Mole Valley Farmers
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30 September 2016 | Online since 2003
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21 February 2013 09:53:55 |

The US weather outlook for winter wheat improves


Soycomplex
Beans got within 8 cents of USD15/bu, a level that has proven to be a tough nut to crack for some time, but failed.
Nevertheless, prices have still posted decent gains since the return from the long weekend. Strong rumours abound of China booking US beans, and although we got confirmation of two cargoes from the USDA yesterday there were no such announcements today. A Brazilian port workers strike is earmarked for Friday and another for Tuesday, further increasing shipping delays. Reports suggest around double the number of vessels waiting at ports in Brazil to load soybeans compared with this time a year ago.
This may continue to push Chinese demand to the US, and stocks there are already pencilled in to be alarmingly tight at the end of the season. There are unconfirmed reports that China has bought up to 10 cargoes of US beans for Feb/March shipment since they returned from holiday. A Beijing consultancy company said soybean inventories at Chinese ports will be below 4.0 MMT by the end of March. A year ago stocks were said to be 6.0 MMT. Japan imported 249,370 MT of soybeans in January, up 19.2% from a year ago. Funds were said to have bought around a net 5,000 soybean contracts on the day. At the close Mar 13 Soybeans were USD14.82 3/4, up 12 1/2 cents; May 13 Soybeans closed at USD14.68 1/2, up 11 1/4 cents; Mar 13 Soybean Meal closed at USD433.60, up USD8.30; Mar 13 Soybean Oil closed at 52.07, down 46 points.
Corn
The corn market put in quite a resilient performance, helped by spillover strength from beans, considering that crude oil crashed a couple of dollars.
Cattle futures were also sharply lower. The demise of the latter two may have been linked to rumours circulating that a large un-named hedge fund is in trouble and being forced to liquidate some of their positions. The weekly ethanol production data, normally released on a Wednesday, isn't out until tomorrow due to the President's Day holiday on Monday. Amidst talk of improved margins of late the bulls will be hoping for an improvement on last week's daily grind of 789,000 barrels.
A slump in crude oil prices might not help a fledgling recovery into next week though. Japan's Ministry of Agriculture said that the nation's December usage of corn in animal feed was 42.7% versus 45.2% a year ago. Wheat usage was up. Japan imported 14.9 MMT of corn in 2012, down 2.5% from a year previously. The US share of that market is also shrinking – down to 74.7% from 90.1% in 2011. Funds were said to have been net buyers of around 3-5,000 contracts on the day. Mar 13 Corn managed to score a little bonus by closing above USD7.00/bu, albeit very narrowly at USD7.00 1/2, up 5 1/4 cents on the day; May 13 Corn closed at USD6.96 1/4, up 4 1/4 cents.
Wheat
The US weather outlook for winter wheat has improved, with significant snow and rain expected in most areas this week. How much good that will do for a crop that went into dormancy in the worst state on record, and has deteriorated significantly since, remains to be seen in the spring.
"Wheat is a weed," as they say, so it's resilience looks like being tested once again. News that Egypt bought US wheat was tempered by the fact that they only booked one cargo and said that they have ample supplies to last them into the early summer.
Jordan bought 50 TMT of optional origin wheat for March shipment. Of more note was a Reuters report suggesting that China may have bought as much as 1 MMT of wheat in recent days, split between US, Canadian and Australian origin. Stocks there are clearly tight, at least they are of quality wheat, as almost all this business was said to have been done for April shipment. The Chinese government said that they will begin to auction wheat from state-owned reserves starting Feb 27. Russia’s Grain Union estimated the 2013 Russian grain crop at 90.0 MMT. The Ag Ministry currently say 95.0 MMT. Fund buying was estimated at 2,000 lots in Chicago today. Mar 13 CBOT Wheat closed at USD7.38 1/2, up 6 1/4 cents; Mar 13 KCBT Wheat closed at USD7.77 1/4, up 8 1/4 cents; Mar 13 MGEX Wheat closed at USD8.20 3/4, up 5 cents.

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