Nogger's Blog

06/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.87 1/2, down 8 cents; May 13 Soybeans closed at USD14.77 1/4, down 8 1/2 cents; Mar 13 Soybean Meal closed at USD437.10, down USD1.40; Mar 13 Soybean Oil closed at 52.45, down 53 points. Fund selling in beans was estimated at a net 3,000 contracts on the day. The market seems reluctant to break through USD15/bu ahead of Friday's USDA report, having put in a half-hearted effort to break through this level a couple of times this week and failed. Production prospects in Brazil are holding steady, or even increasing in some cases, although estimates for output in Argentina are falling. "Argentina weather remains threatening for corn and soybeans with ongoing heat and dryness. Maximum temperatures are predicted above 90 F, starting Friday and continuing through next week with hardly any rainfall. Drought has intensified in top farm provinces Buenos Aires and eastern Cordoba with only 10-40% of normal rainfall over the past month. Shallow-rooted crops, planted into wet fields, are in jeopardy," said Martell Crop Projections. Lanworth Inc estimated the Brazilian soybean crop at 80.3 MMT versus a previous estimate of 80.9 MMT. They placed Argentine output at 51.6 MMT compared to a previous estimate of 53.1 MMT. Michael Cordonnier estimated the Brazilian bean crop at 81.0 MMT, unchanged from previous estimate. He pegged the Argentine bean crop at 51.0 MMT, down 1 MMT from his previous estimate. CONAB comes out tomorrow with their Brazilian crop estimates, their previous estimates were for a bean crop estimated at 82.68 MMT and 2012/13 bean exports of 36.4 MMT (versus 82.5 MMT and 38.4 MMT from the USDA in January). Estimates for tomorrow's weekly export sales report for beans are a robust 800 TMT to 1.3 MMT. Chinese New Year starts this weekend, so some of next week's demand may get brought forward, with next week expected to be quiet.

Corn: Mar 13 Corn closed at USD7.22 1/2, down 6 1/2 cents; May 13 Corn closed at USD7.24, down 6 3/4 cents. Funds were said to have been net sellers of around 5,000 corn contracts on the day. The weekly ethanol production data disappointed, but maybe didn't surprise, with output up only marginally from last week's low of 770,000 barrels/day to 774,000 bpd. This is well under the level required to hit the USDA's demand target from this sector. With 37 US ethanol production plants currently closed the USDA may decide to reduce that target slightly on Friday, although there is some talk of margins having improved a little in the last couple of weeks. Michael Cordonnier forecast the Brazilian corn crop at 70.0 MMT and the Argentine corn crop at 22.5 MMT, both are unchanged from his previous estimates and below the USDA's 71 MMT and 28 MMT respectively. Lanworth Inc placed the Brazilian corn crop at 75.6 MMT versus a previous estimate of 75.8 MMT. In Argentina they went 25.1 MMT versus a previous estimate of 25.6 MMT. They also released tentative early projections for US corn yields and production in 2013/14, going for 155.6 bu/acre and a crop of 13.8 billion bushels. These would represent increases of 26% and 28% respectively if achieved. CONAB release their February Brazilian production estimates tomorrow. Last month they estimated the corn crop at 72.19 MMT and exports at 15.0 MMT. Estimates for tomorrow's weekly export sales are a modest 150-400,000 MT

Wheat: Mar 13 CBOT Wheat closed at USD7.61 1/2, up 4 cents; Mar 13 KCBT Wheat closed at USD8.09 3/4, up 2 1/2 cents; Mar 13 MGEX Wheat closed at USD8.44 3/4, up 3 cents. Wheat garnered support from talk that Russia may have already bought US wheat under the table. Even if they have it is only likely to be the odd cargo or two of high quality milling wheat. If they were to show up in tomorrow's or next week's weekly export sales report it would be interesting. Estimates for tomorrow are 200-500,000 MT. Old crop wheat sales need to be around 490 TMT/week to reach the USDA's target for this marketing year. Lanworth Inc estimated the US wheat crop in 2013/14 at 1.932 billion bushels versus a previous estimate of 1.941 billion. That's 52.6 MMT in English money and would represent a decline of 15% on the USDA's estimate of production in 2012/13. The USDA haven't yet put a figure on production this year, but the Congressional Budget Office released their 2013 US baseline projections today (made in October/ November). Back then they were forecasting a 2013/14 US wheat crop of 2.2 billion bushels, which is just under 60 MMT. Crop conditions have deteriorated markedly since then. MDA CropCast say that the 31-60 day outlook is trending warmer and drier, so there may not be too much improvement in sight for winter wheat. "The continued drier pattern across the Plains and western Midwest will maintain notable moisture shortages there, which will stress wheat as the crop greens up," they said.