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18 December 2014 11:23:33 |

Wheat market closes with strong gains amid Russia turmoil


Soycomplex
Beans closed with small gains at the end of a two-sided session. A trade delegation of Chinese buyers in Chicago were reported to have signed "showcase" deals to import 1 MMT of US soybeans. Abiove estimated Brazil’s 2014/15 bean crop at 91.0 MMT, unchanged from their previous estimate and well below the CONAB estimate of 95.8 MMT and the USDA's 94 MMT forecast.
"Weather outlooks continue to have Brazilian production areas getting adequate moisture for their crops with some press given to the drier areas in Argentina as having potential to a reduction in production," said Benson Quinn. There's some talk of increased US soybean sales to Cuba following comments from the Obama administration seeking to end more than 50 years of hostility between the two countries. Trade estimates for tomorrow's weekly export sales report are in the region of 600-800 TMT for beans. Jan 15 Soybeans closed at $10.27, up 3 1/2 cents; Mar 15 Soybeans closed at $10.35 1/4, up 4 cents; Jan 15 Soybean Meal closed at $359.30, up $2.70; Jan 15 Soybean Oil closed at $31.77, unchanged.
Corn
The corn market also posted small advances of a couple of cents or so, helped by surging wheat prices. Some news agencies reported that China had approved MIR 162 corn for import, although Reuters said that three sources at large Chinese corn importers that they had contacted said that they had received no such notification as yet. They also reported Chinese buyers booking 900 TMT of US DDGS in the past week, with state-owned COFCO the main buyer.
That's something that they'd be unlikely to do without knowledge that approval of MIR 162 was imminent. If they know it's coming then they may have decided to act now before DDGS prices went up, it is thought. US ethanol production was reported at a new record 990,000 barrels/day - the third record week in the past four. South Korea's MFG bought 126,000 MT of optional origin corn for April shipment. South American weather remains generally favourable, although there's some talk creeping in of developing dryness in parts of Argentina. Martell Crop Projections report that "weather conditions in the Midwest have grown progressively drier over the past several weeks. This is reflective of an emerging El Nino, as Midwest winters are often very dry with El Nino." Weekly export sales tomorrow are expected to be around 600-800 TMT. Mar 15 Corn closed at $4.08 1/4, up 2 1/4 cents; May 15 Corn closed at $4.16 1/2, up 2 cents.
Wheat
The wheat market closed with strong gains. Turmoil in Russia is the main reason. Various reports appear to confirm that exporters are having extreme difficulty getting export certificates in a timely manner. It's being suggested that Turkey, Egypt, Armenia and India are being singled out for referential treatment, and exports to those destinations will get pushed through, but everybody else can go and whistle. This appears to have brought trade in Russian wheat to a virtual standstill very quickly.
Exporters don't want to sell, for fear of getting caught having to pay expensive demurrage bills as vessels sit at the quayside waiting for customs clearance. That means that also neither are they a buyer on the domestic market all of a sudden. That leaves the government's intervention fund program looking a more attractive proposition than it has up until now. There are reports of Argentine wheat now trading into African and Middle Eastern homes, where buyers are shying away from even considering Russian wheat. There should also be a pick up in interest for EU and US wheat too. Note too the absence of large Russian wheat buyer Saudi Arabia from the unofficial list of approved homes. Is that just a coincidence, or a poke in the eye for the country seen by many as being responsible for the collapse in crude oil prices that is causing Russia so much stress at the moment? Mar 15 CBOT Wheat closed at $6.48 1/2, up 25 1/4 cents; Mar 15 KCBT Wheat closed at $6.81 1/2, up 26 3/4 cents; Mar 15 MGEX Wheat closed at $6.59 3/4, up 25 1/2 cents.


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