This afternoon's Harvest Progress report for soybeans is expected to show that harvest is over 80% complete which continues to add to cash market support, the CME Group said in its Monday morning comments. Bids in Burns Harbor, IN jumped sharply to 21 cents under the November contract on Friday which was an increase of 14 cents. Bids in Decatur, IL were left unchanged at 15 cents over and basis on the river was slightly lower on the day. The firm domestic cash levels and strong calendar spreads suggests a positive flat price trade in the short term.
Anticipation that this afternoon's Harvest Progress Report for corn will show that the 2012/13 harvest is nearing completion, along with strength in peripheral markets such as crude oil, soybeans, and wheat supported a stronger trade overnight for corn, the CME said. Outside markets have a positive tone to start the week as investors move towards more risky asset classes. December corn is rebounding after settling well off session highs on Friday as traders took profits ahead of the weekend. Friday's volume was recorded at 209,448 contracts and open interest rose by 4,562 contracts.
CORN: Corn futures are trading 3 cents higher this morning, Brugler Marketing said.
Exports sales continue to favor the trade in the bear camp with only minimal feed business being done to an inelastic customer base, the CME said . A major feed mill in South Korea bought 63,000 tonnes of US corn while passing on the total amount of 140,000 tonnes. Japan continues to use more wheat in feed rations and importers such as Mexico are considering the use of more corn from Brazil and Argentina. Mexico's Ag Minister sees that country's corn production at 21.6 million tonnes vs. 17 million last year due to drought conditions. The USDA has Mexico's corn production at 21.50 million tonnes. US exporters are hopeful that demand may shift back to the US border in anticipation of rising imports by the EU and on a lower production outlook in Ukraine. Rumors that the EU may approve imports of a specific GMO corn variety firmed FOB values in Brazil last week by 30 cents per bushels. The stronger cash levels could shift South American corn into the EU which in effect may translate into more demand from Asian buyers in the US.
Farmer sales continue to come to a halt as harvest wraps up. Bids in the interior of the US are firm with various corn elevators near Chicago, Illinois paying 7 cents over the December contract which is up 7 from prior bids, the CME reported. Burns Harbor, IN corn bids also rose by 7 cents per bushel to 7 cents over the December contract and bids in Council Bluffs, Iowa jumped 5 cents per bushel to 22 over the December contract. Decatur, IL was left unchanged at 15 cents over. Feeder bids, ethanol facilities, and lack of cash sales by farmers are keeping support in the basis however Friday's Cattle on Feed report showed September placements were down 18.8% from last year and the number pulled total on-feed supply to down near 3% from last year.
Cash basis levels in the WCB are positive (above futures) due to the reduced corn crop and steady demand, Brugler Marketing said. Basis levels are usually at least 25 cents below the board at harvest time in the WCB.
The weekly CFTC report showed large funds had decreased their net long from the previous week by 3,905 contracts.
Corn exports are running substantially below the last six years as are outstanding sales, with prices at the upper end of historical levels, Brugler Marketing said. Argentine corn planting will be delayed by rain this week mostly in Buenos Aires the number three corn producer for Argentina. Private forecaster Informa Economics projects 2013 corn acres at 97.5 million with USDA at 96.946 in the October WASDE for 2012. Chinese futures were up 2 cents Monday.
SOYBEANS: Soybeans are currently 17 Â? cents higher after being up 12 cents per bushel last week, Brugler Marketing said.
A positive demand outlook along with stronger Asian equity markets overnight supported the revival of soybean prices, the CME said. It seems the lower trade on Friday may have just been profit taking after the sharp gains the day prior. The soybean market opened up steady to slightly lower but prices surged at the 8 pm China open and gains held for the remainder of the night. Last Friday's volume was reported at 197,968 contracts and open interest declined by 6,263 contracts. Volume was considered average at best but the lower trade, along with the decline in open interest suggests profit taking ahead of the weekend which was likely spurred on by negative price action in most commodity classes Friday.
The Commitments of Traders reports as of October 16th for soybeans showed Non-Commercial and Non-Reportable combined traders held a net long position of 167,090 contracts, down 17,139 contracts for the week and the long liquidation selling is seen as a short-term negative force. Trend-following funds (Non-Commercials net of index funds) now hold a net long of 133,672 contracts, down 13,302. The record net long position held by these traders is 224,822 from May 1st, 2012. For soybean meal, Non-Commercial and Non-Reportable combined traders held a net long of 72,760 contracts, up 5,515 for the week and the buying trend is positive. These same traders held a net short position of 20,353 contracts in soybean oil which represents an increase of 14,164 contracts for the week and the selling trend is seen as a bearish force. The increase in the net short position may be linked to the slightly bearish export outlook for US soybean oil due to surging Malaysian Palm Oil stocks.
Wetter Brazilian weather disrupting planting and strong domestic demand are the drivers to higher prices so far, Brugler Marketing said. There could also be some risk on trading as a reaction to last Fridayâs stock market decline. Soy oil was 91 cents higher for the week and soybean meal was down $1.40 for the week.
Private forecaster Informa projects 2013 soybean planted acres at just under 80 million compared to USDA's 77.2 million for 2012 in the last WASDE. Chinese futures were up 19 cents.
WHEAT: Wheat futures are trading 7 to 9 cents higher this morning, Brugler Marketing said.
Wheat on all three exchanges posted gains last week. CBT wheat was up 16 cents, KC was up 15 cents and MGEX was up 14 cents for the week. At least a portion of the gain was the result of rumors that Ukraine will impose a wheat export ban after Nov. 15 to 20. The Ukraine has contracts for 5.4 MMT of wheat to export. Private exporters announced the sale of 117,600 HRW, 49,400 HRS, 58,200 SWW and 4,800 durum wheat to an unknown destination on Friday. That may have been a reaction to the Ukraine rumor.
The weekly CFTC report showed large funds decreased net CBT wheat net longs and added to KC wheat net longs. A Memphis based forecaster projects 2013 US wheat plantings will be 56.8 million acres an increase from the 55.7 planted in 2012.