Nogger's Blog

10/03/11 -- We've got the USDA's US stocks and world supply & demand numbers out at 13.30 GMT and the Bank of England's announcement on interest rates before that at 12.00 noon. In addition to that excitement we've got the USDA's weekly export sales also at 13.30 GMT and Mar Paris milling wheat also goes off the board today too.

The USDA WASDE numbers aren't really expected to throw up any big surprises, although you can never really tell with them. Most eyes will be on Brazil's soybean output, which was pegged at 68.5 MMT last month although private estimates elsewhere are now in the 70-72 MMT region. They dropped Argy bean production 1 MMT to 49.5 MMT last month. It's not beyond the realms of possibility that they may trim that again a little more this month. Indeed a decent punt might be for them to add a million or half a million to Brazil and reduce Argentina by exactly the same amount.

The USDA... think of a number, don't tell me, right double it, now halve it, now add on your birth year, now subtract you birth year, now multiply by 3.14, go on you're nearly there, now divide by 3.14 and what have you got? The number you first started with? Amazing, it works every time. Nah, I can't tell you how I did it or I'd have to kill you.

For US 2010/11 ending stocks the trade forecasts corn at 665 million versus 675 million last month. For beans it's 142m against 140m last time and for wheat 810m vs 818m previously.

World soybean ending stocks are forecast to rise from 58.21 MMT in Feb to 59.186 MMT this time round, with corn and wheat both showing modest declines. In the case of corn from 122.51 MMT to 121.628 MMT and for wheat from 177.77 MMT to 177.569 MMT.

After three days of solid declines it's a little surprising to see beans down fairly sharply again this morning - currently trading around 12c lower on the overnight Globex market. Corn is also down 2-4c with wheat showing mostly fractional gains.

The weekly export sales could be interesting with the trade expecting some fairly solid numbers with corn pegged at 700 TMT-1 MMT, wheat in a similar range and beans coming in at 350-500 TMT.

We've seen some significant losses so far this week with Mar beans down more than 75c from last Friday's close (including this mornings action), Mar corn down 29 1/4c and Mar CBOT wheat posting 68 14/c declines. Yet there hasn't been any hugely significant shift in the balance of the fundamentals.

What maybe has changed is the funds' previously unshakable confidence. I think that the sudden and violent shake-out that we saw a fortnight or so ago has led to a reassessment of the infallibility of just being blindly long. It has probably also meant that stop-losses are being fixed much closer to current market levels, leaving the market more vulnerable to computer-driven selling if and when these orders get automatically triggered.

Meanwhile the BoE's MPC aren't expected to increase interest rates today, although the minutes will make interesting reading when they come out later this month. May or June seems to be most peoples ideas on when we may start to see rates start to move up, which could be the start of some sterling appreciation in the second half of 2011.