Nogger's Blog

24/05/13 -- Soycomplex: The volatility with front month July beans continues. Ahead of a 3-day weekend there was probably some profit-taking and unwinding of spreads going on which saw the Jul/Nov spread narrow by 28 cents. Nearby bean availability is incredibly tight, but with funds looking to exit July longs and/or roll them into Nov then we could see plenty more crazy closes like this between now and the expiry of the front month on Jul 12th. Strong demand for meal sees the US The September-April crush running at 4.8% above year ago levels, yet the USDA is currently estimating the total US crush to be down 4% this season. Soybean imports need to rise, or the domestic crush needs to slow right up, failing which 2012/13 ending stocks will be a whole lot tighter than the 125 million bushels that the USDA presently stubbornly refuse to dip below. The Argentine Ag Ministry said that 85% of their bean crop has been harvested. They cut their production forecast to 50.6 MMT from a previous estimate of 51.3 MMT. The Buenos Aires Grain Exchange forecast Argentina's soybean crop at 48.5 MMT, unchanged from their previous estimate. They said that harvesting is 93% done versus 90% a week ago. Rabobank estimated the US soybean crop in 2013 at 3.269 billion bushels, a rise of 8.4% on last year. They predicted yields at 42.5 bu/acre versus the USDA's 44.5 bu/acre. They see world 2013/14 soybean production rising from 263.6 MMT this season to 277.2 MMT next, with ending stocks up from 55.2 MMT to 62.3 MMT. They cut their forecast for CBOT soybean prices in the final quarter of 2013 to USD11.75/bushel. At the turn of the year in their 2013 outlook they were predicting USD13.00/bushel in Q4 of this year. All eyes will now be on Tuesday night's planting progress report from the USDA, with soybeans expected to be around 35-40% sown versus 28% as of last Sunday night. Jul 13 Soybeans closed at USD14.76 1/4, down 23 1/4 cents; Nov 13 Soybeans closed at USD12.47 3/4, up 4 3/4 cents; Jul 13 Soybean Meal closed at USD428.20, down USD8.80; Jul 13 Soybean Oil closed at 49.24, down 42 points. Jul 13 beans were up 27 1/4 cents on the week, with nearby meal up USD3.10 and front month oil down 28 points.

Corn: As with soybeans front month Jul 13 corn fell and new crop rose in pre-weekend positioning. Next week's price direction will likely be dictated by weekend weather events and Tuesday night's planting progress report. The trade is expecting that to show corn plantings at around 80-90% complete versus 100% a year ago and 95% on average. Taiwan's MIPA bought 60 TMT of Brazilian corn for August shipment overnight. An Israeli private buyer purchased 75 TMT of what was thought to be South American origin corn for June-September shipment. Around 20 TMT of Argentine corn apparently arrived in Brazil's northeastern state of Bahia yesterday. Production in that region was hit by drought this season. Rabobank forecast the US corn crop rising from 10.78 billion bushels last year to 13.94 billion in 2013, a rise of 29.3%. They have the average corn yeild this year pencilled in at 157 bu/acre versus the USDA's 158 bu/acre and 123.4 bu/acre in 2012. They see the world 2013/14 corn crop rising from 840.6 MMT last year to a record 953.5 MMT. That's less than the USDA's 965.9 MMT, but they also predict lower corn usage and therefore higher corn ending stocks than the USDA. They forecast 2013/14 world carryout at 161.7 MMT, versus 126.8 MMT this season, and 159.1 MMT from the USDA. That's a 2013/14 stocks to use ratio of 18% versus the USDA's 17.1% and compared to 15% this season. The Buenos Aires Grains Exchange said that 50.5% of the Argentine corn crop is harvested versus 46% a week ago. They predicted production of 24.8 MMT, unchanged from their previous estimate. The Argentine Ag Ministry have this season's corn crop estimated at 25.7 MMT. The most recent USDA figure is 26.5 MMT. Rabobank cut their forecast for Q4 CBOT corn prices to USD5.00/bu. Deutsche Bank predicted that prices could go lower than that, suggesting "new crop corn prices south of USD4.00 a bushel" in one of the most bearish forecasts yet. July 13 Corn closed at USD6.57 1/4, down 4 3/4 cents; Dec 13 Corn closed at USD5.36 1/2, up 1 3/4 cents. For the week front month July was up 4 1/2 cents and Dec 13 rose 17 cents.

Wheat: The rumoured Chinese business that sent prices sharply higher yesterday was confirmed, with the USDA announcing the sale of 180 TMT of new crop SRW US wheat to China. In what appeared to be a classic "buy the rumour, sell the fact" move the market closed lower. Maybe that was pre-weekend profit-taking after yesterday's rally that took CBOT prices back up above USD7/bu, or maybe it was disappointment that the quantity confirmed wasn't higher. The rumour is that China booked 600-700 TMT of US SRW wheat for July/August shipment, so there may be more sales announced next week. South Korea's MFG bought 114 TMT of optional origin feed wheat for Sep/Oct shipment. The Asian country is said to have bought over 700 TMT of wheat and corn in the past 18 days. Germany are said to have exported over 1 MMT of wheat to Iran in the Jul/Mar period. The Buenos Aires Grains Exchange estimated Argentine wheat plantings for 2013/14 at 3.9 million hectares, that's considerably less than the Ag Secretary's forecast of "close to 4.5 million" earlier in the week, even if it is up 8.3% on last year. They said 3.2% of the wheat crop has been planted so far. Rabobank forecast a 2013/14 world wheat crop of 694.2 MMT, an increase of almost 55 MMT, or 8.6%, on last year. World ending stocks will rise from 166.5 MMT this season to 181.1 MMT next representing a stocks to use ratio of 22%, they said. They forecast the 2013 US all wheat crop at 2.050 billion bushels, slightly lower than the USDA's 2.057 billion, and 9.7% down on production in 2012. Canadian plantings remain slow. Saskatchewan crop planting as of May 20th is 27% complete versus 19% a week ago and 44% for the 5-year average. Active showers moving though Kansas and Nebraska this weekend and early next week should be of some benefit. Early winter wheat harvesting is said to be underway in Texas. Ukraine got beneficial rain this week, and so too did parts of Australia. Southern and central Russia has decent rains forecast in the 7-14 day time frame. Jul 13 CBOT Wheat closed at USD6.97 1/2, down 5 3/4 cents; Jul 13 KCBT Wheat closed at USD7.45 3/4, down 8 3/4 cents; Jul 13 MGEX Wheat closed at USD8.05 3/4, down 7 1/2 cents. For the week Chicago wheat was 14 1/4 cents firmer, with Kansas up 8 1/2 cents and Minneapolis 2 cents higher.