Chicago Market Jumps On Fund Buying
18/02/14 -- Soycomplex: Beans closed sharply higher on the old chestnut of very strong demand, with funds seen as net buyers of around 8-10,000 bean contracts on the day. Weekly export inspections, delayed a day due to Monday's President's Day holiday, for beans came in at close to 1.5 MMT again. Chinese cancellations? There were none announced today, and with 1.5 MMT of beans being shipped out of the US every week at the moment it won't take that long to hit the USDA's export target for the season. Brazilian firm AgRural cut their forecast for soybean production there from 88.8 MMT to 87 MMT due to drought in some areas. That's 3 MMT below last week's USDA estimate. Dr Cordonnier estimated Brazil's soybean crop at 89.0 MMT versus a previous estimate of 89.5 MMT. He estimated the Argentine bean crop at 53.5 MMT, unchanged from his previous estimate. Some are now saying that continued heavy rains in some areas could soon start to have a negative impact on Argentine production. The strong demand scenario didn't get any assistance from the January NOPA crush figure though. That came in at 156.9 million bushels, which was below the average trade guess of 162.4 million, and down from the record 165.4 million crushed in December. Two hard cold snaps in January may have hindered the crush however, as movement of beans was restricted. Mar 14 Soybeans closed at $13.61, up 23 1/2 cents; May 14 Soybeans closed at $13.47 3/4, up 22 3/4 cents; Mar 14 Soybean Meal closed at $456.90, up $6.90; Mar 14 Soybean Oil closed at 40.36, up a hefty 121 points.
Corn: The corn market finished around 4-5 cents higher, aided by spillover support from beans and wheat. Weekly export inspections came in at 827,610 MT, better than the expected 545–675 TMT. Dr Cordonnier estimated the Brazilian corn crop at 68.5 MMT, with production in Argentina coming in at 22.5 MMT. Both were unchanged from his previous estimates. Japan and Mexico are said to be seeking and/or buying US corn for April-July shipment. The trade will be eager to see what the USDA have to say in this week's Outlook Forum (taking place Thurs/Fri) with regards to US spring plantings. Last week's baseline projections pencilled in 93.5 million acres of corn going into the ground this spring. The trade is expecting a lower number than that on Friday. Argentina’s corn planting is 99% complete versus 97% a year ago, according to the Ag Ministry there. The Argentine corn crop is said to be rated 70% good to excellent. Libya were reported to have purchased 30,000 MT of Black Sea origin corn. Ukraine are said to have exported 23.2 MMT of grains to date, including 13.69 MMT of corn. The fund community seems to have had a dramatic change of heart concerning corn in recent weeks, slashing their sizable short position, and now seeming to want to play from the long side for the first time since early last summer. Funds were estimated to have been net buyers of around 10,000 contracts on the day. Mar 14 Corn closed at $4.49 1/2, up 4 1/4 cents; May 14 Corn closed at $4.55 1/2, up 4 3/4 cents.
Wheat: The wheat market closed sharply higher on short-covering/fund buying (estimated at around 3-5,000 CBOT wheat contracts on the day). Friday’s Commitment of Traders report shows funds buying back shorts in Chicago and adding to their net long positions in Kansas and Minneapolis last week. If this indicates a radical change of heart then maybe we've seen the bottom of the market on CBOT wheat? Funds have been short CBOT wheat all the way through 2013, and were sitting on a near record short in excess of 100k contracts at the turn of the year. The Commitment of Traders report as of February 11th showed Non-Commercial traders were then net short 45,171 contracts, a decrease of 7,587 contracts for the week. Weekly export inspections of 266,507 MT were below expectations of 300–400 TMT, but that didn't appear to have an influence today. China are to auction 600,000 MT of wheat from reserves on tomorrow. Russia's grain intervention purchase program appears to have run it's course, totalling only 610 TMT against an originally intended 5-6 MMT. Jordan passed on a tender to import 100 TMT of optional origin feed barley. Mar 14 CBOT Wheat closed at $6.12, up 13 1/2 cents; Mar 14 KCBT Wheat closed at $6.85 3/4, up 11 1/4 cents; Mar 14 MGEX Wheat closed at $6.79 1/4, up 12 3/4 cents.