Nogger's Blog

09/10/12 -- The overnight electronic market is modestly higher in Turnaround Tuesday style with beans up 5-8 cents, corn up 1-2 cents and wheat 3-5 cents firmer.

India confirms it will release an additional 5 MMT of surplus wheat stocks onto the market for both domestic consumption and export. Trade gossip is that 2-3 MMT of that might find it's way to friend-seeking Iraq in exchange for gold and/or crude oil or even fertilisers or a combination of all three.

Russia has confirmed that it will begin selling off 110 TMT of grains a week to local millers and feed companies in the Urals, Siberia and the far east of the country by the end of the month at 10-15% below current market prices.

The Russian Ag Minister say this year's grain crop will come in at 71 MMT.

Ukraine has harvested 85% of the planned area, producing a grain crop of 36.3 MMT so far, according to the Ministry there. Yields are averaging 2.86 MT/ha, now down "only" 10.6% on last year, as the ongoing corn harvest brings in better results.

Celeres peg the Brazilian 2012/13 soybean crop at 79.1 MMT, a 19% increase on 2011/12. CONAB are due out with their first estimate of the season later today. The USDA attache in Brazil went 82 MMT last week off a record 27.5 million hectares.

Gross profit margins of over 100% for the 2012/13 crop are expected to encourage bumper plantings of both this year, the latter noted.

"Temperatures continue very hot in Mato Grosso, Brazil. Highs reached 100 F on Saturday for the 4th time in the week. Soybean producers are still waiting for the monsoon to begin in earnest, so they may begin planting soybeans. Sometimes the rainy season does not get started until late October in Mato Grosso, so the current conditions are not unusual," say Martell Crop Projections.

As mentioned earlier, the trade is waiting for this week's USDA numbers, which inconveniently come out on the day of the Hull Corn Trade Dinner, Thursday 11th.

The trade seems to be expecting an improvement in soybean yields, production and ending stocks. In contrast corn yields are seen holding steady, to declining slightly, with a lower harvested area meaning a fall in both production and carryout. Wheat is seen getting a boost from reduced corn availability meaning lower ending stocks as usage increases.

The signs for the later scenario aren't manifesting themselves just yet, but it's early days of course, and we all expect Russia, Ukraine and the Black Sea region in general to be much more subdued in the second half of the season.

How winter crop development pans out in these regions will be closely watched over the coming months, as it will too of course across the rest of the northern hemisphere. Early indications are that in general things could be considered better than last year, although things are rarely ideal of course.

We may get a clue to how Thursday's report is going to stack up in the overnight trade an hour or so before the official publication. Not that I am one for casting nasturtiums* of course, but it has come to my notice in recent months that the overnight trade can suddenly swing one way or the other half an hour before the official publication time. Frequently the sudden change of direction is subsequently proven to be fortuitous, for those on the right side of it.

Just saying, it might be worth noting any swift changes in market direction around 1pm London time on Thursday....

*Deliberate, and a doffed cap to Dave "Damp Squid" Thompson, formerly of Berk Commodities fame.