 2015, up 3.6 million from the previous year. It is however not as high as was thought likely earlier in the year. The US soybean:corn price ratio on new crop is less than 2.4:1 tonight versus 2.7:1 last August. Informa are due to release their US acreage numbers on Friday, before we get the USDA themselves on Mar 31. I can find no "official" trade estimates for tomorrow's weekly export sales report, but I'd expect that for beans the market is looking in the region of 250-300 TMT as demand switched to Brazil. May 15 Soybeans closed at $9.65, up 10 1/2 cents; Jul 15 Soybeans closed at $9.69 3/4, up 10 1/4 cents; May 15 Soybean Meal closed at $320.80, up $3.30; May 15 Soybean Oil closed at 30.63, up 59 points.
Corn: The corn market ended the best part of 4 cents higher, recovering around half of yesterday's losses. Futures traded higher following the decline of the US dollar following the FED's monetary policy statement. That indicated that US interest rate hikes will likely be at a slower pace than previously thought due to the more moderating growth in the US economy seen recently. Farm Futures Magazine estimated the 2015 US corn area at 88.34 million acres, down from 88.5 in their previous survey and 2.3 million below last year. Interestingly, new popular kid on the block sorghum is seen having its planted area increased 18% to 8.4 million acres. The Rosario Exchange estimated the Argentine corn crop at 23.5 MMT. South Korea's KOCOPIA bought 54,000 MT of corn, and the country's KFA were said to have bought around 60,000 MT of corn in tender. Both purchases were said to have been of optional origin, but most likely will end up being sourced from Brazil. Some trade reports suggest that Brazilian corn is possibly even working its way into the SE of the US. There are also reports of Brazilian ethanol heading to the US, helped by low freight rates and the weak Brazilian real. The US Energy Dept reported weekly US ethanol production up to 947,000 barrels/day this past week versus 944,000 bpd the previous week and 931,000 bpd the week before that. It is also better than the 891,00 bpd produced this week a year ago. Stocks were reported at 20.820 million barrels, which is 353,000 barrels lower than last week. Stocks have now fallen three weeks in a row. I'd expect the market to be looking for weekly corn export sales of around 500-700 TMT tomorrow. May 15 Corn closed at $3.74 3/4, up 3 3/4 cents; Jul 15 Corn closed at $3.82 3/4, up 3 3/4 cents.
Wheat: The wheat market closed around 7-10 cents higher, benefiting from the weaker US dollar, even if it's far too soon to see that being translated into increased US exports. There's still talk of significant winterkill damage to wheat in parts of Kansas and Nebraska. There's also chatter of dryness issues in Kansas and Oklahoma in particular. In Kansas, the leading US wheat state, dry conditions have stressed wheat leading to a rather mediocre crop rated only 41% good-excellent, 46% fair and 13% poor-very poor, said Martell Crop Projections. Things are even worse in Oklahoma - the driest of the 3 main bread wheat states. "Producers reported that subsoil moisture was 70% short-very short, 29% adequate and only 1% surplus. Rainfall is needed soon to preserve chances for a favourable yield. Jointing, the rapid vertical growth stage that demands generous rainfall, was already 19% underway in mid March," they note. These worries come as fund money is sitting on a sizeable short position in wheat. In other news, Farm Futures Magazine estimated the 2015 US all wheat area at 55.6 million acres, down from their 57.6 million estimate in January. Spring wheat plantings were forecast at 13.4 million. Media reports suggest that China has bought 400-500 TMT of high protein wheat from various sources in the past few days. Tomorrow's weekly export sales report will be of interest. Last week's sales were pretty good at 445,200 MT for delivery in the 2014/15 marketing year. That was up 21 percent from the prior 4-week average. Tomorrow I'd expect the trade to be hoping for something of a similar magnitude, but expecting maybe 300-400 TMT. May 15 CBOT Wheat closed at $5.10 3/4, up 7 1/4 cents; May 15 KCBT Wheat closed at $5.53, up 10 1/4 cents; May 15 MGEX Wheat closed at $5.78, up 8 1/4 cents.
