Nogger's Blog

27/02/13 -- Soycomplex: Strike or no strike concerns about Brazilian port congestion continues with reports today that shipping delays are now up to 60 days. Again that could see a shift in demand to the US for soybeans, and nearly everything that they've got to export is already committed. Right on cue the USDA reported the sale of 120 TMT of soybeans to "unknown" for 2012/13 shipment, along with a similar volume to China for new crop delivery. Brazilian union workers are in talks with the government but may yet call a strike after March 15 if their concerns are not resolved. A general strike then would cause absolute mayhem, with Argentina's harvest not due for another month, and they themselves also mired in logistical problems and with farmers there already threatening an embargo on sales next month. Customs data shows that China’s Jan bean imports were 4.782 MMT and that none of that total came from either Brazil or Argentina. The US supplied almost 94% of that volume. The Deutsche Bank estimated Brazil’s soybean crop at 79-80 MMT versus the USDA estimate of 83.5 MMT. Trade estimates for tomorrow's weekly export sales report for beans are 650-750 TMT. Fund buying in beans was estimated at around 4,000 lots on the day. Mar 13 Soybeans closed at USD14.57 1/2, up 9 3/4 cents; May 13 Soybeans closed at USD14.39 1/2, up 7 3/4 cents; Mar 13 Soybean Meal closed at USD429.30, up USD1.60; Mar 13 Soybean Oil closed at 49.27, up 25 points.

Corn: The corn market finished higher on old crop and lower on new crop. The weekly ethanol grind was up 15,000 barrels/day to 812,000 bpd, the largest since the first week of the year and the fourth week in a row of increases. One leading Chinese corn analyst said that China is buying/seeking US corn due to shipping problems from South America. They also said that China's 2013 corn import needs may be around 5 MMT due to the poor quality of last year's harvest. Shanghai-based JC Intelligence said that Chinese feed mills have bought over 200 TMT of US corn since last week. Estimates for tomorrow's weekly export sales report are around 350-450 TMT, will any of this Chinese business show up? Looking into the South American weather forecast for March, MDA CropCast said: "In Brazil, above normal rainfall in northeastern areas would slow corn and soybean harvesting, while near to below normal rainfall in central and southern areas would favour harvesting. Near normal rainfall across most of the safrinha corn belt in Brazil would favour corn growth. Rains are expected to return to Argentina during April and May, which would slow drydown and harvesting of corn and soybeans." The Deutsche Bank estimated Brazil’s corn crop at 70-71.0 MMT versus the USDA estimate of 72.5 MMT. Funds were estimated to have been net buyers of around 2,000 corn contracts on the day. Mar 13 Corn closed at USD7.09 1/2, up 4 1/2 cents; May 13 Corn closed at USD6.95 1/4, up 1/2 cent; Sep 13 Corn closed at USD5.77 3/4, down 1 1/2 cents.

Wheat: The market drifted lower into the close after Mar 13 CBOT wheat had posted double digit gains at one stage. Tomorrow's export sales report will be of particular interest for wheat, with the trade expecting sales of around 500-700 TMT versus 755,900 MT last week. Will there be any confirmation of the recently rumoured sales to "non-traditional" destinations such as China, Russia or even Europe? Saudi Arabia tendered for 110 TMT of optional origin soft wheat and 400 TMT of optional origin hard wheat for June/Aug shipment. Canada and Australia will compete with US wheat for that order. Russia keeps selling it's intervention stocks off, with another 64,782 MT being sold today. Carryover at the end of the season is expected to be very low. Some suggest that this will make the government keen buyers once new crop comes along, and that maybe therefore we won't see domestic traders quite so aggressive early in the new season as they normally are. It remains to be seen how much good recent heavy snowfall does for US winter wheat once it breaks dormancy. "Milder temperatures this weekend in the southern Plains will allow the snow there to indeed begin to melt, but little snow melt is expected elsewhere in the Plains or the Midwest. In fact, another round of snow is expected in the northeastern Plains and west central Midwest early next week," said MDA CropCast. Funds were estimated to have been modest buyers of around 1-2,000 lots of CBOT wheat on the day. Mar 13 CBOT Wheat closed at USD7.04 1/4, down 1 1/2 cents; Mar 13 KCBT Wheat closed at USD7.34 1/4, up 1 1/2 cents; Mar 13 MGEX Wheat closed at USD7.87 1/4, down 1 3/4 cents.