The Morning Vibe

21/09/12 -- The overnight electronic market sees soybeans 12-14 cents higher, with corn up 4-5 cents and wheat 10-14 cents firmer.

Even so, soybeans have had a right old mauling this week, heading for their biggest weekly loss in a year, according to Reuters this morning.

Nothing that much has changed though really. There is some talk of better US yields coming through for soybeans, which I guess if you combine that with the possibility of an increase in planted area, based on the recent findings of the Farm Service Agency, then there's the potential to increase US production a little from the USDA's current 2.634 billion bushels.

What about the demand side of the coin though? Yesterday's weekly export sales report means that 75% of the USDA's entire 2012/13 target has already been achieved - and we're only in the second week of the marketing year!

The world desperately needs bumper soybean production from South America in 2013, but they haven't even started planting yet, the earliest beans from Brazil are still at the very least four months away.

Bumper production though is what we are likely to get, if the weather plays ball. Oil World currently estimate the Brazilian soybean crop in 2013 at 82 MMT (up 23%), Argentina at 56 MMT (up 37%), Paraguay at 8.6 MMT (up 115%), Uruguay at 3.1 MMT (up 94%) and Bolivia at 2.45 MMT (up 11%).

There's just such a hell of a long way to go until that lots starts coming onto the market, and we are of course assuming here that we don't get another South American crop problem like last year.

So is this a soybean buying opportunity, or a major reversal? Before you make your mind up on that one it may be worth considering the strong seasonal trend for soybeans to bottom out around now, it is harvest time after all. Check out the twenty year seasonal chart for Nov beans here.

In other news, Russia's Economy Minister is quoted on the wires this morning as saying "it's entirely possible that the government will decide to limit (grain) exports" after all this season.

That would appear to have provided a bit of upward impetus for wheat. Note if you will though that yesterday's weekly export sales from the USDA only brings existing US wheat commitments to 38% of the USDA's 2012/13 target, versus 55% normally, and we are much further into the 2012/13 marketing year for wheat which begins on Jun 1 than we are for soybeans.

Elsewhere, Kazakhstan said it had harvested 12.5 MMT of grains in bunker weight off 92% of the planted area. Russia said, "erm, I think you'll find that belongs to us now."

In trivia that means nothing at all but is interesting nevertheless, this time last year Nov 11 London feed wheat was GBP159.50/tonne and en route to GBP140.00/tonne in the run-up to Christmas, with top spec milling wheat premiums as low as a fiver!