Chicago Closing Comments - Is The Wheat Rally Running Out Of Steam?
01/04/14 -- Soycomplex: Beans closed sharply higher, with fund money stepping in for around a net 10-12,000 contracts on the day for a second session running. Chinese industry analysts said that the domestic crush there for the last week of March was 1.4 MMT, up 16% on the previous week. They estimated March soybean imports at 5.1 MMT, rising to 6.5 MMT in April. Reuters reported that a 60 TMT cargo of Brazilian soybeans sold to China had been resold/redirected to South Africa. Benson Quinn said that "a proposal in the Senate to retroactively reinstate the biofuel, i.e. biodiesel, $1 fuel credit was deemed supportive with soyoil rebounding sharply." They also said that private analysts calculate that US 2013/14 soybean ending stocks could be 20-25 million bushels lower than the USDA's March estimate of 145 million due to a higher domestic crush and increased exports. Extreme old crop tightness looks like prevailing for the time being. US farmers are expected to plant 5 million more soybean acres this spring though, according to the USDA. The current late start to spring in the Midwest might delay corn plantings and increase that figure even further too. Already, some are also suggesting that Brazilian growers will increase their soybean plantings for 2014/15, with some private production estimates in the bin-busting 95-97 MMT area. Any sign of faltering Chinese demand could therefore be pretty bearish going forward, especially with fund money sitting on a hefty long position. May 14 Soybeans closed at $14.84 1/2, up 20 1/2 cents; Jul 14 Soybeans closed at $14.57 1/4, up 27 3/4 cents; May 14 Soybean Meal closed at $482.70, up $3.40; May 14 Soybean Oil closed at 41.40, up 98 points.
Corn: The corn market settled around 5 to 7 cents higher, with fund money stepping in for an estimated net 8,000 contracts on the day to further increase their already weighty long-holding. Momentum from yesterday's session, with the bullish impetus of the USDA estimating 2014 US corn plantings around a million acres lower than the market expected, was carried over into today. Early US spring corn planting in southern states is delayed. Texas corn planting is 28% complete versus 53% a year ago and 48% for the 5 year average. Louisiana corn planting is 75% complete versus 94% a year ago and 84% on average. Mississippi corn planting is 30% complete versus 43% a year ago and 47% on average. Meanwhile, there's a worry that things will also be behind schedule in the Midwest too later this year. "Midwest fields are still mostly frozen at the end of March, threatening to delay corn planting. Fieldwork ordinarily begins in late April in preparation for corn planting May 1, but deep penetrating frost is a hindrance to timely planting," said Martell Crop Projections. In Brazil, IMEA estimated Mato Grosso's 2013/14 corn crop at 15.23 MMT versus a previous estimate of 17.04 MMT and compared to last year's crop of 22.54 MMT. Taiwan Sugar Corp bought 20,000 MT of US corn and 15,000 MT of US beans for May/June shipment. Ukraine said that it had exported 2.6 MMT of corn in March and almost 17.3 MMT of corn so far this season, up nearly 59% from 10.9 MMT a year ago. The Energy Dept will release their weekly ethanol production numbers tomorrow. Last week's output was 885k barrels/day, which remains less than the level required to hit the USDA's target for the season. May 14 Corn closed at $5.07 1/2, up 5 1/2 cents; Jul 14 Corn closed at $5.12 1/2, up 5 3/4 cents.
Wheat: The wheat market closed lower as scattered showers moved through the Southern Great Plains, with more in the forecast. Russia, Ukraine and Australia are all set to receive timely rains too. Last night the Kansas wheat crop was rated 32% good to excellent down 1% from a week ago. The Oklahoma wheat crop was 17% good to excellent, unchanged from a week ago. US Wheat Associates said that Indonesia's 2013/14 US wheat imports may reach 1 MMT versus 534,000 MT in 2012/13. The Kazakhstan Ag Ministry said that the country has exported 6.78 MMT of grain by rail between July 1st and March 30th versus 5.24 MMT in the same period a year ago. The Ukraine Ministry said that the country had exported 27.5 MMT of grains from July 1st to March 31st, up from 19.5 MMT in the same period a year ago. Wheat accounts for 7.8 MMT of that total versus 6.3 MMT a year previously. Wheat has come up a long way in a short time. Is the rally running out of steam? Benson Quinn Commodities said "The negative stance on the technical structure in the wheat markets continues. Today’s price action isn’t going to offer optimism to the bulls, but all three contracts did respect their 20 day moving averages and didn’t get a chance to test yesterday’s lows. I expect fund selling to increase on trade below both these levels, which would allow for a meaningful correction." May 14 CBOT Wheat closed at $6.85 1/4, down 12 cents; May 14 KCBT Wheat closed at $7.53 1/2, down 10 1/2 cents; May 14 MGEX Wheat closed at $7.35 1/4, down 7 1/2 cents.