05-12-2013 16:22 PM | Arable, Cereal, Crops, Market Reports, News

Wheat market crashes lower; Brazil rains 'might be too much of a good thing'



Soycomplex

The market closed higher, but is still trying to reconcile strong nearby demand for US beans and meal against projected record South American production getting ever closer. There's some talk that rains in Brazil's leading soybean state of Mato Grosso might be too much of a good thing. Above estimated the Brazilian soybean crop at 86.6 MMT versus a previous estimate of 86.0 MMT.


That's a record, although towards the low end of current trade forecasts. They see Brazil's 2013/14 soybean exports at 44 MMT, similar to the USDA. Dr Cordonnier left his Brazilian soybean production estimate unchanged at a record 90 MMT, but raised his forecast for Argentina by 1 MMT to an also record 56 MMT. Brazilian growers are said to have only been relatively light forward sellers of their 213/14 soybean crop.

On a national level Safras e Mercado say that 33% of the 2013/14 Brazilian soybean crop is sold versus 48% a year ago. Stats Canada forecast the Canadian canola crop at a record 18 MMT, up sharply from 13.9 MMT last year and the 16 MMT estimated in October. That was right at the top end of trade estimates of 16.6-18.0 MMT. Oil World estimated China’s 2013/14 soybean imports at 69.7 MMT versus a previous estimate of 69.0 MMT and 59.9 MMT in 2012/13. Some are thinking that tomorrow's weekly export sales for soybeans may come in around the 1 MMT mark, others point to the fact that this would be in a holiday shortened week, so they may in fact come in a bit lower than that. Jan 14 Soybeans closed at $13.29 1/2, up 9 3/4 cents; Mar 14 Soybeans closed at $13.12 1/4, up 7 3/4 cents; Dec 13 Soybean Meal closed at $447.90, up $1.80; Dec 13 Soybean Oil closed at 40.14, up 24 points.


Corn

The corn market closed around 4-5 cents higher, shrugging off reports that China was continuing to reject some US corn consignments due to them containing traces of the non-approved MIR 162 variety. Almost 94% of China's Jan/Oct corn imports came from the US, according to Reuters.


The USDA announced 165,750 MT of US corn sold to Mexico, split 132,600 MT for 2013/14 delivery and 33,150 MT for 2014/15 delivery. Stats Canada pegged the 2013/14 corn crop there at 14.194 MMT versus an average estimate of 13.3 MMT. That's up sharply from their previous estimate of 12.942 MMT and compares favourably with the 2012/13 crop of 13.06 MMT. Dr Cordonnier estimated the 2013/14 Brazilian corn crop at 68.5 MMT, unchanged from previous estimate. He estimated the 2013/14 Argentine corn crop at 24.0 MMT down 1 MMT from his previous estimate of 25.0 MMT.

The US Energy Dept reported weekly US ethanol production at 913,000 barrels/day, down from 927,000 bpd last week, but above the level of around 900,000 bpd required to hit the USDA target for the season. Funds were said to have been decent net buyers on the day, covering in an estimate 9,000 contracts of their hefty short position in CBOT corn. There's a feeling that this trend will continue as we head towards year end. Estimates for tomorrow's weekly export sales report are around 850-950,000 MT which may be ambitious. Dec 13 Corn closed at $4.25 1/2, up 3 1/2 cents; Mar 14 Corn closed at $4.36 1/2, up 5 1/4 cents.

Wheat

The wheat market crashed lower, following the news from Stats Canada that this year's wheat crop there was a bin-busting 37.5 MMT. Not only is that a record by some distance, it is also far higher than the average trade guess of 33.8 MMT, and well above even the highest estimate in the ring (35.3 MMT).


Canadian barley production was also pegged above the top end of trade estimates at 10.24 MMT. The Canadian wheat crop last year was only 27.1 MMT and barley production was 8 MMT. The news was bearish, especially following a similar surprisingly bullish wheat production report from Australia's ABARES only yesterday. Weakness in the Canadian dollar will also help their exports to the detriment of US wheat.

China is seen buying 3-4 MMT of Australian wheat in 2013/14, limiting sales from the US. The trade will now be monitoring an Arctic air blast set to send temperatures plunging across almost the entire US during the next week, although some are now saying that things may not be quite as cold as was forecast yesterday. MDA Weather Services say that about 5% of the US HRW wheat crop is at risk from winterkill. Russia's winter grains plantings (mostly wheat) stand at 14.7 million hectares versus 15.8 million in 2012 and 15.9 million in 2011. Informa yesterday forecast the 2014 Russian wheat crop at 48.5 MMT. Trade estimates for tomorrow's weekly export sales report for wheat are around 450-550 TMT. Dec 13 CBOT Wheat closed at $6.47 1/4, down 6 1/2 cents; Dec 13 KCBT Wheat closed at $7.09 1/4, down 2 1/2 cents; Dec 13 MGEX Wheat closed at $6.72 1/2, down 12 1/4 cents.

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