US winter wheat planting forecast cut
Beans closed with modest gains, which was no mean feat considering the total lack of support from either corn or wheat. Informa forecast 2014 US soybean plantings at 81.264 million acres. That's a steep rise of over 6% versus last year's 76.533 million, when corn was the in vogue crop pushing plantings of that to a 75-year high, although it's actually a little lower than the 81.929 million estimated previously.
With soybeans at over $13/bushel and corn again looking like it might test the $4/bushel level why would US farmers not plant beans? OK, the new crop price difference isn't quite that large, but it's still a ratio of 2.5:1 based on Nov beans versus Dec corn tonight. Very strong demand for US beans on the export front sees 26.6 MMT shipped already this season and a further 14.9 MMT sold and waiting to go. That's total commitments of 41.5 MMT versus the current USDA forecast for full season exports of 40.7 MMT. Instead of the market talking about Chinese cancellations being likely, it may be that "needed" would be a better word to use. Strong demand for meal keeps domestic US usage of soybeans robust also. Talking of which, Bunge this week announced that they were closing a soybean processing facility in southern Rio Grande do Sul state, saying Brazil's tax structure favours the export of raw soybeans instead.
Yesterday's weekly export sales numbers revealed US meal sales well above market expectations at 234,700 MT. Sales of only 86,000 MT are needed per week to reach the USDA's forecast for the season. There's some much-needed rain in the forecast over the weekend and into early next week for Argentina. The Buenos Aires Grains Exchange said that soybean planting there is now 96.2% complete. Weather conditions in Brazil look generally favourable, with a record crop there surely on the way. Yet again though, a record crop might also equal record logistical problems and record shipping delays once the harvest and export program get into full swing. Mar 14 Soybeans closed at $13.16 1/2, up 1 1/2 cents; May 14 Soybeans closed at $12.97 1/4, up 1 cent; Mar 14 Soybean Meal closed at $434.50, up $2.50; Mar 14 Soybean Oil closed at 37.74, down 31 points. For the week that puts Mar 14 beans up 12 3/4 cents, with meal down 70 cents and oil falling 21 points.
The corn market closed around 3 to 4 cents lower. Informa suggested that US farmers will plant 93.319 million acres of corn this spring. That's a fall of "only" a little over 2% from last year's 75-year high of 95.365 million acres. That's quite a modest reduction given that US corn values fell by 40% last year. It is also significantly higher than the 91.846 million than Informa had previously estimated.
This may be a function of less wheat getting planted in the US for the 2014 harvest - as forecast last week by the USDA and today agreed with by Informa. It may also signal that many US farmers just can't bring themselves not to plant corn. A "my Daddy always planted corn, and so did my Grand Daddy," sort of thing. On the export front, the USDA today announced 204,000 MT of US corn sold to Egypt for 2013/14 shipment under the daily reporting system. As of yesterday's weekly export sales report the US had shipped 12.6 MMT of corn so far this season, with a further 16.9 MMT of outstanding sales. That takes total net commitments to 29.5 MMT versus the USDA's forecast for the season of 37 MMT. That means that total shipments plus sales are currently around 80% of the USDA forecast for 2013/14 versus a 5-year average of around 60%. That's pretty good, but note that the shipped/unshipped proportion is a lot different to that of soybeans. Also note that it's US corn purchases that China are currently cancelling, not those of soybeans.
The Buenos Aires Grains Exchange said that Argentine corn planting is 86% complete versus 82.8% a week ago and 93.4% a year ago. Argentine customs data shows that the country exported 20.2 MMT of corn in the first 11 months of 2013 - an 18% increase on the same period in 2012. The largest home was South Korea, traditionally a big buyer of US corn, taking in excess of 2.3 MMT. The weather forecast for Argentina looks a bit more promising. Talk that another polar vortex is expected to drop into the eastern Corn Belt by the end of the month may support the nearby cash market as it would again hinder movement of grains. Mar 14 Corn closed at $4.24, down 4 cents; May 14 Corn closed at $4.31 3/4, down 3 3/4 cents. For the week Mar 14 corn was down 8 3/4 cents with May 14 down 9 cents.
The wheat market closed 5 to 9 cents lower on the day across the three exchanges. CBOT wheat set a fresh 3 1/2 year low for a front month on nearby Mar 14. Wheat's premium over corn is the main problem, but one that could ultimately also be it's salvation. Like the old adage "the cure for high prices is high prices" then maybe the cure for "nobody wants to buy wheat" is simply "so I won't plant it" then? Informa cut their forecast for US winter wheat plantings for the 2014 harvest from the 43.09 million acres planted last year to 41.892 million - very similar to last week's USDA number. Informa looks for all US wheat plantings to be just over 55.8 million acres, down from the USDA's 2013 area estimate of 56.2 million, with the spring wheat area falling by almost a million acres to 12.1 million.
US winter wheat on the southern Plains, parts of Texas panhandle and western Kansas have seen less than 50% of normal moisture since the middle of October, raising production concerns there. India continue to be a thorn in the side for wheat bulls though, tendering to sell 120,000 MT for Feb-March shipment. There could easily be a lot more to come waiting in the wings from them, with a record 100 MMT crop said to be on the way this year.
The Buenos Aires Grains Exchange said that the wheat harvest there is complete, estimating this year's production at 10.1 MMT, up 1.3 MMT on last year after good yields from the later harvest boosted final output. After a very mild spell, Southern Russia and Ukraine are trending colder than normal over the next couple of weeks. There's been quite a bit of talk of the potential for damage to winter wheat here lately, due to inadequate snow cover. The latest forecasts however also show precipitation of 150-300% of normal for the region for the period through to early February. Tunisia bought 100,000 MT of soft milling wheat, 109,000 MT of durum wheat and 75,000 MT of feed barley in various tenders - all of optional origin and for Feb/Mar shipment. Europe is the most likely supplier as exports here continue at a brisk pace. Germany will likely ship 250,000 MT of wheat to Iran this month, say Reuters. Mar 14 CBOT Wheat closed at $5.63 1/2, down 9 1/4 cents; Mar 14 KCBT Wheat closed at $6.23 1/4, down 6 1/4 cents; Mar 14 MGEX Wheat closed at $6.18 1/2, down 5 1/2 cents. For the week Chicago wheat lost 5 1/2 cents, with Kansas gaining 2 3/4 cents and Minneapolis down by 2 cents.
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