Chicago Grains Tumble, Greece And China Concerns Weigh
07/07/15 -- Soycomplex: Beans closed the day sharply lower. The continued slump in the Chinese stock market is causing some concern, they are after all the country that accounts for around two thirds of all world soybean trade. Without them the global soybean market is massively oversupplied. The strong US dollar didn't help today either. The trade was also maybe a little surprised that the USDA left crop ratings unchanged in last night's report. The average guess in a Bloomberg survey was for a one point cut in good to excellent to 62%. There's plenty of competition around for US beans, in the face of record production in both Brazil and Argentina this year. Friday's upcoming WASDE report could see further South American production estimate increases from the USDA. Brazilian customs data shows that they exported a record 9.8 MMT of soybeans in June, up 5% from the May total, and in a shorter month as well. Dr Cordonnier says that the recent domestic soybean price rise will encourage an increase in plantings for the 2015/16 harvest of between 1-5%. Informa cut their forecast for the 2015/16 world soybean harvest from 319.1 MMT to 316.1 MMT, a 1.4% reduction on this season's record 320.5 MMT. They cut their view on this year's US crop from 105.9 MMT to 103.6 MMT, down 4.1% on last year. They see Brazil's crop at 97 MMT, down from 97.5 MMT previously, but still a record crop and up 1 MMT compared to this season. Argentina's crop was estimated unchanged from previously at 57 MMT, down 3.5 MMT from this year's record. That still keeps plenty of competition around for US beans in 2015/16. Jul 15 Soybeans closed at $10.02, down 31 3/4 cents; Nov 15 Soybeans closed at $9.85 3/4, down 29 cents; Jul 15 Soybean Meal closed at $349.90, down $4.50; Jul 15 Soybean Oil closed at 31.41, down 123 points.
Corn: The corn market closed around 2-3 cents lower, doing its best to shrug off pressure from falling soybeans, wheat and outside markets. A slight improvement in US corn crop condition ratings last night probably caught a few off guard, the average consensus in a Bloomberg survey was for a one point drop in good to excellent ratings. Losses in the Chinese stock market are also a concern, but the US isn't really very reliant on them as an export home, unlike with soybeans. The USDA's FAS in China today increased the size of this year's corn crop there by 2 MMT to a new all time high 230 MMT, up a hefty 6.6% on 215.7 MMT a year ago. Corn imports in 2015/16 were estimated at only 3 MMT. Only a few years ago China's needs to import corn were being estimated 3-4 times higher than that, as this was seen as the next big growth market. That was a mistake it would now seem, sorghum is the new current "big thing" with China estimated to import 10 MMT of the grain this year. May sorghum imports alone topped 1 MMT. The fact that there's currently no import duty on sorghum, but that there is one on corn, makes sorghum around a $100/tonne cheaper imported grain than corn. That could change though, with the Chinese government keen to dispose of some of their burgeoning domestic corn stocks. Informa estimated the world corn crop in 2015/16 at 987.2 MMT, down a tad from a previous forecast of 987.9 MMT, and 1.2% down on a year ago. This year's US crop was trimmed from 344.2 MMT previously to 340.7 MMT, a 5.8% drop compared to last year's record. They see Chinese output a bit lower than the USDA's FAS at 228 MMT. Brazil's crop was raised 2 MMT to 78 MMT. The US weather forecast has cool conditions until Friday, then temperatures turn warmer. For the second half of the month, near to above normal temperatures and near to below normal rainfall is the current best guess, although of course there's plenty of time for that to change. Jul 15 Corn closed at $4.15 3/4, down 2 3/4 cents; Dec 15 Corn closed at $4.33, down 2 cents.
Wheat: The wheat market closed lower. The dollar was strong, and the euro remains vulnerable on the possibility of a Grexit/Greek default. Neither are friendly for US wheat export ambitions going forward. There are areas of concern for wheat though. Whilst the US winter wheat harvest has almost caught up with the 5-year average pace, there's more rain in the forecast this week for the Southern Plains. Quality here is also an issue. Potential wheat production estimates in Europe are getting trimmed, and there's widespread rumblings about crop losses in Canada, and a possible El Nino-reduced crop to come in eastern Australia too. Another area of concern is Argentina, where the Rosario Grain Exchange are adamant that plantings will fall to the second lowest in 100 years this year. Trade gossip says that Canada's wheat crop could fall to 25 MMT or less this year, reducing exports by 4-5 MMT. The USDA currently has the Canadian wheat crop at 29 MMT and exports only down 3 MMT compered to 2014/15. Informa today cut their world wheat crop estimate by 3.5 MMT to 715.2 MMT. Included in that was a 1.8 MMT reduction for Europe to 148.5 MMT. Russia's crop was however raised 1 MMT to 57 MMT, and the US all wheat crop increased by 0.5 MMT to 58.8 MMT. China's crop was estimated unchanged at 125 MMT, so too was India's at 88 MMT. The world 2015/16 barley crop was reduced by 0.5 MMT to 139.8 MMT, although Russia's potential was increased by 1 MMT to 17 MMT. The 2015 harvest in Russia and Ukraine is a bit behind due to rain. Russia has currently harvested 1.2 million ha versus 1.9 million a year ago, Ukraine is at 501.5k ha versus 2.34 million a year ago. Early yields are up in both country's though, with Russia up 3.2% at 3.87 MT/ha and Ukraine said to be up 10% at 3.2 MT/ha. All that comes with the caveat of if we believe what the respective Ag Ministry's in each country are telling us. Jul 15 CBOT Wheat closed at $5.79 1/2, down 9 cents; Jul 15 KCBT Wheat closed at $5.70 3/4, down 5 1/4 cents; Jul 15 MGEX Wheat closed at $6.09 3/4, down 9 cents.
