Nogger's Blog

22/04/13 -- Soycomplex: A weekend of less severe weather than anticipated, and an improved outlook for the week ahead set the tone. China imported 3.84 MMT of soybeans last month, down 20.4% from a year ago, according to customs data. That takes Jan/Mar imports to 11.49 MMT, down 13.35% from a year ago. At least some of this decline will have been down to shipping delays out of Brazil. Nevertheless bird flu concerns, and the possible impact on demand for beans and meal have got the market nervous. China's April bean imports are estimated at 4.18 MMT, rising to 5.9 MMT in May and 6.9 MMT in June. This seasonal pick-up in demand is normal for this time of year. The question now is will it materialise? There have now been 104 confirmed cases of bird flu in China with 21 deaths. Weekly US soybean export inspections of 4.907 million bushels were below the expected 6-11 million. That added a little to the negative tone even though net commitments are already 99.7% of the USDA's target for the season. Safras e Mercado said that the Brazilian bean harvest is 86% complete, which is around normal for this time of year. They estimated the crop there at 82.495 MMT, along with Argentina's bean crop at 50.0 MMT and Paraguay's at 8.0 MMT. The USDA announced 174 TMT of new crop US beans sold to China. Fund selling was estimated at around 6-7,000 soybean contracts on the day. May 13 Soybeans closed at USD14.17 1/4, down 11 cents; Jul 13 Soybeans closed at USD13.64 1/4, down 18 1/4 cents; May 13 Soybean Meal closed at USD410.00, down USD2.40; May 13 Soybean Oil closed at 48.62, down 54 points.

Corn: An improved weather outlook was also seen as bearish for corn. Weekly export inspections of 12.401 million bushels were in line with the expected 10-15 million, although hardly spectacular. This is still around 5 million bushels below the level needed to hit the USDA target of 800 million bushels worth of US corn exports this season. Bird flu concerns in China are also weighing on corn. Customs data shows China imported 237,044 MT of corn in March, down 49.78% compared to a year ago. That takes Jan/Mar imports to 1.028 MMT, down 41.05% from a year ago. Pilgrims Pride’s CEO (the second largest chicken producer in the US) was quoted as saying that they plan to buy 10% of their Dec 12/Jul 13 corn requirement from Brazil. Safras e Mercado report that Brazil's first corn crop is 70% harvested versus 83% a year ago. They estimate Brazil's second corn crop at 41.56 MMT versus 37.977 MMT a year ago. The USDA reported after the close that 4% of the US corn crop has been planted, versus the 5-year average of 16% and 26% a year ago. The trade seems to be viewing recent heavy Midwest rains as likely to do more good than harm at this stage in terms of helping resolve long-term drought. Early corn plantings last year, as we now know, turned out to be less beneficial than was thought likely to be the case at the time. You could even make out a case that they were harmful to final yields in that they speeded crop maturity up to coincide with the height of the drought. Fund selling was estimated at a net 7,000 contracts on the day. May 13 Corn closed at USD6.45 3/4, down 6 1/4 cents; Jul 13 Corn closed at USD6.23 1/2, down 9 1/2 cents.

Wheat: The wheat market closed lower, but well off early session lows. Weekly export inspections of 24.848 million bushels beat last week's 23.678 million and were above the top end of trade expectations of 18-24 million. China's March wheat imports of 289,344 MT were down 46.03% from a year ago. Jan/Mar imports are now 691,229 MT, down 38.34% from a year ago. Drier and warmer weather this week in the US Midwest will be beneficial for fieldwork. After the close the USDA reported winter wheat in the good/excellent category declined by one point to 35%. Poor/very poor meanwhile increased two points to 33%. This was in line with trade expectations. Only 7% of the US spring wheat crop was was planted, up just one point from 6% last week and compared to 52% last year. The 5-year average for this time of year is 24%. Winter wheat headed is only 8% versus 42% last year and the 5-year average of 19%. Winter wheat conditions are worst in Texas, where 60% of the crop is rated poor/very poor, followed by Colorado (56%), South Dakota (53%), Nebraska (43%), Kansas (37%) and Oklahoma (36%). Egypt's Ag Ministry estimated their 2013/14 wheat crop at a record 10.0 MMT versus a previous estimate of 9.5 MMT. Few believe this to be realistic. The USDA currently say 8.7 MMT, and many private estimates are lower than this. Funds were judged to have been net sellers of around 2-3,000 Chicago wheat contracts on the day, and remain net short. It might not take a move too much below USD7/bu to encourage some profit-taking. On the day May 13 CBOT Wheat closed at USD7.02 1/4, down 6 3/4 cents; May 13 KCBT Wheat closed at USD7.39 1/2, down 6 1/2 cents; May 13 MGEX Wheat closed at USD8.18 3/4, down 6 3/4 cents.