Chicago Grains Bounce, But Will It Last?

20/08/15 -- Soycomplex: Beans closed with decent gains, rebounding nicely from yesterday's lows. Weekly export sales came in at 46,400 MT for the soon to end 2014/15 marketing year and 784,400 MT for 2015/16. The latter being primarily for China (426,000 MT) and unknown destinations (167,800 MT). It was comforting for the market to see China taking a decent slug of new crop, even if there were old crop cancellations from unknown destinations (89,700 MT) and China (66,000 MT). Actual shipments of 401,100 MT were up noticeably from the previous week, being 93 percent above the prior 4-week average and the highest since early April. Preliminary findings from the final day of the ProFarmer crop tour in Eastern Iowa put pod counts at 1,235.11 for each sampling of a 3 foot square plot, up from 1,173.59 a year earlier. In Minnesota soybean pod counts were seen at 1,301, up from 1,031.5 in same region a year earlier. Final yield estimates will be released tomorrow after the close. The regular weekly survey into trader/analyst sentiment on beans found the trade the most bearish in 12 weeks, with only 3 bulls, 14 bears and 3 neutral. MDA CropCast estimated the 2015 US soybean crop unchanged from a week ago at 3.754 billion bushels versus the USDA's 3.916 billion. Rabobank estimated US 2015 soybean yields at 45 bu/acre, up from previously but still below the USDA's 46.9 bu/acre forecast. They forecast bean prices at $9.50/bu in Q3 of this year and $9.40/bu in Q4; down from their previous estimates of $9.90 and $9.60, respectively. It is however better than where the market closed tonight. Sep 15 Soybeans closed at $9.21 1/2, up 18 cents; Nov 15 Soybeans closed at $9.07 1/4, up 13 3/4 cents; Sep 15 Soybean Meal closed at $330.90, up $6.90; Sep 15 Soybean Oil closed at 27.98, up 9 pips.

Corn: The market closed around 3-4 cents higher. Weekly export sales of 282,700 MT for delivery in 2014/15 were up noticeably from previous week and 84 percent above the prior 4-week average. There were also sales of 576,400 MT on the new crop. Actual shipments of 918,100 MT were up 9 percent from the previous week, but down 10 percent from the prior 4-week average. In Eastern Iowa, the ProFarmer tour found corn yields averaging 168.34 bu/acre versus 178.75 bu/acre a year ago, although the year ago figure included both eastern and western growing regions of the state. The USDA estimated last week that Iowa corn yields will rise 2.8% to 183 bu/acre from 178 last year. In Minnesota, where this year's corn crop is widely regarded as looking the best in the country, they found corn yields estimated at 200 bu/acre, up sharply from 170.8 bu/acre a year earlier, and higher than the USDA's current 184 bu/acre forecast. MDA CropCast estimated the 2015 US corn crop at 13.566 billion bushels versus the USDA's 13.868 billion, and down 11 million on a week ago. They cut almost 1 MMT off their global production estimate, principally due to reduced expectations in Europe and the FSU. Rabobank estimated EU corn production down to 60 MMT, below the USDA's forecast of 62.3 MMT because of excessive heat. They see US corn yields at 165 bu/acre, up 2 bu/acre from their previous estimate, but still below the USDA's 168.8 billion. They forecast US corn prices at $3.75/bu in Q3 of this year and $3.80/bu in Q4, which is in line with where the market currently sits. The Bloomberg survey into trader sentiment was much more evenly split on corn than it was for beans, finding 8 bulls, 6 bears and 7 neutrals. High levels of variability in US yield potential this year is likely to keep the market guessing for a while yet. More bad news out of China, and weak crude oil prices cap gains. Sep 15 Corn closed at $3.71, up 3 3/4 cents; Dec 15 Corn closed at $3.82 1/2, up 4 cents.

Wheat: The market closed around 5-10 cents higher across the 3 exchanges in what I guess you could call a corrective bounce. Weekly export sales of 314,400 MT for delivery in the 2015/16 marketing year were down 25 percent from the previous week and 49 percent below the prior 4-week average. Total marketing year sales are down 15% from the previous year. Actual shipments of 606,200 MT were a marketing-year high though. Even so, accumulated exports are lagging behind the pace of this time last year by 21%. MDA CropCast added 600 TMT to their world wheat production estimate, largely due to improved expectations for Europe. Brussels confirmed that they'd issued 563 TMT worth of soft wheat export licences this past week, taking the cumulative total for the season so far to 2.87 MMT. That's 13% ahead of where things were this time a year ago. Final exports then went on to be record large, and shipments this season are expected to be 12% lower than they were in 2014/15, according to the latest USDA estimates. Early season EU barley exports are stellar at 2.23 MMT versus only 1.21 MMT this time a year ago. Rabobank estimated wheat production in Russia at 59 MMT, and at 24.5 MMT in Ukraine. SovEcon forecast Russia's August grain exports at 3.2 MMT, down sharply from 4.7 MMT a year previously. Macquarie said that the Black Sea region had the potential to increase wheat production by around 50% between now and 2030, along with "strong potential" to increase corn output too. The rises could come from increased plantings and improved yields, they said. A shift to more modern farming techniques and significant investment and improvements to the existing infrastructure in the region will be needed however. The Russian rouble hit fresh all-time lows against both the US dollar and the euro today as crude oil plumbs to new lows. The Russian government unsurprisingly didn't kick off it's new intervention purchasing program with a long queue of willing sellers as the prices on offer are miserly in rouble terms. On wheat, Bloomberg found 5 bulls, 10 bears and 6 neutrals. Sep 15 CBOT Wheat closed at $5.06 1/4, up 10 cents; Sep 15 KCBT Wheat closed at $4.81 1/4, up 7 cents; Sep 15 MGEX Wheat closed at $5.13, up 4 3/4 cents.