Chicago Markets Position Themselves For USDA Report, Beans End Sharply Higher

09/07/15 -- Soycomplex: Beans rallied sharply higher heading into tomorrow's USDA report. "Risk appetites returned to the macro markets with Chinese equities higher overnight. This spilled into Ags during the overnight session while short covering/positioning ahead of USDA reports tomorrow rallied markets further during the day session. Beans were the upside leader rallying back towards last week’s highs," said Benson Quinn. Soybean export sales came in at 41,400 MT on old crop and 201,100 MT for the new crop. Actual shipments this week were 202,200 MT, down 30 percent from the previous week. They don't need to be large though, the USDA has now already shipped 47.86 MMT of soybeans this season, with a further 2.69 MMT of outstanding sales waiting to go. That takes full season commitments to 50.55 MMT versus the USDA's current estimate for exports this season of "only" 49.26 MMT. So I guess we might see that increased tomorrow and old crop carryout dropped. The USDA had the latter at 330 million bushels in June. Trade estimates this time round average around the 287 million bushel region. Recall that earlier in the week it was noted that Oil World said that last year's US soybean production (said to have been 108 MMT) was probably overstated by around 2 MMT. Any changes to that would tighten old crop ending stocks further. We may also get a downwards revision on prospective 2015 US soybean yields and therefore production tomorrow. The USDA had yields at 46 bu/acre last month. A Bloomberg survey came up with an average trade guess of 45.1 bu/acre, from within a range of guesses of 43.5-46.0 bu/acre. Production was estimated at an average 3.781 billion bushels in that survey, with a range of guesses of 3.58-3.885 billion, down from the USDA's 3.85 billion a month ago. Global ending stocks are seen at an average of 91.89 MMT, from a range of 89.4-94.8 MMT and down from the USDA's June figure of 93.22 MMT. New crop US ending stocks are estimated at around 380 million bushels versus 475 million a month ago. The FAO today estimated the world 2015/16 soybean crop at 316 MMT, down 4 MMT from the current season's record, and around 1.5 MMT below the USDA's June forecast. MDA CropCast trimmed their US 2015 soybean production estimate to 3.694 billion bushels today. They also cut the global 2015/16 rapeseed crop to 65.21 MMT due to reductions in Canada. CONAB estimated the Brazilian 2014/15 soybean crop at 96.2 MMT, up 12% on a year previously and a new record high. The USDA were 94.5 MMT last month. Jul 15 Soybeans closed at $10.37 3/4, up 31 1/2 cents; Nov 15 Soybeans closed at $10.15 3/4, up 27 1/2 cents; Jul 15 Soybean Meal closed at $364.00, up $13.20; Jul 15 Soybean Oil closed at 32.27, up 67 points.

Corn: The corn market closed around 4-5 cents higher on positioning/short covering ahead of tomorrow's USDA report. The average trade guess in a Bloomberg survey came up with average 2015 US corn yields at 165.2 bu/acre, from within a range of 163.0-166.8 billion, the USDA's current 166.8 bu/acre and last year's record 171.0 bu/acre. Production was forecast at an average of 13.414 billion bushels, with the range of guesses coming in at 13.14-13.60 billion and versus 13.630 billion from the USDA a month ago. US 2014/15 ending stocks are seen at 1.549 billion bushels, with the range of guesses at 1.263-1.952 billion and the USDA's June forecast of 1.771 billion. World carryout this season is seen at an average of 192.31 MMT, with a range of estimates of 185.19-197.0 MMT and almost 3 MMT less than the USDA's June forecast of 195.19 MMT. Weekly export sales today came in at 535,200 MT for delivery in 2014/15 and 149,000 MT for 2015/16. The old crop sales included one cargo to China that was mostly switched from unknown destinations. Exports of 966,200 MT were down 6 percent from the previous week and 4 percent below the prior 4-week average. The primary destinations were Japan (208,200 MT), Mexico (141,800 MT), Peru (83,700 MT), Taiwan (76,100 MT), Egypt (71,400 MT), Saudi Arabia (70,800 MT), and South Korea (65,100 MT), the USDA said. The FAO raised their 2015/16 world corn crop estimate from 1002 MMT to 1007 MMT, still some 19 MMT down on the previous season's records crop. It is however well above the USDA who last month stood at 989 MMT. They also increased their view on 2015/16 global ending stocks, raising them from 219 MMT a month ago to 221 MMT this time round. MDA CropCast forecast a US 2015 corn crop of 13.525 billion bushels. CONAB raised their forecast for total 2014/15 Brazilian corn production by 1.6 MMT to 81.81 MMT. Argentine and Brazilian markets were closed today for a holiday. Trading resumes tomorrow. FranceAgriMer raised their view on French corn exports in the 2014/15 season from 7.54 MMT to 7.67 MMT, a 46% increase on a year ago. Even so, carryout is still forecast nearly 45% higher at 3.31 MMT. Once tomorrow's USDA report is out of the way, the trade will be back to concentrating on the weather. "June rainfall has set a new record in Illinois corn with 8.88 inches. The long term average is 4.38 inches. Since May 1, the state’s rainfall has accumulated to 14.7 inches against 8.4 inches normally," said Martell Crop Projections. What does that mean for yields? They do say that rain makes grain after all. The closest similarly wet June was in 2010. "The Illinois corn yield in 2010 finished just slightly below trend following a similar wet June. Growing conditions gradually improved after flood waters abated. Moreover, July growing conditions were ideally cool, maximizing the yield potential during the critical pollination stage boosting the yield," they added. Jul 15 Corn closed at $4.21 1/4, up 5 cents; Dec 15 Corn closed at $4.39, up 4 3/4 cents.

Wheat: The wheat market closed mostly lower ahead of tomorrow's report. Weekly export sales were in line with expectations at 345,900 MT, but once more didn't pull up any trees. Exports of 268,800 MT were also less that thrilling and were down 26 percent from the previous week. It's been 7 weeks since exports topped 400,000 MT, and 12 weeks since they were above 500,000 MT. That isn't the stuff of dreams. Unlike the corn and soybean markets, the trade is looking for the USDA to increase US production and stocks in tomorrow's WASDE report. That is expected to show a 2015 US all wheat crop of 2.145 billion bushels, with a range of estimates of 2.073-2.197 billion, and above the USDA's June estimate of 2.121 billion. US carryout is seen at 860 billion bushels, with a range of estimates of 695-947 million and up from the USDA's current 814 million forecast. On the global front, world 2015/16 carryout is seen at an average of 200.33 MMT, from within a range of 192.4-204.41 MMT and 202.40 MMT from the USDA a month ago. The FAO today estimated those at 198 MMT, down 3 MMT from a month ago, but in line with 2014/15. They see global production in 2015/16 at 723 MMT, unchanged from a month ago, down 8 MMT from the previous season's record, and around 1.5 MMT above last month's USDA offering. MDA CropCast trimmed their forecast for Canadian wheat production this year by 0.64 MMT on continued dryness. They now line up at 27.9 MMT, down 6.7% on a year ago. They also cut Argentina by 0.2 MMT to 11.3 MMT, an 11% drop compared with 2014/15. Russia said that they'd harvested 6.7 MMT of grains so far this season, down from 10.9 MMT at this point a year ago. The harvested area is also down at 1.8 million ha compared with 3.1 million this time a year ago. Average yields are however said to be up compared with 12 months ago at 3.77 MT/ha (3.54 MT/ha in 2014). Around 3.3% of the new crop Russian wheat area has been harvested, producing a crop of 3.3 MMT to date. Yields there are said to be averaging 3.74 MT/ha versus 3.59 MT/ha a year ago. FranceAgriMer raised their view on French soft wheat exports in 2014/15, up from 18.92 MMT to 19.31 MMT, and a small advance on shipments of 19.17 MMT the previous season. As with corn however, bumper production last year still means that carryover is higher year-on-year at 2.66 MMT compared with 2.35 MMT at the end of 2013/14. It will be interesting to see what the USDA say with regards to global wheat production tomorrow. "They have the ammunition to lower the global crop with reductions for Canada, some reduction for the EU. A reduction for India wouldn’t be out of the question. Making significant changes to Australia may be a bit premature," was Benson Quinn's opinion. The USDA are of course often famously slow to react to such things. Last month they had Canada at 29 MMT and Europe at 150.7 MMT. I'll go for 2 MMT off Canada and 1 MMT off Europe this time round. Jul 15 CBOT Wheat closed at $5.72 1/4, unchanged; Jul 15 KCBT Wheat closed at $5.65, down 5 3/4 cents; Jul 15 MGEX Wheat closed at $6.05 3/4, down 2 1/4 cents.