Nogger's Blog

28/09/12 -- Soycomplex: Nov 12 Soybeans closed at USD16.01, up 30 1/4 cents; Jan 13 Soybeans closed at USD16.02 3/4, up 31 1/2 cents; Oct 12 Soybean Meal closed at USD487.00, up USD13.90; Oct 12 Soybean Oil closed at 52.18, up 7 points. Beans rallied sharply after a tentative opening on the back of a bearish, for soybeans at least, USDA report. Funds finished up buying an estimated 13,000 soybean contracts on the day as corn locked in limit up. The USDA came out with a 2011/12 closing US soybean balance of 169 million bushels, 37 million above the average trade guess, due to an increase in 2011 production. The latter came as a result of a 0.4 bushels/acre rise in last year's yields and an increase in harvested acreage. Strong demand for US soybeans continues, with the USDA reporting the sale of 180,000 MT to China under the daily reporting system to add to yesterday's 110 TMT and 140 TMT sold to "unknown" on Wednesday. Soybean sales for 2012/13 could hit 80% of the USDA's targeted level by next week. The IGC estimated world soybean production up 8% in 2012/13 to 256 MMT on the back of the much touted sharp recovery in South American output, for which they noted "favourable weather conditions will be critical, and even at this level of output, stock levels are still to fall year on year." World ending stocks, which are seen falling by more than a third in the past two years, were placed at just 22 MMT in 2012/13. Despite today's rally Nov 12 beans were 19 cents lower on the week, Oct 12 meal was up USD2.50 versus last Friday.

Corn: Dec 12 Corn closed at USD7.56 1/4, up 40 cents; Mar 13 Corn closed at USD7.59 1/2, up 40 cents. Funds were featured buyers of an estimated 28,000 contracts on the day as nearby contracts soared to limit up moves. The USDA cut US corn ending stocks below one billion bushels to 988 million versus the 1.166 billion expected. That was sufficient motivation to get fund money flooding back in for corn, despite hard evidence of demand destruction - for US corn at least. South Korea's MFG bought 197,500 MT of South American origin corn for Feb/March shipment, South Korea's KFA bought 55 TMT South American origin corn for March shipment and another South Korean buyer booked 69 TMT of optional origin corn for Feb/March shipment. The IGC cut 5 MMT off their global corn production estimate to 833 MMT, with ending stocks seen 2 MMT lower than last month to 118 MMT. Corn production in the EU-27 was trimmed almost 5 MMT from last month to 55 MMT, which is more than 2 MMT below the USDA's estimate. US corn production was left unchanged from last month at 275 MMT, which is 12.4% down on last year, although 2.5 MMT more than the USDA currently project. Separately, Coceral estimated the EU-27 corn crop at 56 MMT. For the week overall Dec 12 corn was 8 cents higher and Mar 13 was 8 1/2 cents firmer.

Wheat: Dec 12 CBOT Wheat closed at USD9.02 1/2, up 47 cents; Dec 12 KCBT Wheat closed at USD9.27 1/2, up 49 1/4 cents; Dec 12 MGEX Wheat closed at USD9.58 1/2, up 44 1/4 cents. Funds were said to have been net buyers of around 7,000 Chicago wheat contracts on the day. The USDA put Sep 1 wheat stocks at 2.1 billion bushels, 177 million lower than anticipated, due it would seem to increased usage of wheat in feed rations due to corn tightness. The IGC cut Australia's wheat crop to 22.5 MMT, Europe's to 131.4 MMT and Russia's to 39 MMT, taking world production down 5 MMT to 657 MMT, with a similar drop in 2012/13 ending stocks to 175 MMT, which is 1.7 MMT less than the USDA currently predict. Looking ahead: "Planting of northern hemisphere winter grain is well underway and the wheat area is tentatively forecast 2% higher for 2013/14, driven by both firm prices and a projected recovery from the weather-related damage to crops in 2012/13," they said. Despite today's sharp gains, on the week as whole wheat posted only very minor gains. For the week Dec 12 Chicago wheat was up 5 1/4 cents, with Kansas wheat up 1 1/4 cents and Minneapolis up 3/4 of a cent.