US wheat production raised; corn market falls

Soycomplex

Beans closed the thick end of 20 cents lower in predictably choppy trade, with the USDA's October WASDE report out mid-session. On the face of it 2014 US soybean yields and production were pegged lower than the average trade estimates, and 2014/15 ending stocks were reduced from a month ago. The market initially moved higher, but eventually settled very close to the lows of the day, perhaps on the realisation that yields, production an stocks are all still at record levels.

It is also entirely possible that further increases are still to come for this crop. The bare numbers had yields at 47.1 bu/acre this year, that's up 0.5 bu/acre from last month, but a similar figure below the average trade guess. Production was forecast at 3.927 billion bushels, up only 14 million versus last month due to a larger than anticipated reduction in harvested acres.

Trade estimates had been for production of 3.976 billion bushels. New crop US soybean ending stocks were cut from the 475 million bushels forecast a month ago to 450 million this time round. "The fact that the 25 million bushels reduction came from lower carryin, and not a result of increased demand estimates was probably the nail in the coffin as today’s 20-cent lower trade erased all most all of this week’s gains," said Benson Quinn Commodities.

At the end of the day whether new crop ending stocks are 450 or 475 million, that's still a lot of soybeans - and an almost fivefold increase compared to the end of the 2013/14 marketing year that's just finished. There were no changes to 2014/15 soybean production in Brazil, Argentina or Paraguay. China's crop was trimmed slightly from 12 MMT to 11.8 MMT.



China's import requirement was left unchanged at 74 MMT. Global 2014/15 ending stocks were tweaked a little higher to 90.7 MMT, a more than 36% increase compared to last season, and also a record volume by some distance. Nov 14 Soybeans closed at $9.22 1/2, down 19 1/2 cents; Jan 15 Soybeans closed at $9.30 1/2, down 19 1/2 cents; Oct 14 Soybean Meal closed at $339.30, up $6.30; Oct 14 Soybean Oil closed at 32.28, down 60 points. For the week that puts Nov 14 beans up 10 1/4 cents, with Oct 14 meal up $31.30 and oil virtually identical to last Friday.

Corn

The corn market fell around 10 cents, but was still a little higher for the week. The USDA estimated 2014 US corn yields at 174.2 bu/acre, up 2.5 bu/acre from a month ago, although half a bushel below the average trade guess.

Production was seen 80 million bushels higher at 14.475 billion, although again this was slightly lower than the average trade guess of just over 14.5 billion. As with beans, US 2014/15 carryout came in at less than the trade was expecting (2.081 billion bushels versus the anticipated 2.13 billion), but that was still up from a month ago (2.002 billion) and much higher than in the season just ended.

World ending stocks for 2014/15 were pegged at 190.6 MMT versus 173 MMT in 2013/14. Corn initially moved higher following the release of the numbers, but as with beans the trade seemingly readjusted their viewpoint, and after digesting the figures in a bit more detail, the market ultimately slipped away to close near the lows of the day and erasing around half of this week's gains. Closer to home, "EU corn imports for 2014/15 are forecast to drop over 50 percent (9 million tons) from last year because of a record corn crop and abundant supplies of other feed grains.

This follows an upward trend in EU corn imports for most of the last 6 years. Elevated global corn prices spurred production, particularly in Ukraine and Brazil," they said. "This year, reduced EU corn imports will drive global trade lower. This in turn will mean intensified competition for exporters. Ukraine, with a freight advantage and nonbiotech corn supplies, has been the EU’s largest supplier in recent years with trade in 2013/14 likely to reach 10 million tons.

A second consecutive record U.S. crop will struggle to find export demand, and stocks will build yet again. With abundant supplies in most exporting countries, there will be continued pressure on prices," they added. EU-28 corn imports are now seen at 7.2 MMT in 2014/15, down more than 3 MMT from the 10.3 MMT forecast only a month ago and compared to the 16.3 MMT shipped in last season. In other news the USDA announced almost 1.5 MMT of US corn sold to Mexico split over the 2014/15 and 2015/16 marketing years. Dec 14 Corn closed at $3.34, down 10 3/4 cents; Mar 15 Corn closed at $3.46 3/4, down 11 cents. For the week Dec 14 corn still gained 10 3/4 cents.



Wheat

The wheat market closed mixed, with Chicago and Kansas ending higher and Minneapolis a little lower. This report was expected to be more about corn and beans than wheat, but a mildly friendly tone to it lent support to wheat today. As with the other pits though, early gains quickly got eroded, although the wheat market also still did manage to end the week higher than it began it. The stand out figure for US wheat was the lowering of 2014/15 ending stocks from the 698 million bushels estimated a month ago to 654 million. The trade was expecting a small increase to 704 million, which is what caused the initial excitement, although prices ended the day around 10-15 cents off the intra day highs across the three exchanges.

"US Production for 2014/15 is raised 5 million bushels based on the latest estimate from the September 30 Small Grains 2014 Summary," they said. However "increased production is more than offset by higher feed and residual disappearance and higher exports," they added. US wheat exports in 2014/15 were raised from 25 MMT to 25.5 MMT, although that's still a 6 MMT (or 19%) reduction on last season. The EU-28's wheat export potential was also increased from 26 MMT to 28 MT, although again that's still almost 4 MMT below those in 2013/14.

They will be helped by a 3 MMT rise in Europe's wheat crop from last month's forecast to a record 154 MMT. Ukraine's crop was raised 0.5 MMT to 24.5 MMT, Kazakhstan's was lowered from 13.5 MMT to 12.5 MMT and Russia's was left on hold at 59 MMT. Australia's wheat crop was cut modestly from 25.5 MMT to 25.0 MMT. Many other estimates are now a bit lower than that. World wheat production at 721 MMT is now only 7 MMT above projected consumption, last month it was estimated almost 10 MMT higher. World ending stocks in 2014/15 are now seen at 192.6 MMT, down from the 196.4 MMT estimated last month, but still up 3.8% compared to the end of last season.

In other news, Egypt's GASC bought two cargoes of French wheat and one of Russian for Nov 11-20 shipment. The FAO estimated the 2014 world wheat crop at 719 MMT versus a previous estimate of 717 MMT. Dec 14 CBOT Wheat closed at $4.98 1/2, up 5 1/4 cents; Dec 14 KCBT Wheat closed at $5.77 3/4, up 5 cents; Dec 14 MGEX Wheat closed at $5.53 1/4, down 1/4 cent. For the week that puts Chicago wheat 12 3/4 cents higher, with Kansas and Minneapolis both up 9 3/4 cents.