Nogger's Blog

03/04/13 -- Soycomplex: Soybeans fell as reports of a third death from bird flu in China circulated, sparking fears of reduced demand from the world's largest buyer. Private estimates already suggest that Chinese soybean imports may fall short of the USDA's estimated 63 MMT by some 3-4 MMT. For the week March 23–29 total crush capacity utilisation in China was only 48 percent. Informa increased their estimate for Argentine soybean production this year from 51 MMT to 52 MMT, although they cut Brazil from 84.5 MMT to 83.25 MMT. Most analysts have Brazilian production shrinking a little due to rain at harvest time. The USDA's Foreign Agricultural Service estimated Argentina's crop at only 48.5 MMT (the USDA themselves say 51.5 MMT) and Brazil's at 82.0 MMT versus the USDA estimate of 83.5 MMT. Whichever way you look at it all of these estimates for Brazil will be record highs. The FAS even threw in a forecast for Brazil's '13/14 production of a new record 85 MMT. The FAS estimated the Paraguay '12/13 soybean crop at 8.35 MMT versus the USDA estimate of 7.75 MMT, adding that harvesting there was 95% complete. Vietnam bought 10 TMT of Argentine meal for May shipment. Trade estimates for tomorrow's weekly export sales report for soybeans are 300-625 TMT. China are on holiday Thursday/Friday. May 13 Soybeans closed at USD13.80 1/4, down 13 3/4 cents; Jul 13 Soybeans closed at USD13.57 3/4, down 16 3/4 cents; May 13 Soybean Meal closed at USD398.00, down USD4.10; May 13 Soybean Oil closed at 49.15, down 44 points.

Corn: The corn market got support from surging wheat which is now priced at more than 50 cents over corn on front month May 13 and USD1.80 over on new crop Dec 13. Informa upped their Argentine corn production estimate from 25 MMT to 25.3 MMT and increased Brazilian output from 71.6 MMT to 71.95 MMT. Both will be aggressive exporters and provide stiff competition for American corn in 2013. Informa estimate that 27% of the Argentine corn crop has been harvested. South Korea seeks 140 TMT of optional origin corn for August shipment, South America will likely be the favourite for that. Black Sea corn will also offer stiff competition going forward. Optional origin corn is said to now be priced USD15/tonne under feed wheat into East Asian ports. China's corn stocks at northern ports are estimated at 3.15 MMT versus 2.0 MMT a year ago. Taiwan bought 23,000 MT of US corn. Data from the Energy Dept showed the weekly ethanol grind up only marginally, by 2,000 barrels/day to 807,000 bpd, less than the level required to meet USDA targets yet again. The daily grind needs to average nearly 840,000 bpd to do that. Cold/wet weather in the US is seen continuing to delay early planting ambitions, although getting the corn in early isn't always a benefit as last year showed. Trade estimates for tomorrow's weekly export sales report are around 175-400 TMT. Funds were estimated to have been light further sellers on the day of around 1-2,000 lots. May 13 Corn closed at USD6.41 1/2, up 1 cent; Jul 13 Corn closed at USD6.30 1/4, up 3 cents.

Wheat: The wheat market rebounded sharply from recent losses on concerns over US production potential and increased demand. There's talk of China enquiring for US wheat due to problems with the gluten content of Canadian wheat. The market may also have seen some short-covering today, along with rolling out of long corn, short wheat positions. Monday's strong weekly export inspections underpin hopes that demand for US wheat is there, trade estimates for tomorrow's weekly export sales report are 400-700,000 MT. Last week's sales of a combined 828,600 MT beat trade forecasts of 3-600 TMT. Old crop sales need to average 321 TMT/week to hit the USDA projection for the 2012/13 season. Last week's old crop sales of 580,300 MT easily beat that. The market should be supported by the notion that US wheat is cheap. As of mid afternoon Chicago wheat prices had fallen by 12.7% since the turn of the year. European wheat has fallen considerably less, with Paris wheat down by 4.3% since Dec 31 and London wheat prices falling by only 3% during this period. Whilst India still have plenty of wheat to sell, they didn't fancy selling it at last week's prices, so they aren't going to fancy this week's levels much. The "usual suspects" around the Black Sea when it comes to discounting the wheat market are sold out, for the time being, which does seem to provide the US with a little window of opportunity. Funds were said to have been net buyers in CBOT wheat of around 7,000 contracts. May 13 CBOT Wheat closed at USD6.96 1/2, up 25 3/4 cents; May 13 KCBT Wheat closed at USD7.35 1/4, up 18 1/2 cents; May 13 MGEX Wheat closed at USD7.91 1/2, up 15 1/4 cents.