Nogger's Blog

10/07/12 -- Soybeans: Jul 12 Soybeans closed at USD16.48 3/4, down 16 1/4 cents; Nov 12 Soybeans closed at USD15.38 1/2, down 9 1/4 cents; Jul 12 Soybean Meal closed at USD482.20, down USD3.30; Jul 12 Soybean Oil closed at 54.21, down 22 points. Funds were said to have been net sellers of 6,000 soybean contracts in profit-taking ahead of tomorrow's USDA report. Corn yields may be what most in the trade are looking for, but 2011/12 soybean ending stocks are already tight, Chinese imports aren't letting up, and reduced US output this year should see 2012/13 ending stocks even tighter than this season. The latest weather forecasts show main precipitation chances in the week ahead to be in the south east. Rain is certainly needed in these areas but these aren't as major producing states as those further north and west. Whatever tomorrow's USDA report says we will probably be back to trading the weather before the daytime session is over.

Corn: Jul 12 Corn closed at USD7.61, down 14 1/4 cents; Dec 12 Corn closed at USD7.17 1/2, down 12 1/2 cents. Funds trimmed some of their recently acquired corn longs as a little precaution ahead of tomorrow, being estimated net sellers of 11,000 corn contracts on the day. The average trade guess for USDA yields tomorrow is 154.1 bpa. That is what the trade expects them to say, not what the trade thinks that the real yield potential is. That number is more in the 140-145 bpa range. The Renewable Fuels Association say that there is "no justification for altering the overall RFS in any way, nor does it have the authority to impulsively reduce the program's targets." Sufficient corn stocks are available within the industry to "easily satisfy" this year's RFS ethanol target of 13.2 billion gallons, they say. Effectively, the ethanol mandate will not be lowered. They don't however say who is going to produce all this ethanol if margins are negative.

Wheat: Jul 12 CBOT Wheat closed at USD8.04 3/4, down 6 cents; Jul 12 KCBT Wheat closed at USD8.12, down 5 1/2 cents; Jul 12 MGEX Wheat closed at USD9.14, unchanged. Funds were said to have sold around 3,000 Chicago wheat contracts on the day. Tomorrow's USDA report is thought likely to be less of a market mover for wheat than corn or beans. There will however undoubtedly be some adjustments in world production. With Russia's output almost certain to be reduced from last month's 53 MMT estimate. Kazakhstan could also be cut, although Europe could rise. US all wheat output is expected to rise slightly from 2.234 billion bushels last month to 2.247 billion this time round. Given the anticipation for a large cut in US corn production, and reduced wheat output from the Black Sea, we could see world wheat ending stocks which were cut to 185.76 MMT last month trimmed further.