Wheat market closes higher for second day
Wheat market closes higher for second day
SoycomplexBeans closed higher, with nearby months leading the way, on continued strong demand. The market possibly seems to think that US 2013/14 ending stocks will inevitably be tighter than the USDA's "line in the sand" 150 million bushels estimate from yesterday. World ending stocks of 73 MMT in 2013/14 are record large, but they are still all a long way off. Various analysts suggest that downwards revisions to Brazilian production estimates may be on the horizon, even though CONAB today only marginally cut their forecast for output in what is now the world's largest producing nation, from 90.33 MMT to 90.01 MMT. CONAB’s president said that hot and dry weather could have a (downwards) impact on the next government estimate. AgRural said earlier in the week that they might lower output, from their current 88.8 MMT, in their next estimate if rains don't arrive by Friday. It's southern states that seem to have the most problems. "Rio Grande do Sul, Brazil’s 3rd largest soybean state, has received only 63% of rainfall, on average, the past 30 days. Parana moisture deficits range from 75 to 100 millimeters in a swath of the central state, Brazil's second largest soybean state. Mato Grossso do Sul reports the most severe drought stress, the 5th top soybean state," said Martell Crop Projections. Oil World said that South American soybean production may be 3-5 MMT less than analysts were expecting due to hot and dry weather. They estimated Argentina’s 2013/14 soybean crop at 53-54 MMT versus a previous estimate of 54-55 MMT. Celeres said that as of 7 Feb Brazilian growers had sold 48% of their 2013/14 soybean crop versus 59% a year ago. Argentine farmers remain reluctant sellers. Dr Cordonnier cut his Brazilian soybean production estimate from 90 MMT to 89.5 MMT (and said that there could be further cuts to come), and was unchanged on Argentina at 53.5 MMT. The USDA announced 116,000 MT of US beans sold to China for 2014/15 shipment under the daily reporting system. Wholesale cancellations have still to appear, and yesterday's weekly export inspections report suggests another robust set of US soybean shipments this Thursday. Mar 14 Soybeans closed at $13.34 3/4, up 9 1/4 cents; May 14 Soybeans closed at $13.20 1/2, up 8 1/4 cents; Mar 14 Soybean Meal closed at $449.20, up $5.20; Mar 14 Soybean Oil closed at 38.85, up 12 points.CornThe corn market closed a couple of cents lower in what was perhaps disappointment that last night's lower close, after what was after all a bullish WASDE report for corn, was a bearish signal. The USDA's surprisingly low 2013/14 US carryout estimate of 1.481 billion bushels was 9% below their January forecast and came in well under even the lowest trade guess. It should be noted though that it's currently US corn purchases that China is cancelling, not those for beans, and there's said to still be around 1.7 MMT of unshipped US corn sold to China on the books. There's still no sign of the dispute surrounding Chinese acceptance of the non-approved MIR 162 GMO corn variety either. CONAB cut their forecast for Brazil's 2013/14 all corn crop from 78.97 MMT to 75.47 MMT, although that's still well above yesterday's USDA estimate of "only" 70 MMT. There appears to be a wide difference of opinion surrounding the size of the second crop corn area. Right at the low end of the scale are Informa with a Brazilian all corn crop of only 66 MMT this year. A US private survey estimated that corn planting in the US this year would only fall by 1.8% to 93.15 million acres. The USDA will give their initial projections on spring plantings in the conclusion to next week's Outlook Forum (Thurs/Fri). There's talk that Japan are seeking/buying US corn for March-June shipment. Egypt and Mexico are said to be looking for US corn for April–June shipment. Dr Cordonnier estimated the 2013/14 Brazilian corn crop at 68.5 MMT, unchanged from previous estimate. He has the Argentine 2013/14 corn crop at 22.5 MMT, also unchanged from his previous estimate. Ukraine grain (mainly corn) exports are picking up again after a weather-related lull. Looking ahead, the Ukraine Ag Minister estimated 2014 the corn planting area at 5.2 million hectares, up 6% from a year ago, and said that this figure could rise further depending on how winter grains emerge from dormancy. The US Energy Dept will be out with their usual weekly ethanol production and stocks report tomorrow. Last week's production number was 895k barrels/day. Mar 14 Corn closed at $4.41 1/2, down 1 1/2 cents; May 14 Corn closed at $4.47 1/4, down 1 1/2 centsWheatThe wheat market closed higher for a second day, albeit after a bit of a wobble shortly after the open outcry session began. Yesterday's bullish US wheat ending stocks number triggered short-covering which seemed to get carried through to today. After last night's close the Texas weekly winter wheat progress report came in with good to excellent at 18%, down 1% from a week ago, and poor to very poor at 41%, unchanged from a week ago. ABARES estimated Australia's 2013/14 wheat harvest at 27 MMT, versus 26.2 MMT previously and the USDA's 26.5 MMT. They said that production in Western Australia, the country's largest exporting region, was up 58% to 10.5 MMT. UkrAgroConsult said that 93% of Ukraine’s winter grain crops are in good to fair condition. Winterkill fears so far appear unfounded. Ditto Russia, although lower winter wheat seedings will almost inevitably mean reduced output this summer. Both Russia and Ukraine will likely make up for this with significant increases in corn plantings again for the 2014 harvest, which could ultimately weigh on wheat prices much as they have done this year. The IGC forecast a 2.5% rise in the world wheat harvested area in 2014. They said that the US will harvest 47.9 million acres of wheat, a 2.7 million (or 6%) rise on last year despite a 3% drop in plantings, due to lower levels of abandonment. In 2013/14 the US planted 56.2 million acres of wheat, but only harvested 45.2 million, a very high abandonment rate of nearly 20%. Warmer weather is set to arrive in the US Plains and Midwest in the coming days, removing the threat of freeze damage to winter wheat. On the international tender front, Jordan bought 100,000 MT of optional origin wheat for June shipment. Egypt have gone quiet again after a flurry of business in January after prices have risen. They say that they have sufficient wheat socks to last until mid-June, by which time their own wheat harvest should have further replenished domestic stocks. Mar 14 CBOT Wheat closed at $5.90 1/4, up 5 1/2 cents; Mar 14 KCBT Wheat closed at $6.65 1/2, up 2 3/4 cents; Mar 14 MGEX Wheat closed at $6.61 1/4, up 9 3/4 cents. We are now 40 cents above the contract low set in late January on Mar 14 CBOT wheat, we may need to see a pick up in demand, rather than a short-covering rally, to see the market press higher.
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