CBOT Closing Comments
Soybeans
July soybeans closed at USD10.25 1/2, up 13 cents; July soybean meal closed at USD314.10, up USD3.70; July soybean oil closed at 37.38, up 52 points. Today's USDA report lowered 2009/10 ending stocks by 10 million bushels from the June report and left 2010/11 the same at 360 million bushels. World 2010/11 soybean ending stocks were increased to 67.76 MMT from 66.99 MMT. Weekly export sales were in line with expectations at 864,873 MT. China took most of that and also bought another 120,000 MT of soybeans for 2010/11 the USDA confirmed today.
Corn
July corn closed at USD3.75 1/4, down 2 1/4 cents; Dec Corn closed at USD3.95 1/4, down 1 cent. the USDA estimated 2009/10 ending stocks at 1.478 billion and 2010/11 stocks at 1.373 billion in today's report, slightly above the average trade guesses. World 2010/11 corn ending stocks were cut from 147.3 MMT to 141.1 MMT. Export sales were a combined total of 825,953 MT and shipments were 1,030,497 MT. Old crop sales included one cargo to China.
Wheat
July CBOT wheat closed at USD5.23 1/2, down 10 1/2 cents; July KCBT wheat closed at USD5.48 1/4, down 5 3/4 cents; July MGEX wheat closed at USD5.54 1/2, down 8 3/4 cents. The USDA is projecting all wheat production for 2010/11 at 2.216 billion bushels, up 149 million bushels from the June report. The USDA reported weekly export sales of 513,600 MT for wheat, a bit better than the 350-450,000 MT expected. They also cut 2010/11 world wheat ending stocks from 193.9 MMT last month to 187.1 MMT.
EU Wheat Closing Comments
November London wheat closed a volatile session GBP0.15 higher at GBP119/tonne, with November Paris wheat EUR1.50 lower at EUR161/tonne.
London wheat fluctuated from around GBP2/tonne higher early in the day to GBP2/tonne lower by lunchtime, before closing near unchanged levels.
The market has risen a lot over the past ten days and was due a bit of consolidation with the USDA due out today.
They were eminently predictable in my view, trimming output in Europe, Canada, Russia and Kazakhstan - but erring on the side of caution with most of those cuts.
Wheat production in Europe was only cut by just over a million tonnes to 141.82 MMT, whilst Russian production was estimated at 53 MMT. Both of those predictions are probably at least 3 MMT, and possibly as much as 5 MMT overstated.
EU grain export licences granted by Brussels for first week of 2010/11 MY were 465,000 MT, up 28 percent on last year.
At home the weather outlook remains bullish, with the only rain forecast for the weekend in the relatively wheatless northwest of the country. Daytime temperatures of 30-31C in the south east are only predicted to fall to a very warm 20C tonight.
There's no rain on the forecast for the major wheat growing areas in the south and east until next week, and it could well be too late to do much good by then.
USDA Report Reaction
A pretty predictable set of numbers from the USDA really, it was always going to be highly unlikely that they'd cut global wheat production collectively by as much as individual estimates have been showing.
They have a long history of being slow to react to rapidly changing production, whether in the US or abroad, so why should this time be any different.
If you want the real production numbers from the USDA then come back in twelve months time, they might be a bit closer by then.
In the US, record wheat yields will offset this year's low plantings. Increasing production there and finding a further 2.5 MMT in China helped partially offset reductions in Europe, Russia, Kazakhstan and Canada. Certainly output in the first two mentioned is probably still significantly overestimated at 141.82 MMT and 53 MMT respectively.
Overall, when taken at face value, the numbers are mildly bearish.
Strong soybean demand from China is underlined by them buying more new crop soybean today, and the news that they imported a record 6.45 MMT in June. They also showed up as buying a cargo of US corn in the weekly export sales report too.
Early calls for this afternoon's CBOT session: Corn called 3 to 5 lower; Soybeans called 5 to 7 lower; Wheat called 7 to 10 lower.
Stan The Man
Contact has been made with Kazakh Stan in some Godforsaken remote part of the former Soviet state. Here's what he has to say from the field:
"still very dry here. Not as warm as I’d expected (high 20s/low 30s) and we had some rain on Monday (when I arrived on farm – I said it was a present from Scotland!) – but not all areas got it & amounts were variable.
"SOSR flowering here – but crops are thin & very short (lower than knee-height!). Definitely not going to be a high yielding season – unfortunately."
USDA World Supply Highlights
The USDA cut 2010/11 world wheat ending stocks from 193.9 MMT to 187.1 MMT. They cut EU-27 wheat production to 141.8 MMT, Canada to 20.5 MMT and Russia to 53 MMT. None of those were (predictably) by as much as private analysts have been estimating. Chinese wheat production was inexplicably raised by 2.5 MMT to 114.5 MMT.
World 2010/11 soybean ending stocks were increased to 67.76 MMT from 66.99 MMT. World 2010/11 corn ending stocks were cut from 147.3 MMT to 141.1 MMT. Chinese corn production was pegged at an unlikely 166 MMT.
USDA Export Sales
The USDA reported weekly export sales of 513,600 MT for wheat, a bit better than the 350-450,000 MT expected. Brazil was the biggest buyer taking 85,000 MT. Actual shipments were 557,600 MT.
For corn, old crop sales of 501,200 MT for delivery in 2009/10 included 60,600 MT to China. There were also sales of 324,800 MT for delivery in 2010/11. Actual shipments were 1,030,500 MT. Pre-report estimates were for combined net sales of 800-1,100,000 MT.
For soybeans, old crop sales of 262,600 MT were almost all for China. There were also sales of 602,300 MT for delivery in 2010/11, which were also mainly for China (360,000 MT). Pre-report estimates were for combined net sales of 500-750,000 MT. Shipments were just 76,000 MT - a marketing-year low.
In a separate missive the USDA today announced the sale of 120,000 MT of soybeans to China for 2010/11.
USDA Stocks Numbers
2009/10 (bil bu) USDA Avg Guess Range 08/09
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Soybeans 0.175 0.171 0.138-0.195 0.138
Corn 1.478 1.404 1.214-1.600 1.673
Wheat 0.973 0.968 0.940-0.973 0.657
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2010/11
Soybeans 0.360 0.354 0.250-0.387
Corn 1.373 1.337 0.833-1.734
Wheat 1.093 1.033 0.852-1.104
China Imports Record Volume Of Soybeans In June
China imported a record 6.45 MMT of soybeans in June, according to the Chinese National Grains and Oils Information Centre (CNGOIC).
That is a phenomenal amount of soybeans which ever way you look at it.
Imports month are expected to fall back a bit for the next few months as their own soybean harvest approaches. Even so at 5 MMT in July, 4.5 MMT in August and 4 MMT in September they're still at historically high levels.
Also of note is that the US seems to be getting a larger slice of the cake this year. Normally US sales to China would have dwindled to next to nothing in the summer months as they switch their attention to cheaper South American beans.
