Nogger's Blog

07/03/13 -- Soycomplex: The choppy theme continues as we head into tomorrow's all important USDA report. Nearby beans remain well supported by heavy rains forecast for Southern Brazil in the week ahead which will delay harvesting, and possibly add to logistical problems too. Michael Cordonnier reports a 60km line of trucks waiting to unload soybeans at one of the three rail terminals in Mato Grosso. There are also reports that dock workers in Brazil will hold a one day strike on Mar 19, although negotiations between the unions and the government are still ongoing. Weekly export sales of 392,000 MT of old crop and 990,600 MT of new crop beat trade expectations. With more than 5 months of the season left to go that takes US commitments on soybeans to over 95% of USDA targets. The USDA attaché in Argentina estimated the soybean crop there at 50.0 MMT versus the USDA's February estimate of 53.0 MMT. CONAB cut their estimate on production in Brazil by 1.3 MMT to 82.1 MMT, although that's still a record. They also cut their soybean export estimate to 36.78 MMT from a previous estimate of 37.78 MMT. Macquarie estimated Brazil’s bean crop at 81.0 MMT and Argentina's at 48.9 MMT. The ongoing strong pace of US exports means the trade is expecting a cut in US ending stocks tomorrow, with the average trade guess at 122 million bushels, from within a range of estimates of 107–131 million, versus the USDA February estimate of 125 million. Fund buying was estimated at a net 3,000 soybean contracts on the day. Mar 13 Soybeans closed at USD15.03 1/2, up 19 cents; May 13 Soybeans closed at USD14.73 1/2, up 7 1/2 cents; Mar 13 Soybean Meal closed at USD436.00, up USD1.80; Mar 13 Soybean Oil closed at 50.40, up 34 points.

Corn: Weekly export sales were poor at net cancellations of 49,800 MT of old crop and sales of only 206,400 MT for new crop against expectations of a combined 500-700 TMT. South Korea cancelled a tender to import 55 TMT of optional origin corn for July shipment due to high prices. CONAB left their Brazilian corn production estimate unchanged at 76.1 MMT. Macquarie disagree, coming in at 68.0 MMT, saying that they expect lower "safrinha" - or second crop corn - yields. They have the Argentine corn crop at 24.5 MMT versus the USDA's 27.0 MMT. The FAO said that "prospects for the first 2013 maize crops in South America remain generally favourable." In Brazil they said "Planting progress for the second season crop is also satisfactory under the good moisture conditions and the area is expected to increase from last year’s level." Yesterday's Energy Dept numbers show 84.5 million bushels of corn used for ethanol production last week versus the 87.8 million required to hit the USDA's target of 4.5 billion bushels of demand from that sector this season. POET are said to be actively looking to buy US wheat due to the high corn price to use in the grist to make ethanol but they are limited on inclusion levels. MDA CropCast said that the world would produce 894 MMT of corn in 2013/14, an increase of 9.3%, led by a near 82 MMT (22.7%) recovery in US production to a record 341.4 MMT. None of that is even in the ground yet of course. The slow US export pace sees total commitments to date at only 63.4% of USDA projections. That has the trade anticipating a rise in US ending stocks in tomorrow's report to 649 million bushels, from within a range of estimates of 627–750 million, and the USDA February estimate of 632 million. Funds were said to have been modest net buyers of around 2,000 contracts on the day. Mar 13 Corn closed at USD7.11 1/2, up 3 1/2 cents; May 13 Corn closed at USD6.91 1/4, up 2 3/4 cents.

Wheat: Weekly export sales of 618,100 MT of old crop and 210,000 MT of new crop comfortably beat trade forecasts for sales of a combined 300-600 TMT. China was a featured buyer of 60,400 MT of the old crop. Net commitments are now 81.7% of the USDA target for a season that ends in May. Old crop sales now need to average 403 TMT/week to hit that target. The FAO forecast a 4.3% rebound in world wheat production for 2013/14 to 690 MMT, that would be the second highest crop on record. Taiwan bought 93,680 MT of US wheat for April/May shipment. Japan bought 133,057 MT of wheat for April/June shipment, of which US wheat accounted for 47,658 MT, with the rest going to Canada and Australia. Oman seeks 20 TMT of optional origin milling wheat for April shipment. Argentina’s Ag Ministry estimated the 2012/13 wheat crop at 10.1 MMT, down 28% from 14.1 MMT a year ago. The USDA currently estimate 11.0 MMT, so may revise that lower tomorrow. India announced their intention to release an additional 5 MMT of wheat for export over the next three months, although their price aspirations seem ambitious. India’s 2013 wheat crop is estimated at a near record 92.3 MMT. Russia’s Grain Union estimated their 2013 grain crop at 95.0 MMT up 34% from a year ago, producing a 2013/14 wheat exportable surplus of 20.0 MMT. POET potentially buying US wheat for ethanol production is supportive. That, and the high price of corn, could see the USDA raise domestic wheat consumption tomorrow. For now though the trade is anticipating an increase in US ending stocks to 713 million bushels, from within a range of estimates of 671–754 million, and the USDA February estimate of 691 million. Mar 13 CBOT Wheat closed at USD6.86 3/4, up 10 1/2 cents; Mar 13 KCBT Wheat closed at USD7.40, up 10 1/2 cents; Mar 13 MGEX Wheat closed at USD8.06 1/4, up 4 1/4 cents.