Nogger's Blog

10/05/13 -- Soycomplex: The USDA report proved to be fairly predictable, keeping the old crop outlook tight, but projecting the usual jam tomorrow. They stood by their minimum "line in the sand" for US old crop ending stocks of 125 million bushels. New crop ending stocks however came in above expectations at 265 million bushels versus the average trade guess of 239 million. That came courtesy of a projected 44.5 bushel/acre yield in the US this year, up more than 12%, or almost 5 bu/acre on last year. That is seen producing a US soybean crop of 3.39 billion bushels in 2013, also more than 12% up on year ago levels. They also pegged global soybean production for 2013/14 at a record 286 MT, up 6% compared 269 MT in 2012/13. Brazil's crop next year is seen rising from this year's record 83.5 MMT to a new record 85.0 MMT, with Argentina's coming in at a record equalling 54.5 MMT versus 51.0 MMT this year (the latter being revised down today from 51.5 MMT last month). These production numbers take world ending stocks for 2013/14 to a record large 75 MMT. That's not as outrageous as it might sound, as the USDA have also pencilled in Chinese imports at a record 69 MMT in 2013/14, a hefty 10 MMT more than they are expected to ship in 2012/13. In other news, the Buenos Aires Grains Exchange said that Argentina's soybean harvest is 79.3% complete, up from 66.2% a week ago and versus 73.4% a year ago. They estimated Argentina’s soybean crop at 48.5 MMT, unchanged from their previous estimate. The CFTC commitment of traders report shows spec money continuing to exit soybean longs. Funds were estimated to have been further net sellers of around 5,000 soybean contracts on the day. May 13 Soybeans closed at USD14.88 1/4, down 3 cents; Jul 13 Soybeans closed at USD13.99, down 9 3/4 cents; Nov 13 Soybeans closed at USD12.05 1/2, down 10 cents; May 13 Soybean Meal closed at USD444.30, up USD4.20; May 13 Soybean Oil closed at 49.17, up 10 points. For the week May 13 beans were up 33 1/4 cents, whilst Nov 13 beans were down 15 3/4 cents. May 13 meal was up USD26.50 and May 13 oil up 1 point.

Corn: Similar to soybeans, corn got a bit of support nearby from tight old crop US supplies, but the outlook was more bearish going forward into new crop. The USDA pegged US corn yields at 158 bu/acre this year, 28% up on last year, with production projected at 14.1 billion bushels, up more than 30% to a record 14.1 billion bushels. Old crop carryout was increased slightly to 759 million bushels versus the 754 million that the trade was expecting. US ending stocks for 2013/14 however are seen rebounding sharply to in excess of 2 billion bushels. Demand from the ethanol sector in 2012/13 was increased slightly to 4.6 billion bushels, although that was offset by a reduction in exports to 750 million bushels. Brazil's corn crop this year was raised 2 MMT to 74 MMT, whilst Argentina's was left unchanged at 26.5 MMT. The trade was expecting 75.2 MMT and 25.4 MMT respectively. World corn production in 2013/14 was pegged at a record 966 MMT, up 12.7% on 2012/13. New crop global ending stocks were forecast at 154.63 MMT versus an average trade estimate of 150.9 MMT. China is seen importing 7 MMT of corn next season, versus 3 MMT this year, despite their domestic production rising to a record 212 MMT. In other news, the Buenos Aires Grains Exchange said that Argentine corn harvest is 40.5% complete, up from 38.5% a week ago and versus 49.2% a year ago. They estimated the crop at 24.8 MMT, unchanged from their previous estimate. Now that this USDA report is out of the way we go back to trading the weather. The trade is expecting US corn planting to be somewhere between 25-35% complete in Monday night's crop progress report. it may come in at the low end of that scale as farmers wait for fields to dry out a little and soil temperatures to improve rather than risk planting in soggy, wet conditions. The CFTC commitment of traders report shows spec money increasing their net long heading into this report. Today funds were judged to have ended up as net sellers of around 10,000 contracts. May 13 Corn closed at USD6.87 3/4, down 6 3/4 cents; Jul 13 Corn closed at USD6.36 1/4, down 12 1/2 cents. May 13 corn was down 11 3/4 cents for the week whilst Jul 13 shed 25 cents.

Wheat: The USDA left US 2012/13 ending stocks unchanged at 731 million bushels, in line with expectations. They pegged 2013 US all wheat production at just over 2 billion bushels, which was also in line with trade forecasts. Production in the top US wheat state of Kansas was forecast down from 382.2 million bushels last year to 299.7 million, although this was now a severe a drop as many expected, and still beats output of 276.5 million in 2011. They did however paint a picture of plentiful wheat availability around the world for 2013/14, with a record global crop of 701 MMT, up 7% from output versus 2012. Whilst US output is seen down 8% this year, there are increases for Russia, Ukraine and Kazakhstan, which are all broadly in line with the estimates given by the FAO yesterday. Russia's wheat crop is seen up 48% to 56 MMT, with Ukraine's rebounding 40% to 22 MMT and Kazakhstan's forecast to increase 52% to 15 MMT. There are also increases for the EU (up 5% to 139 MMT), Canada (up 7% to 29 MMT), Australia (up 11% to 24.5 MMT) and Argentina (up 18% to 13 MMT). In other news, the Buenos Aires Grains Exchange estimated the 2013/14 Argentine wheat area at 3.9 million hectares, up 8.3% from a year ago. There are still a few question marks around for global wheat before the USDA's record 701 MMT crop is assured however. "New South Wales wheat producers are complaining bitterly about drought. The soil moisture deficit in northern and central NSW has worsened to 150-300 mm since August 1, 2012. The southwest wheat growing area requires 75-150 mm of rainfall to fully re-charge soil profiles based on official data from the Bureau of Meteorology," say Martell Crop Projections. Meanwhile "Drought has worsened in the past month in European Russia, threatening winter grains and slowing spring grain planting in Ukraine, southern Russia and southeastern Europe. Unusually warm temperatures are making drought worse, enhancing evaporation and speeding soil drying," they add. May 13 CBOT Wheat closed at USD6.96 3/4, down 19 1/2 cents; May 13 KCBT Wheat closed at USD7.71 1/2, down 20 1/2 cents; May 13 MGEX Wheat closed at USD8.57 3/4, unchanged. On the week CBOT wheat was down 14 1/2 cents, Kansas fell 18 1/2 cents and Minneapolis was down 3/4 of a cent.