Chicago Grains Post Nice Rally To End The Week, Are The Dark Days Over?
25/09/15 -- Soycomplex: Beans closed around 20 cents higher, belatedly basking in the glory of yesterday's 13 MMT+ sale to China. In addition the USDA today announced 260,000 MT of US beans sold to China for 2015/16 shipment. It isn't thought that the latter is part of the former. This was the highest close for front month beans since Sep 8. Does this mean that then lows of the year are in? Personally I doubt it. Any rallies now will only encourage increased desire to expand soybean acres in South America this year. We might need to see some sort of production problem there yet before we can be confident that the bottom of the market is in. Coceral forecast the EU-28 rapeseed crop at 21.45 MMT, down from 24.1 MMT a year ago. The IGC said that the EU rapeseed planted area was unlikely to expand for the 2016 harvest. Ukraine is only two thirds sown on winter OSR, and the IGC say that what's left might not get into the ground. Both those factors could boost demand for soybeans and meal in the next twelve months and beyond, but there could maybe be a bit more pain to come first. Today's commitment of traders report shows fund money expanding their net short in beans by more than 21k lots for the week through to Tuesday night. They were net short 46,250 lots as of then. Nov 15 Soybeans closed at $8.89 1/4, up 21 1/4 cents; Jan 16 Soybeans closed at $8.93 1/4, up 20 3/4 cents; Oct 15 Soybean Meal closed at $308.70, up $6.30; Oct 15 Soybean Oil closed at 27.72, up 74 points. For the week front month beans were up 22 cents, meal fell 30 cents and oil added 167 points.
Corn: The corn market closed around 7-8 cents higher. Coceral estimated the EU-28 corn crop at 59.5 MMT, down almost 20% from 73.8 MMT a year ago, and some other analysts are even lower than that - the IGC were at only 57.6 MMT yesterday. Coceral have the French corn crop at 13.4 MMT versus 17 MMT a year ago. Romania's production will drop to 8.9 MMT from 11.5 MMT and Hungary's is seen down to 6.4 MMT from 9.1 MMT. Agritel said that Ukraine's 2015 corn producers are expecting a 20-30% drop in yields. They peg production there at "no less" than 23 MMT versus 28.5 MMT a year ago from the USDA (who are at 27 MMT for this year). Early yields are miles below the USDA's 6.59 MT/ha average estimate at 4.40 MT/ha, although these are expected to pick up as the harvest progresses. FranceAgriMer raised the proportion of the French corn crop rated good to very good by one percentage point from a week ago. Even so at 56% things are much worse than 87% this time last year. Nationally the 2015 harvest is said to be 4% complete. China only just 35,861 MT of the 5.4 MMT of corn that they had on offer at auction this week as they continue to struggle to shift some of their massive reserves, some of which are several years old. Tonight was the best close on corn since Sep 15. As with beans thoug, I'd be tempted to say that this doesn't necessarily mean that the lows of the year are in just yet. There's US harvest pressure to come, and recall that seasonally we don't see the lows of the year on corn until October. Despite a sharply lower crop in Europe this year, we also have to consider that there are massive wheat stocks here, both from the new harvest and a large carryover from last year too. With France in particular already struggling to store all that wheat, where's the corn going to go? Fund money reduced their net long in corn a little to 66,625 lots as of Tuesday night Dec 15 Corn closed at $3.89, up 7 1/2 cents; Mar 16 Corn closed at $4.00 1/4, up 7 1/2 cents. For the week Dec 15 corn was 11 3/4 cents higher.
Wheat: The wheat market closed with decent gains on he day and for the week. I'm tempted to think that wheat over-achieved this week. Coceral estimated the 2015 EU soft wheat crop at 148.2 MMT versus it's June estimate of 140.6 MMT and now almost exactly level with last season's record crop. EU weekly export licences were down from 525 TMT to 502 TMT, with France picking up 33% of that total. Cumulative export licences to date are down 26% on a year ago, and yet the USDA expects these to only finish the season 8% lower. US Fed Chairwoman Yellen said that she still expects US interest rates to start to rise before the end of the year. "The central bank head said as long as inflation was stable and the US economy was strong enough to boost jobs, the conditions would be right for a rise," reported the BBC. That likely means a stronger US dollar, and that doesn't likely mean a boost to US wheat exports, not with fierce competition around from Europe, the Black Sea, Australia and Canada. On the international tender front, South Korea's KFMC bought 23,000 MT of US wheat for Dec-Jan shipment and Taiwan are in the market for 89,150 MT of US milling wheat for Nov–Dec shipment, but these are nothing more than routine tenders. In the US total 2015/16 wheat commitments (sales and shipments) are 14% behind the pace of a year ago, yet the USDA has these down to increase by nearly 10% this year. How are they going to achieve that with a firmer US dollar? There's much trade talk about winter wheat plantings in Russia and Ukraine going into dry ground and being unlikely to get well established ahead of winter dormancy. That's one of the main factors supporting the market at the moment. Plantings in both countries are only currently slightly behind where they were a year ago, but could do with a drink for sure, and not much relief is in the forecast. Whether this is a real market mover remains to be seen. Russia's wheat exports should now start to pick up with the agreed changes being made to the export duty on Oct 1. Fund money was short 35,365 Chicago wheat lots as of Tuesday night. Dec 15 CBOT Wheat closed at $5.07 3/4, up 10 1/2 cents; Dec 15 KCBT Wheat closed at $5.00 1/4, up 10 1/4 cents; Dec 15 MGEX Wheat closed at $5.22 3/4, up 8 3/4 cents. For the week, Chicago wheat was up 20 cents, with Kansas 18 cents higher and Minneapolis 11 3/4 cents firmer.
