Chicago Slumps, With New Crop Wheat Faring The Worst

Posted by Nogger - a legend in his own mind at 09:00 | Categorized as

02/05/12 -- Soybeans: May 12 Soybeans closed at USD14.80, down 17 3/4 cents; Nov 12 Soybeans closed at USD13.68 1/4, down 24 1/4 cents; May 12 Soybean Meal closed at USD428.50, down USD4.00; May 12 Soybean Oil closed at 54.33, down 19 points. Beans posted new highs early in the session but got dragged down by weaker corn and wheat as the morning wore on. Funds sold an estimated 9,000 soybean contracts on the day despite the USDA confirming further fresh export business in the for of 204,000 MT of new crop soybeans to "unknown" along with 30,000 MT of old crop soybean oil sold to China. The trade is expecting another big week in the tomorrow’s weekly export sales report, with soybean estimates ranging from 900 TMT to 1.4 MMT. With old crop availability continuing to tighten it will be interesting to see how tomorrow's sales are split. Despite today's falls the soybean:corn price ratio still favours some switching into beans.

Corn: May 12 Corn closed at USD6.42 1/4, down 17 1/2 cents; Dec 12 Corn closed at USD5.31, down 7 3/4 cents. Funds were said to have been heavy sellers, dumping around 18,000 contracts on the day. The USDA announced the sale of 130,000 MT of new crop corn to unknown. Chinese customs officials have apparently given the green light to Argentine corn imports, which may harm US export prospects in that direction. Brazilian corn production hopes are increasing by virtue of better prospects for second crop corn. On Monday analyst Michael Cordonnier raised his production forecast from 58 MMT to 61 MMT. The USDA attache in Brazil now goes 64.5 MMT from 62 MMT. Ideas of an early US harvest eroded some of the nearby premium away despite availability tightness. Given the recent business to China trade estimates for tomorrow’s weekly export sales report range from 3.0 to 4.0 MMT, much of which has already been confirmed under the daily reporting system.

Wheat: May 12 CBOT Wheat closed at USD6.07, down 26 3/4 cents; May 12 KCBT Wheat closed at USD6.18 1/4, down 27 1/4 cents; May 12 MGEX Wheat closed at USD7.44 1/2, down 22 1/2 cents. It was bearish news all the way for wheat. The ongoing Kansas crop tour is reporting much better yield potential from a rapidly maturing crop. Spring wheat plantings are hugely advanced. Western European weather concerns have been dispelled by abundant April rains and any lingering doubts over Eastern Europe should get a shot in the arm with a decent rainfall event on the cards for the end of the week. New crop July CBOT wheat closed at new lows for 2012, also took out the 2011 lows and came within a few cents of the contract low set very early in it's life back in September 2010. Trade estimates for tomorrow’s weekly export sales report range from 600 to 850 TMT.