Friday, 11 May 2012

CME: Corn Futures Closed Lower Thursday


US - July Corn finished down 19 3/4 at 587 1/2, 24 3/4 off the high and 2 up from the low. December Corn closed down 9 1/2 at 507 1/4. This was 2 1/4 up from the low and 12 off the high. July corn closed sharply lower on the session and saw the lowest close since March 16th.
The USDA had enough bearish factors to drive futures lower early in the day with December corn pushing down to the lowest level since February 25th. The USDA pegged ending stocks for the 2011/12 season at 851 million bushels which was up 50 million from last month and up about 100 million from trade expectations.

Feed usage was adjusted lower by 50 million bushels and other usage numbers were left unchanged on the month. Traders see US producers using more domestic wheat and even UK feedwheat imports into the East Coast as reasons for the decline. Brazil production was revised to 67 million tonnes from 62 million last month. As a result, world ending stocks came in at 127.5 million tonnes as compared with expectations at near 122 million.

For the new crop season, the USDA pegged yield at a record high 166 bu/acre which pushed ending stocks to a whopping 1.881 billion bushels which is up from trade expectations near 1.71 billion. The record high yield was calculated by "not" using last years yield in their 20 year trend calculation and by raising the yield by 2 bu/acre due to early plantings.

In the May report last year they used the trendline yield for the 1990 to 2010 seasons and the same years for the calculation this year. Total usage was pegged at 13.775 billion from 12.655 billion this season. Weekly export sales came in well below trade expectations at 224,200 metric tonnes for the current marketing year and 249,200 for the next marketing year for a total of 473,400.

Cumulative corn sales stand at 86.9 per cent of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 84.0 per cent. Sales of 327,000 metric tonnes are needed each week to reach the USDA forecast. July Rice finished up 0.395 at 15.79, equal to the high and 0.32 up from the low.

Soybean Futures Closed Higher

July Soybeans finished up 25 at 1455 1/4, 3 1/2 off the high and 25 3/4 up from the low. November Soybeans closed up 25 1/2 at 1359. This was 27 1/2 up from the low and 9 off the high. July Soymeal closed up 8.6 at 424.6. This was 9.6 up from the low and 0.9 off the high. July Soybean Oil finished up 0.68 at 53.5, 0.15 off the high and 0.6 up from the low. July and November soybeans closed sharply higher on the day but closed off of the early-in-the-day highs. The USDA confirmed a very tight outlook for the coming season.

The USDA pegged US ending stocks for 11/12 at 210 million bushels, which was slightly supportive against expectations and compares with 250 million estimated last month. For the 2012/13 season, ending stocks are projected at just 145 million bushels which is 20 million below expectations and is the lowest May estimate since 1988. November soybeans pushed sharply higher early in the session trading as much as 34 1/2 cents higher on the day.

World ending stocks for the 2011/12 season came in at 53.2 million tonnes which was right on expectations and compares with 55.52 million last month and down from 70.1 million last year. Brazil production came in at 65 million, down from 66 million last month and Argentina was revised down to 42.5 million from 45 million last month. However, the Brazil agriculture ministry this morning revised their crop estimate higher to 66.7 million tonnes from 65.6 as their previous forecast.

Weekly export sales for soybeans came in better than expected at 466,500 metric tonnes for the current marketing year and 1.36 million tonnes for the next marketing year for a total of 1.827 million. Old crop sales of 76,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 138,400 metric tonnes for the current marketing year and 97,100 for the next marketing year for a total of 235,500. Oil sales came in at 30,100 tonnes.

Weakness in corn and the outlook for good weather in the Midwest were seen as negative forces. Meal was the leader on the upside. The Rosario Grains Exchange pegged the Argentina crop at just 40.9 million tonnes from 43.1 as their previous estimate.

Wheat Futures Closed Higher

July Wheat finished up 1 1/4 at 601 1/4, 6 1/4 off the high and 6 1/4 up from the low. December Wheat closed up 1 3/4 at 640 3/4. This was 6 1/2 up from the low and 5 3/4 off the high. July wheat experienced two-sided choppy trade and closed slightly higher on the day. The higher close after posting a new low for the move is seen as a positive technical factor. While production numbers came in higher than expected, usage was also higher than expected and stocks are tightening.

Weakness in corn was offset by strength in soybeans and the tightening stocks situation for both the US and world for wheat is a positive force as well. The USDA pegged winter wheat production at 1.694 billion bushels which was about 55 million above trade expectations and compares with 1.494 billion last year. All wheat production was pegged at 2.245 billion bushels which is up 50 million from expectations and compares with 1.999 billion last year. The USDA pegged US ending stocks for the 2011/12 season at 768 million bushels which was about 12 million below trade expectations and down from 793 million last month.

For the 2012/13 season, ending stocks were pegged at 735 million bushels which is 50 million below trade expectations. World ending stocks for the 2011/12 season came in at 197.03 million tonnes as compared with 206.27 million last month as feed usage was revised up by 16.5 million tonnes. For the 2012/13 season, world ending stocks were pegged at 188.13 million.

Weekly export sales came in at 221,600 metric tonnes for the current marketing year and 328,900 for the next marketing year for a total of 550,500 which was about as expected. Cumulative wheat sales stand at 98.6 per cent of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 97.1 per cent. Sales of 95,000 metric tonnes are needed each week to reach the USDA forecast.

The Buenos Aires Grains Exchange pegged the 2012/13 planted area for wheat at 4.0 million hectares, down 13 per cent from last year. July KC wheat closed lower and managed to push to the lowest level since July of 2010. July Oats closed unchanged at 336. This was 2 up from the low and 3 1/4 off the high.

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