Rainy winter gives China chance for productive wheat yield
Rainy winter gives China chance for productive wheat yield
SoycomplexBeans closed lower on the day, but higher for the week, in what was probably a bit of light consolidation ahead of another long weekend in the US, with the markets there closed on Monday for Presidents Day. "There is still talk that US traders aren’t as willing as they have been in the past in letting buyers out of trades, which could mean sales are getting priced and the supply will be loaded out at some point," said one commentator. The buyers that they are most specifically referring to are of course the Chinese. There's some suggestion that the recent unloading delays of US soybeans in China whilst they are scrutinised for traces of MIR 162 corn might be a subtle little tit-for-tat move aimed at "encouraging" US sellers to agree to cancel/defer contracted shipments. With old crop soybean sales already at 105% of the USDA forecast for the season something needs to be done. CNGOIC estimated China’s 2013/14 soybean crop at 12.0 MMT, down 0.2 MMT from their previous estimate and down 8% from a year ago. Production in Heilongjiang province is said to be 16.5% down on a year previously. The Buenos Aires Grains Exchange estimated Argentina's soybean crop at 53 MMT versus 54 MMT from the USDA earlier in the week. Across the border: "Heat and moisture stress in South Brazil promotes ideas that soybean production may not be as abundant as originally expected. The heat wave began 30 days ago in South Brazil. This may have a negative bearing on the soybean yield in Rio Grande do Sul especially, Brazil’s 3rd most important soybean state. February is the main period for pod-filling, heat stress shrinking the size of beans in the pod," said Martell Crop Projections. India's government estimated their total oilseed crops at 32.98 MMT versus 30.94 MMT a year ago. The USDA's Chief Economist said that next Friday's Outlook Forum estimates would likely show higher bean acres than yesterday's baseline projections suggested (78 million acres, up a modest 2% versus 76.5 million last year). Mar 14 Soybeans closed at $13.37 1/2, down 6 3/4 cents; May 14 Soybeans closed at $13.25, down 5 1/2 cents; Mar 14 Soybean Meal closed at $450.00, down $2.80; Mar 14 Soybean Oil closed at 39.15, down 39 points. For the week, front month beans were 6 cents higher, with meal up $3.60 and oil up 59 points.CornThe corn market finished higher, with the Mar 14 contract posting its highest daily close in 3 months. The latest Commitment of Traders report shows managed money switching from a net short to a net long in CBOT corn, the first time they've been net long since last June. The USDA's Chief Economist is hinting that next Friday's Outlook Forum might reveal lower potential US corn acres this spring than yesterday's baseline numbers suggested (93.5 million acres, down a fairly modest 2% from 95.4 million last year). A Bloomberg survey earlier in the week came up with a potential net reduction of around 5%, and some estimates have been in the 6-7% region. The Buenos Aires Grains Exchange raise their forecast for Argentine corn plantings from 3.3 million hectares to 3.57 million, although that's still down almost 10% on last year's 3.95 million. They estimated Argentina’s 2013/14 corn crop at 23.5 MMT versus the 2012/13 crop of 27.0 MMT and the current USDA estimate of 24.0 MMT for this year. "Drought breaking rain in Argentina provides hope for a better soybean harvest, but corn has been irreversibly damaged by heat and moisture stress. Stressful weather coincided with the sensitive pollination stage in corn, locking in a sharply reduced yield. Moisture stress was most severe in Buenos Aires the leading corn province that grows 36% of the national crop," said Martell Crop Projections. Rains and cooler temperatures are forecast for Brazil through the weekend, although hot and dry conditions return again next week. Bunge are reported to have announced that they will refuse to handle corn containing a new GMO strain currently being marketed by Syngenta that is not approved by China. Their CEO stated they will only handle crops that have been approved by major markets. That's an interesting move ahead of the spring planting season in the US. Will the other major trading houses also now follow suit? The Indian government estimated their corn crop at 23.29 MMT versus 21.06 MMT a year ago. The Ukraine Ministry said that they had 19.9 MMT of grain stocks as at Feb 1, a 28% rise on a year ago, and more than half that total (11.1 MMT) was corn. Mar 14 Corn closed at $4.45 1/4, up 4 3/4 cents on the day, for a modest 1 cent rise on the week; May 14 Corn closed at $4.50 3/4, up 4 1/4 cents.WheatThe wheat market closed around 2 to 4 cents higher on the day. The latest Commitment of Traders report shows managed money continuing to trim its net short position in CBOT wheat, down by almost 10,000 lots on the week to a net short 43,225 contracts. The Indian government estimated their 2014 wheat crop at a record 95.60 MMT versus 93.51 MMT a year ago. Some forecasts are as high as 100 MMT, and harvesting of that will begin next month. Iraq are tendering for 50 TMT of US, Canadian or Australian wheat, but frequently buy more. Japan bought 286,091 MT of wheat for March-July shipment, in its regular combination of US, Canadian and Australian origin. They are also said to be shopping for 42,908 MT of Canadian wheat for July shipment. "China’s main wheat belt has received exceptional heavy rainfall. This is an unexpected bonus since the winter climate is extremely dry in North China. February precipitation in winter wheat has accumulated to 0.50 to 2 inches, with still more to come. "A rainy winter gives China wheat a chance for a productive yield, following a very dry planting season in the fall. China is the world’s leading wheat producer and consumer," said Martell Crop Projections. Russia announced that it was ceasing it's regular intervention purchase program next week. They only managed to pick up 2,430 MT of grain in Tuesday's purchase and a paltry 270 MT on Wednesday as the prices being offered are now way too low following the recent slump in value of the rouble. There's the suggestion that Kazakh grain may start to find its way into neighbouring Russia, after they devalued their currency by 19% earlier in the week. They still have 4.5 MMT of grains looking for an export home in the remainder of the current marketing year. Weather conditions on the US Plains remain too dry for winter wheat. Mar 14 CBOT Wheat closed at $5.98 1/2, up 3 cents; Mar 14 KCBT Wheat closed at $6.74 1/2, up 1 3/4 cents; Mar 14 MGEX Wheat closed at $6.66 1/2, up 4 1/4 cents. For the week Mar 14 Chicago wheat added 21 cents, with Kansas gaining 25 1/4 cents and Minneapolis putting on 27 1/4 cents.
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