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4 February 2014 11:23:29 |

US drought becomes 'extreme' for wheat; corn market closes higher


Soycomplex
Beans closed around 10 cents higher on the day in relatively quiet trade. China are on holiday, which might mean that the much talked about cancellations are deferred for at least a few more days. There's also talk that vessel line-ups in Brazil are already starting to build. IMEA said that the soybean harvest in Brazil's top producing state of Mato Grosso is 10.6% done versus 5.8% a week ago and 11.4% this time last year.
There's talk of some far better than expected yields in Mato Grosso, with early short cycle beans producing up to 70 (60kg) sacks per hectare. Local analysts Agroconsult last week estimated the Brazilian corn crop at a record 91.6 MMT, and they were using an average yield estimate for Mato Grosso a third less than 70 sacks/ha, according to Reuters. AgRural said that nationally the Brazilian bean harvest is 6% complete. Dereal said that Brazil's Parana state was in for a record 16.48 MMT soybean harvest. There's talk of Argentine government intervention to "encourage" farmers to sell old crop beans. There's also talk of some growers having to sell by the end of March to pay tax bills and cover input costs. The USDA confirmed 40 TMT of soyoil sold to unknown for 2013/14 shipment under the daily reporting system. Strategie Grains estimated the global 2014/15 soybean crop at 298 MMT versus 287 MMT in 2013/14. They peg the world 2014/15 rapeseed crop at 67.0 MMT versus a previous estimate of 68.0 MMT. Weekly US soybean export inspections were 45.43 million bushels versus 73.974 million last week - possibly a sign of a seasonal switch to South America, but maybe also influenced by the current bad weather restricting the movement of grains in the US. Mar 14 Soybeans closed at $12.92 3/4, up 10 cents; May 14 Soybeans closed at $12.78 1/4, up 9 3/4 cents; Mar 14 Soybean Meal closed at $434.00, up $7.90; Mar 14 Soybean Oil closed at 37.45, down 19 points.
Corn
The corn market closed around 2-3 cents higher. The USDA announced 113,780 MT of US corn sold to unknown for 2013/14 shipment under the daily reporting system. Weekly export inspections of 21.644 million bushels were pretty uninspiring, and down from 29 million a week ago. Again, maybe this is as much due to bad weather in the US as anything else. "It was reported last week that FGIS inspectors in New Orleans were unable to inspect barges for a couple of days due to ice along the river (Mississippi)," said Benson Quinn Commodities.
Neverthless, cumulative export inspections are 574.397 million bushels compared to 311.934 million this time last year. The USDA's FAS said that South Korea will import 9.5 MMT of corn this year, a 16% rise on last year, as cheaper prices of the grain encourage the displacement of wheat in feed rations. They cut South Korea's wheat import requirement by 400 TMT to 4.1 MMT (and versus 4.6 MMT in 2012/13) to reflect that switch. They said that 3 MMT of this season's South Korean corn imports will come from the US versus 2 MMT in 2012/13. Ukraine said that it had exported over 12 MMT of corn so far this marketing year. The USDA attaché in Moscow raised their estimate for Russian grain exports this year from 20 MMT to 21.6 MMT, with corn shipments increased by 0.5 MMT from previously to 2.5 MMT. They've exported 2 MMT to date. The Russian port of Novorossiysk shipped 541 TMT of grains last month, a 42.5% decline on December. The total included 265 TMT of corn, with South Korea (237 TMT) the main destination. There are shipping delays developing due to bad weather and other logistical issues in both Russia and Ukraine at the moment. Mar 14 Corn closed at $4.35 3/4, up 1 3/4 cents; May 14 Corn closed at $4.41 3/4, up 2 1/4 cents.
Wheat
The wheat market jumped around 6-8 cents across the three exchanges to start the new month in what may have been short-covering prompted by a bit of nervousness over the ongoing cold spell gripping the US. There could however be some relief in sight for the dry Plains. "A stormy wet forecast is welcome in hard red winter wheat, where winter weather conditions have been much drier than normal. Kansas, Oklahoma and West Texas have 'severe' to 'extreme' drought on the US Drought Monitor January 28.
Drought has become 'extreme' on the High Plains the western third of the wheat zone. This area has a semi-arid climate but current drought is much worse than normal, "said Martell Crop Projections. It's been dry in the west too. "Coastal Washington state has received only 55% of normal rainfall this winter, and coastal Oregon just 30-35% of normal precipitation," they said. "Welcome rain and snow is predicted this week in Washington, Oregon and northern California easing severe drought. Previously a stable warm ridge of high pressure had prevailed blocking showers. The sudden change in the weather pattern is due to a southern shift in the jet stream now dipping south across the Pacific Northwest," they added. There's talk that Iran's 2013 wheat crop may have been massively overstated. The head of the nation's Farmer's Union said that production was only around 7 MMT. The current USDA estimate is 15.5 MMT. Iran may need to import 7.5 MMT of wheat this season versus a current USDA forecast of only 4.5 MMT, he said. Weekly US wheat export inspections were an insipid 11.65 million bushels, down even on last week's relatively poor showing of 14.63 million. Mar 14 CBOT Wheat closed at $5.63 3/4, up 8 cents; Mar 14 KCBT Wheat closed at $6.24 1/4, up 8 3/4 cents; Mar 14 MGEX Wheat closed at $6.10 3/4, up 6 3/4 cents.

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