Nogger's Blog

19/03/13 -- Soycomplex: Beans fell for a seventh straight day, with May 13 closing at the lowest levels for a front month since the early days of 2013. A report that China has cancelled purchases of Brazilian beans was the catalyst. It is suggested that Sunrise Group (one of the largest private importers in China who are said to import around 7 MMT of beans annually) may have cancelled almost 2 MMT of Brazilian beans, comprising 23 regular cargoes for April/June shipment and the 10 panamax cargoes for Jan/Feb shipment. Exactly why the market chooses to decided that this news is bearish as far as demand for US soybeans goes is unclear. Unless they were completely overbought to the tune of 2 MMT then surely some of these cargoes will be switched to the US? It is suggested that some, if not most, of the April/June requirement will be switched to Argentina. It seems inevitable though that they too will suffer logistical shipping problems once their soybean export program also gets underway. Oil World meanwhile said that China’s soybean stocks are at undesirably low levels and that the Argentine soybean crop may fall below their current estimate of 49.0 MMT. May 13 Soybeans closed at USD14.06 3/4, down 2 3/4 cents; Jul 13 Soybeans closed at USD13.88, down 6 1/2 cents; May 13 Soybean Meal closed at USD411.60, down USD1.70; May 13 Soybean Oil closed at 49.48, down 20 points.

Corn: The corn market continues to divorce itself from the demise of beans on increased domestic demand heading into next week's stocks report. Valero were said yesterday to have reopened it's idled ethanol plant in Bloomingburg, Ohio. Today came the news that they will restart another idled ethanol plant in Linden, Indiana, in a few weeks time. Tomorrow we get the weekly ethanol production data from the US Energy Dept. The bulls will be looking for an increase on last week's 797,000 barrels/day, which was below the level required to hit the USDA's target of 4.5 billion bushels worth of demand from the ethanol sector this season. Safras e Mercado said that 88% of the Brazilian 2nd corn crop has been planted, up from 77.5% a week ago and versus 89% a year ago. Michael Cordonnier left his Argentine corn production forecast unchanged at 24 MMT, but increased his Brazilian estimate by 2 MMT to 74 MMT. He anticipates 55% of this year's output will come from the 2nd crop corn. He also said that "the current cost of transporting corn from Sorriso in central Mato Grosso to the Port of Santos in southeastern Brazil is actually more than the cost of the corn." Japan, the world's largest corn importer, continue to tweak back their corn usage. Their Ag Ministry said that January use of corn in animal feed was 42.2% versus 42.7% in December and versus 45.1% a year ago. Japan imported 1.19 MMT of corn in January, down 7.7% from a year ago, they added. May 13 Corn closed at USD7.28 1/2, up 8 1/2 cents; Jul 13 Corn closed at USD7.12, up 8 3/4 cents.

Wheat: The market firmed on spillover support from corn, and short-covering. Funds shorts may be a little nervous heading into next week's stocks report, which may indicate more domestic wheat feeding and therefore lower stocks than the market expects. There are also ideas that Russia's grain crop might not rebound quite so successfully this year as the Ministry's current official estimate of 95 MMT. Russia's Deputy Ag Minister said on Monday the the country would produce 80 MMT of grains this year, which is "only" 11.5% up on last year. There's also talk of the stocks being so low at the end of the current season that the government will be aggressive buyers in the Aug/Oct period, thereby limiting the impact that we usually see when new crop Russian grain comes onto the market. SovEcon today estimated Russia’s 2013/14 grain exportable surplus at 16.0 MMT, little more than the 15.1 MMT of this season. Japan is seen importing more wheat then ever before as they cut back on corn usage in animal feed. They are shopping for 132,777 MT of milling wheat for April/June shipment in their regular weekly tender, of which 76,858 MT is of US origin. Whilst winter wheat crop conditions in Kansas and Oklahoma improved a little this week, they were down in Texas. Even with that improvement in the former two 29% of Kansas wheat and 37% of Oklahoma wheat is still rated as poor to very poor. May 13 CBOT Wheat closed at USD7.22, up 9 1/4 cents; May 13 KCBT Wheat closed at USD7.51 3/4, up 7 1/2 cents; May 13 MGEX Wheat closed at USD7.98 3/4, up 10 cents.