China wheat auctions not going well; corn market closes lower
Beans closed sharply higher for the third session in a row. Fund buying continues to support the market, they were in for an estimated net 5,000 bean contracts on the day today. Old crop remains extremely tight, with any shorts in May or July getting squeezed out as making delivery against those shorts isn't an easy option. The Buenos Aires Grain Exchange said that the rain-delayed soybean harvest in Argentina is 21.4% complete, up from 14% a week previously, producing a crop of around 13.5 MMT so far. The harvest this time last year was 38.6% complete.
The Brazilian soybean harvest was 86% complete as of last Friday. US weekly export sales are out tomorrow, with the trade expecting zero on old crop beans due to lack of availability, and with sales of maybe 150-350 TMT on new crop. We will also see how many soybeans have been shipped out of the US in the past week, with shipments so far already at 96% of the USDA's forecast for the entire season. Unfulfilled sales to China are said to be only 262,800 MT, with a further 984,000 MT outstanding for unknown. This makes the Chinese credit/default problems much more of an issue for South American sellers than it is for the US. Two vessels are currently said to be in Brazil's shipping line-up to load beans for the US. It looks like more will be needed. May 14 Soybeans closed at $15.18 3/4, up 17 1/2 cents; Jul 14 Soybeans closed at $15.08 3/4, up 21 1/4 cents; May 14 Soybean Meal closed at $491.00, up $3.60; May 14 Soybean Oil closed at 43.71, up 88 points.
The corn market closed around 4 to 6 cents lower. Funds were estimated to be net sellers of around 6,000 lots on the day. The Chinese Stats Bureau said that corn plantings there this year will rise 1.75%. Dr Cordonnier said that 7% of Mato Grosso's safrinha corn crop has already finished pollinating, with 10% of the crop at the same stage in Parana (Brazil). Crop conditions so far are "very favourable" he noted. Parana corn is rated 93% good, 6% average and only 1% poor, he said. CONAB estimate second crop corn producing 43.9 MMT this year, or around 58% of the national crop. UkrAgroConsult said Ukraine exported 954,000 MT of grain between April 1-April 14.
The vast majority of that will have been corn. The Ukraine Ministry said that the country had exported 28.6 MMT of grains to date this season, and over 18 MMT of that has been corn. The Buenos Aires Grain Exchange said that progress with Argentina's corn harvest has been very slow, with only 19.7% of the crop cut so far. That's only 3.2% up in a week, and 12 points down on a year ago at this time. They noted that there had been an early frost in some parts of the grain belt, and that this could have an adverse affect on yields. Nevertheless, they held their production estimate unchanged for now at 24 MMT. Weekly US ethanol production came in at 939k barrels/day, up sharply on 896k barrels/day a week previously, and hitting the level required to match USDA targets for the season for the first time in weeks. This was the highest weekly grind since early December. May 14 Corn closed at $4.97 1/2, down 6 1/4 cents; Jul 14 Corn closed at $5.03 1/2, down 6 1/4 cents.
The wheat market closed lower on profit-taking. Fickle funds were given credit for ending the day net sellers of around 4,000 Chicago wheat contracts on the day - having been said to have been net buyers of 6,000 yesterday. The latest US weather forecast on the Plains is warmer, and a bit wetter.
Recent Chinese government wheat auctions haven't been going well. They only sold less than 17% of the 626 TMT of wheat on offer in today's sale and last week's auction of 858 TMT of wheat only received a take-up rate of 16%. Jordan purchased 150,000 MT of optional origin wheat yesterday and 100,000 MT of optional origin barley today. The Black Sea is the most likely origin for both. EU soft wheat exports look like they are finally slowing, with Brussels granting 421 TMT worth of export licences this week versus 585 TMT the previous week. The 2014 EU wheat and barley harvests look like being early, with crops running 2-4 weeks ahead of normal maturity following a generally mild winter.
Japan is tendering for 136,200 MT of food grade wheat. There's a long weekend looming, with US and Europe closed on Friday. US markets re-open on Monday afternoon, whilst Europe remains shut until Tuesday. Who knows what the Ukraine situation will be like by then? Trade estimates for tomorrow's weekly export sales report from the USDA are all over the place, from as low as only 250 TMT to as high as 850 TMT. May 14 CBOT Wheat closed at $6.88, down 13 3/4 cents; May 14 KCBT Wheat closed at $7.54 1/2, down 11 cents; May 14 MGEX Wheat closed at $7.26 1/2, down 12 cents.
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