The whole floor rallied today (even beleaguered soy oil closed higher) but the surprise was the rally was led by beans.
It appears beans had sold off hard enough earlier this week that a corrective bounce was in order.
So there was a fair amount of unwinding of corn/bean spreads which were in fashion earlier this week due to Midwest rains helping beans more than corn.
The weather forecasts are still fairly benign but the NWS maps are getting dry for the next two weeks.
Meal gained strongly versus oil with the Z oil share plunging to a new low of 30.7%.
Bean spreads were very firm with the SU-SX inverse gaining 4 ½ cents to a high of 14 ¾ cents today.
Domestic bean premiums as high as +80X as we approach first notice day for SU is supporting the SU-SX spread.
The nearby meal spreads however were a bit weaker on reports of weaker domestic meal premiums and discounted CIF barge premiums.
South American soy oil premiums have been on fire due to the sharp flat price collapse trading up to +100 FOB on excellent Indian demand.
This has placed US soy oil in a competitive export position with nominal offers at +200 FOB Gulf.
Argentine farmers are expected to begin a 5-day marketing strike on Monday so there will be little incentive to discount Argentine meal or oil premiums.
And Brazilian bean premiums have rallied sharply on Chinese demand squeezing Brazilian crush margins and offering little incentive to discount their meal or oil premiums.
So there could be a window here for the US to pick up some meal and oil export business.
Today’s weekly export sales report showed China cancelled 66,000 tonnes of old crop beans but bought 426,000 tonnes of new crop beans.
Weekly meal export shipments were impressive once again at 178,200 tonnes.
Despite poor pod counts reported by the eastern Pro Farmer crop tour and mixed pod counts in IA and MN, the market believes the recent rains will help bean yields.
We sense smart money wants to sell a bean rally with most technicians targeting the 920-930 area as a good sell point.
Corn posted solid gains as confidence builds that USDA over-estimated the corn yield on Aug 12.
There were enough mixed yield estimates from the western Pro Farmer crop tour to reinforce the notion that western yields would not offset poor eastern yields.
We believe CZ should find support near 365 and find resistance near 400.
Wheat followed corn and beans higher on a tide that lifted all boats.
The problem of US export competitiveness remains.
Chicago wheat continued to outgain KC and Minneapolis wheat.
The Chicago/KC premium moved to a fresh high of 25 cents basis U.
The hunt for milling quality SRW wheat continues.
The weekly export sales report showed a sale of 24,900 tonnes of HRS wheat to Canada which is akin to shipping coal to Newcastle.
We suspect this sale reflects a Laker cargo sold into Three Rivers, Quebec for further export.
When the cargo leaves the St. Lawrence we expect this sale to Canada to be cancelled.
We understand there has been active boat loading of HRS at Duluth averaging about 2 to 3 cargoes per week.
Here are today’s net price changes:
SU +18 cents
SX +13 ¾ cents
CU +3 ¾ cents
CZ +4 cents
WU +10 cents
KWU +7 cents
MWU +4 ¾ cents
BOZ +7 pts
Canadian canola crushing margins are poor with some major crushers indicating negative margins of about $11 per tonne.
This week China has picked up 1 or 2 canola cargoes at cheap prices.
The lack of crush margin allowed China to step in front of Canadian crushers.
South Korea’s Daehan seeks 23,900 tonnes US wheat for November.
South Korea’s CJ seeks 27,100 tonnes US wheat for November.
Mexico is shopping for beans for October.
Indonesia bought Argentine meal.
Malaysia will keep the crude palm oil export tax at 0% for September.
Russian grain harvest through Aug 20 showed a harvest of 62 million tonnes on 21.9 million hectares with an average yield of 2.84 tonnes per hectare.
Last year the Russian harvest was 67.2 million tonnes on 22.1 million hectares with an average yield of 3.04 tonnes per hectare.
The weekly Buenos Aires Grain Exchange weekly crop progress report:
1) Corn harvest 93.2% complete
2) Sunseed sowing 8.7% complete, -3.8% versus last year
The Argentine Ag Ministry estimated 2015-16 wheat sown area at 4 million hectares versus previous estimate of 3.7 million hectares.
The Argentine Ag Ministry estimated 2014-15 corn crop at 33.8 million tonnes versus previous estimate of 31 million tonnes.
The Argentine Ag Ministry estimated 2014-15 soybean crop at 61.4 million tonnes versus previous estimate of 60.8 million tonnes.
EPA said 1.28 billion of renewable fuel credits (RINs) were generated in July versus 1.27 billion in June.
EPA said 294.3 million biodiesel RINs were generated in July versus 270.8 million in June.
On Friday, Stats Canada will issue crop estimates.
Here are the expected levels:
All wheat 25.6 million tonnes
Canola 13.6 million tonnes
Barley 7.0 million tonnes
Durum 4.7 million tonnes
Oats 3.2 million tonnes
On Friday, USDA will issue the August cattle-on-feed report.
On feed Aug 1 is expected at 102.7% of last year.
Placed on feed in July is expected at 101% of last year.
Marketed in July is expected at 97% of last year.
Today’s fund activity:
Wheat bot 6,000
Corn bot 4,000
Beans bot 10,000
Meal bot 6,000