Soycomplex
Beans closed lower on the outlook for a huge US crop now being just around the corner. Even the recently well supported Sep 14 sunk to a new near 4-year closing low for a front month. Brazilian growers will also begin planting what is expected to be a record 2014/15 crop of their own within a matter of weeks. The USDA are expected to revise upwards their US soybean production forecast next week. They were at 3.812 billion bushels with yields at 45.4 bu/acre in August. Today we had Allendale peg yields a bushel/acre higher with production at 3.884 billion bushels.
Lanworth put yields at 46.7 bu/acre and production at 3.852 billion bushels. FCStone last night said 47.6 bu/acre with production at 4 billion bushels. Lanworth today also estimated Brazil’s 2014/15 bean crop at a record 98.0 MMT, a sharp 14% jump versus 85.7 MMT a year ago, and far higher even than Celeres' recent 91.3 MMT and the UDSA's current 91 MMT forecasts. These are monster numbers, especially when you consider that the entire global soybean demand side of the balance sheet is dominated by just one country - China.
They are expected to account for two thirds of all world soybean trade in 2014/15. That leaves the market extremely vulnerable to any sign of a let up in demand from them. Bird flu? Credit problems? GMO? Nah, it couldn't happen, could it? And consider that prices at 4-year lows means that every tonne that China has already got bought for 2014/15 is now bought expensive. The temptation to default will be going through some Chinese minds right now. Sep 14 Soybeans closed at $10.80 3/4, down 16 1/2 cents; Nov 14 Soybeans closed at $10.20, down 12 cents; Sep 14 Soybean Meal closed at $447.20, down $2.90; Sep 14 Soybean Oil closed at 31.73, down 28 points.
Corn
The corn market closed at fresh more than 4-year low, so as not to leave soybeans feeling lonely. As with beans, the estimates for this year's crop are flooding in, and they are all lining up well above the USDA's current 167.4 bu/acre yield figure and production of a fraction over 14 billion bushels. FCStone set the tone after the close last night, with their estimate of production at a record 14.595 billion bushels, with yields averaging an all time high 174.1 bu/acre. Today we had Allendale saying 14.409 billion and 171.9 bu/acre.
Lanworth chipped in with a production figure even higher than FCStone, 14.649 billion bushels using a yield estimate of 173.7 bu/acre. Lanworth also estimated Brazil’s 2014/15 corn crop at 79.0 MMT versus 78.6 MMT a year ago. Celeres yesterday put that at a record 85.1 MMT.
Unlike soybeans, at least the world isn't totally dependent on China to take the bulk of global exports (if it was the US would be in trouble already as they still haven't resolved the MIR 162 dispute). They are only seen importing 3 MMT of corn in 2014/15, which puts them about on the same rung on the global import ladder as Saudi Arabia. In other news, South Korea's NOFI bought 129,000 MT of optional origin corn for Jan–Feb shipment. South Korea's KFA are tendering for 60,000 MT of optional origin corn for Feb shipment. The USDA attaché in Russia estimated the 2014/15 corn crop there at 13 MMT which is up 12% from a year ago. Harvesting of that is already underway, and they are likely to be their usual aggressive early season sellers. Sep 14 Corn closed at $3.41 1/4, down 14 1/2 cents; Dec 14 Corn closed at $3.52, down 11 3/4 cents.
Wheat
The wheat market closed lower, led by Chicago which finished the day down 20 cents. News of a deal, or sorts, between Russia and Ukraine to halt the fighting in the east of the latter was viewed as bearish. The USDA attaché in Russia estimated the country's 2014/15 grain crop at 99.0 MMT versus a previous estimate of 94.0 MMT. That includes 56 MMT of wheat and 17.5 MMT of barley.
They put Russia's 2014/15 grain exports at 28.0 MMT versus a previous estimate of 26.0 MMT. Egypt's GASC bought one cargo each of French and Romanian wheat. Some were surprised at the number of French offers, as well as the prices put up. This may suggest that there's a bit more confidence in the quality of this year's harvest, now that it's over, than was previously thought. US wheat wasn't even offered. Neither was Ukraine origin, which may more likely be down to a lack of quality amongst this year's crop rather than concerns about the ability to ship. Exports out of the country have been brisk during the first two months of the marketing year.
UkrAgroConsult said that Ukraine exported 2.74 MMT of grain in August, mostly wheat and barley. South Korea's CJ are tendering for 51,300 MT of US wheat for Jan shipment. Japan bought 40,210 MT of feed wheat and 34,340 MT of feed barley in a tender for Dec-Jan shipment. Sep 14 CBOT Wheat closed at $5.23 1/2, down 20 cents; Sep 14 KCBT Wheat closed at $6.00 3/4, down 16 3/4 cents; Sep 14 MGEX Wheat closed at $6.15, down 3 3/4 cents.
