Nogger's Blog

08/03/13 -- Soycomplex: Soybeans ended mixed with strong nearby demand and shipping delays in Brazil supporting the nears and prospects for bumper availability later in the year weighing on the deferred positions. The USDA completely ignored the fact that strong US sales, the vast majority of which have already been shipped, surely mean that their export projection for 2012/13 is too low and left it unchanged at 1.345 billion bushels. That allowed them to also leave ending stocks unchanged at 125 million bushels. They would appear to have decided that 125 million is their minimum comfort zone, being little more than 2 weeks worth of supply. They left Brazilian soybean production unchanged at 83.5 MMT, the trade was expecting a modest reduction. They cut Argentine output by 1.5 MMT to 51.5 MMT, the trade was forecasting a 3 MMT cut to 50 MMT. That enabled them to raise world ending stocks slightly to 60.2 MMT versus the trade expecting a small cut to 59.58 MMT. FAPRI (The Food and Agricultural Policy Research Institute) estimated US 2013 soybean plantings at 78.5 million acres versus the USDA projection of 77.5 million. They see the average yield at yield at 43.5 bu/acre versus the USDA projection of 44.5 bu/acre. They see US output in 2013 at 3.367 billion bushels versus the USDA projection of 3.405 billion, but up 11.7% on 3.015 billion in 2012. They don't see US 2013/14 ending stocks rebounding as much from this season's 125 million as the USDA's 250 million bushels, releasing an estimate of 191 million. Chinese customs data shows that the country imported 7.68 MMT of soybeans in Jan/Feb 2013, down 9% from the same period in 2012. Funds were estimated to have been net sellers of around 2-4,000 soybean contracts on the day. Mar 13 Soybeans closed at USD15.08 1/2, up 5 cents; Aug 13 Soybeans closed at USD14.04, down 10 1/2 cents; Mar 13 Soybean Meal closed at USD436.10, up USD0.10; Mar 13 Soybean Oil closed at 50.16, down 24 points. For the week that puts the front months up 65 cents, meal up USD8.80 and oil up 69 points.

Corn: The USDA report was neutral to slightly friendly. Exports were cut 75 million bushels from 900 million to 825 million, few would argue with that. What surprised though was an increase of 100 million bushels in domestic feed usage. Demand from the ethanol sector was also left unchanged at 4.5 billion bushels despite the weekly grind consistently failing to match the level required hit this target and talk of at least one major producer looking to partially switch to wheat. That meant US ending stocks being left unchanged at 632 million bushels when the trade was anticipating a rise to 649 million. Brazilian production this year was also unchanged at 72.5 MMT, Argentine output wasn't cut by as much as expected - from 27.0 MMT to 26.5 MT versus the 25.6 MMT forecast by the trade. World ending stocks were trimmed from 118 MMT to 117.5 MMT versus the 117.87 MMT expected. FAPRI estimated 2013 US corn plantings at 96.9 million acres versus the USDA projection of 96.5 million and 97.2 million last year. Harvested area was seen at 88.8 million, the same as the USDA projection and up from 87.4 million in 2012 due to the high level of abandonment last year. Yields are seen rising to 161.8 bu/acre versus the USDA projection of 163.6 bu/acre, up 31% on 2012. That gives production of 14.37 billion bushels versus the USDA's projection of 14.53 billion and output of 10.780 billion in 2012. US ending stocks next year were forecast at 1.638 billion bushels versus the USDA projection of 2.177 billion, but still up 160% on this season's 632 million from the USDA. Fund buying in corn was estimated at around 10,000 contracts on the day. Mar 13 Corn closed at USD7.25 1/4, up 13 3/4 cents; May 13 Corn closed at USD7.03 1/2, up 12 1/4 cents. For the week Mar 13 was 1 cent higher and May 13 fell 5 cents.

Wheat: The USDA report looked bearish, but strength in corn added support for nearby months. World 2012/13 wheat production was raised from 653.6 MMT to 655.5 MMT, including a near 1 MMT increase for India to a record 94.88 MMT. That helped raise world ending stocks from 176.73 MMT to 178.2 MMT versus the small reduction to 176.69 MMT that the trade was expecting. US export potential was cut from 1.05 billion bushels to 1.025 billion, increasing US carryout from 691 million bushels to 716 million, which was 3 million more than anticipated. Despite talk of increased demand for wheat due to expensive corn, the USDA didn't increase their domestic usage estimate. FAPRI estimated US wheat plantings for this year's harvest at 57.5 million acres versus the USDA's projection of 56.0 million and up 3.2% versus 55.7 million in 2012/13. Interestingly they have wheat harvested acres at 49.7 million, far higher than the USDA's projected 46.5 million. Whilst they have yields slightly lower than the USDA at 44.9 bu/acre versus 45.2 bu/acre from Washington, the sharp difference in harvested area means that FAPRI are predicting a US all wheat crop of 2.233 billion bushels and 133 million higher than the USDA's projection of 2.100 billion. That would equate to adding a further 3.6 MMT of output to the US this year than the USDA currently predict. Production in 2012/13 was 2.269 billion. FAPRI estimated 2013/14 US wheat ending stocks at 727 million bushels versus the USDA projection of 639 million and today's forecast of 716 million in 2012/13. Funds were thought to have maybe been net buyers in CBOT wheat to the tune of around 1,000 contracts. On the day Mar 13 CBOT Wheat closed at USD6.90, up 3 1/4 cents; Mar 13 KCBT Wheat closed at USD7.38 1/4, down 1 3/4 cents; Mar 13 MGEX Wheat closed at USD8.06 1/4, unchanged. For the week that puts CBOT wheat down 23 1/4 cents, with Kansas falling 17 3/4 cents and Minneapolis shedding 13 1/2 cents. For CBOT wheat this was the lowest close for a front month since June 2012 on the weekly chart despite today's modest gain.