Nogger's Blog

11/12/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.72, down 2 3/4 cents; Mar 13 Soybeans closed at USD14.71 1/4, down 4 1/4 cents; Dec 12 Soybean Meal closed at USD455.00, up USD2.60; Dec 12 Soybean Oil closed at 49.87, down 96 points. There were only minimal changes to the world supply and demand balance sheet for soybeans, with perhaps the most salient alteration being the cut in US ending stocks to 130 million bushels. This was in line with trade estimates, but reinforces the view that there's little room for slip ups from South America come the spring as North America will be pretty much a spent force by then. The USDA left production estimates unchanged in Brazil and Argentina at 81.0 MMT and 55.0 MMT respectively. US soybean oil exports were hiked 50% from last month to 817 TMT (last month's target has already been surpassed). Given the very strong pace of US soybean weekly sales and shipments it was a bit of a surprise that 2012/13 exports weren't increased, although that would have made ending stocks even tighter. Perhaps that will come next month? January often brings a reassessment on final US production, which may allow the USDA to increase 2012/13 exports whilst not tightening carryout further by virtue of extra 2012 output. The USDA also separately announced a 115,000 MT soybean sale to China for 2012/13 delivery under the daily reporting system.

Corn: Dec 12 Corn closed at USD7.24 1/4, down 2 1/2 cents; Mar 13 Corn closed at USD7.28, down 2 cents. US corn ending stocks were left unchanged in today's USDA WASDE report, contrary to trade expectations for a 16 million bushels increase. World production was hiked around 10 MMT though, courtesy of a 8 MMT increase for Chinese output to a record 208 MMT. Global consumption was also increased, by around 9 MMT, meaning that there was little actual change to the overall level of world ending stocks. Argentine production was only trimmed by 0.5 MMT, the trade had been expecting a 2 MMT cut to 26 MMT. Yet, private analyst Michael Cordonnier sees output there at only 22.5 MMT. Exports from both the South American suppliers were left unchanged. The USDA left demand from the ethanol sector the same as last month at 4.5 billion bushels. Tomorrow we get the weekly ethanol grind numbers, with around 825,000 barrels/day needed to hit that target. Thursday we get the latest weekly export sales, these have been consistently poor of late, with the odd exception. Around 435 TMT/week is pace needed to match the USDA's unchanged 2012/13 export target of 31 MMT. Last week's total was just 51,600 MT.

Wheat: Dec 12 CBOT Wheat closed at USD8.05 3/4, down 27 cents; Dec 12 KCBT Wheat closed at USD8.68 3/4, down 21 1/4 cents; Dec 12 MGEX Wheat closed at USD8.96 3/4, down 13 3/4 cents. Wheat got the bearish surprised this month, with world production seen rising from 651.4 MMT last month to 655.1 MMT this time round. Ending stocks were increased accordingly from 174.2 MMT to 177.0 MMT, although that's still 9.6% down on last season. The trade was however expecting a decrease to 173.4 MMT. Australian output was raised 1 MMT to 22 MMT, China's crop was increased 2.6 MMT to 120.6 MMT - largest production since 1997/98 - and Canada's upped 0.5 MMT to 27.2 MMT. Argentina's crop was surprisingly left unchanged at 11.5 MMT. Argentina, Australia, Europe, India, Paraguay and "Others" all saw their exports raised, whilst those of the US were cut 1 MMT to 29.5 MMT, increasing carryout there by almost 1.4 MMT. Argentina's wheat exports were in fact forecast at 7.5 MMT, which is interesting on a number of counts, not least that the government there are said to have capped the volume at 4.5 MMT within the last few days.