Nogger's Blog

28/08/13 -- Soycomplex: It was a choppy session, with front month Sep 13 beans posting decent gains. First notice day for that is Friday, and open interest in it has been dropping sharply of late so we can maybe expect some further extreme volatility before the contract expires in a couple of weeks time. There's a long weekend coming in the US, with Monday being Labor Day. Add to that the ever changing weather report, month end and nervousness over Syria and we could be in for further choppy activity over the next couple of sessions. There's also talk of beans in the Deep South being not far off being harvested in an effort to take advantage of the nearby premiums. The USDA announced the sale of 120 TMT of new crop US beans to China today. Nothing particularly startling there, remember that they need to buy around five cargoes every working day of the year if they are to import the 69 MMT of soybeans in 2013/14 that the USDA expects them to. The Chinese government are to auction off a further 500 TMT of state-owned soybeans tomorrow. Lanworth estimated the US 2013 soybean crop at 3.140 billion bushels with an average yield of 40.8 bu/acre. The USDA are currently at 3.255 billion and 42.6 bu/acre. Brazil (and indeed South America in general) are gearing up to produce a record soybean crop in 2014. Michael Cordonnier said that much better returns from beans than corn and the falling value of the Brazilian real mean that growers there will increase plantings by 4-6%, and maybe more this year. He estimates production next year at 85-87 MMT. Local analysts Agroconsult forecast a crop even higher at 88.4 MMT versus the previous record output of 81.5 MMT this year. Oil World forecast a South American soybean crop of a record 152.7 MMT, up 4.6% from 2012/13. Safras e Mercado recently suggested that production could hit 160 MMT. Yet again in the case of soybeans we therefore appear to have a "jam tomorrow" scenario developing. Trade estimates for tomorrow's weekly export sales report for beans are around 500-800 TMT. Sep 13 Soybeans closed at USD14.33, up 19 cents; Nov 13 Soybeans closed at USD13.72 3/4, up 2 1/4 cents; Sep 13 Soybean Meal closed at USD463.30, up USD7.40; Sep 13 Soybean Oil closed at 44.31, up 25 points.

Corn: The corn market isn't displaying the same degree of conviction to the upside as beans, given that the recent warm and dry spell is occurring post-pollination. For corn we appear to have an "is the glass half full or half empty" type situation. Lanworth estimated US 2013 corn crop at 13.406 billion bushels with an average yield of 152.4 bu/acre, down 4% from their previous estimate and below the USDA's 13.763 billion and 154.4 bu/acre. Even though Lanworth are lower that the USDA, that's still a record crop. They estimated Ukraine’s corn crop at 25.6 MMT, down 5% from their previous estimate but also still a record output. Lanworth estimated China’s 2013 corn crop at 208.0 MMT, down 1% from their previous estimate, but guess what? Yep, that's still a record crop. Both the GFS and European weather models are now calling for cooler weather this weekend through next week, although the respite might not bring much rain or last too long. "Mason City, Iowa, is expecting a high of 90 F Saturday, but 79 F on Monday, Labor Day. A couple more surges of cool, dry Canadian air are predicted in the Midwest next week. However, by Friday September 6th, hotter weather is expected to resume, when a ridge of high pressure strengthens in the Great Plains and expands east into the Midwest," said Martell Crop Projections. Weekly US ethanol production came in down a hefty 24,000 barrels/day versus last week at 820,000 bpd. Whether that is down to waning demand, downtime or tight corn supplies is immaterial - it still continues to indicate that the USDA have overstated demand from that sector in 2012/13. Crude was up sharply on both sides of the Atlantic for a second day as tensions between the West and Syria escalate. South Korea's Nofi bought 60 TMT of optional origin corn for Feb shipment. Asian buyers are expected to be busy booking corn for the New Year over the next week or so, although it will mostly be of optional origin. Brazilian analysts Agroconsult forecast corn production there falling from 80.3 MMT this year to 76.0 MMT next year as growers turn to soybeans. Michael Cordonnier said that corn prices in interior states Mato Grosso a long way from the ports are around or below the equivalent of USD2/bu. Trade estimates for tomorrow's weekly export sales report are around 300-600 TMT. Sep 13 Corn closed at USD5.04 1/4, up 4 1/2 cents; Dec 13 Corn closed at USD4.80 3/4, down 5 1/2 cents.

Wheat: The wheat market remains a follower of corn. The USDA announced the sale of 119 TMT of US wheat to unknown, split 22 TMT of HRW and 18 TMT of SRW for delivery in 2013/14 and 49 TMT of HRW and 30 TMT of SRW for delivery in 2014/15. Egypt bought 295 TMT of hard wheat for Oct 1-10 delivery in their tender. They booked 60 TMT of Russian wheat, 60 TMT of Romanian wheat and the rest was of Ukraine origin. French wheat was comfortably out-priced and US wheat wasn't even offered. Japan seeks 120 TMT of feed wheat and 200 TMT feed barley via a SBS tender for Nov/Dec shipment. Tunisia bought 84 TMT of soft wheat and 75 TMT of feed barley in a tender. Rusagrotrans forecast the Russian wheat crop at 52.6-53.0 MMT, with exports at 15-16 MMT. They said that total grain exports in August will be 3.1 MMT, but will fall to 2.6-2.8 MMT in September due to hot competition from other countries on the Black Sea. Brazil announced that they will extend the duty free period on wheat imported from outside the Mercosur trade bloc to September 10th. They also increased the quota allowed in from outside this group from 2.0 MMT to 2.3 MMT. With frost problems in their own crop and Argentina's not due onto the market until Nov/Dec they may have to make further similar changes down the line. They've been active buyers of US wheat lately, topping the list of homes in the weekly export sales report for the last couple of weeks. Trade estimates for tomorrow's report are around 400-600 TMT. Toepfer estimated the German wheat crop at 24.18 MMT versus a previous estimate of 24.24 MMT and the 2012 wheat crop of 22.33 MMT. They placed the EU soft wheat crop at 134.6 MMT, up 7% versus 125.7 MMT in 2012. They have Romania's 2013 wheat crop at 7.44 MMT versus the 2012 crop of 5.75 MMT, Hungary’s crop at 4.93 MMT versus 3.94 MMT last year and Bulgaria’s crop at 4.95 MMT versus 4.56 MMT in 2012. A report on Reuters suggests that whilst official estimates for the French wheat crop this year are around the 36 MMT mark, private estimates are in the 37.0-37.5 MMT region (versus 35.6 MMT last year). Wheat harvesting in France, Germany and eastern Europe too is just about done. Sep 13 CBOT Wheat closed at USD6.46 1/2, down 4 1/4 cents; Sep 13 KCBT Wheat closed at USD7.06 1/4, down 1 cent; Sep 13 MGEX Wheat closed at USD7.34 1/4, up 4 3/4 cents.