Nogger's Blog

03/06/13 -- Soycomplex: Soybeans advanced on US weather concerns and strong global demand, with Jul 13 pressing on to the highest close for a front month since last October and a highest for the contract since September 2012. Fresh news was relatively thin on the ground, ahead of the USDA crop progress report due out after the close. Weekly soybean export inspections of 4.44 million bushels were up on last week's 3.4 million. Strong demand for meal, total US commitments are already 101% of the USDA target for the season, is seen keeping domestic demand for soybeans strong. Brazil's Trade Ministry reported that the country had exported a record 7.95 MMT of soybeans in May, up from 7.15 MMT in April. A Reuters survey estimated US soybean plantings this year at 78.238 million acres versus the USDA's May estimate of 77.1 million as some area gets switched from unplanted corn. The respondents weren't as optimistic as the USDA's 44.5 bu/acre forecast on yields though, coming up with an average estimate of 43.668 bu/acre. After the close the USDA put US soybean planting at 57% complete, up from 44% last week, but well behind the 5-year average of 74% and the slowest pace since 1996. Trade guesses were all over the place, but within a broad range of 50-65% done. The USDA said that 31% of the crop was emerged versus 49% on average. Jul 13 Soybeans closed at USD15.32 1/2, up 22 1/2 cents; Nov 13 Soybeans closed at USD13.25 1/2, up 21 1/4 cents; Jul 13 Soybean Meal closed at USD454.40, up USD7.20; Jul 13 Soybean Oil closed at 48.66, up 28 points. As mentioned previously, beans have found it consistently difficult to hold above the USD15/bu mark since last summer, when fund enthusiasm to be heavily long in the ag sector was far higher than it is currently. It will be interesting to see if they can manage to do so this time.

Corn: Overnight support for corn quickly evaporated once the daytime open outcry session opened. Funds are expected to begin rolling out of their July corn longs tomorrow, which may add pressure to the nearby position. Weekly export inspections of 11.660 million bushels were towards the low end of trade expectations. Morgan Stanley forecast US corn plantings at 93.5 million acres, some 3.8 million less than the USDA's May estimate. Even so, the 2013 US crop will still come in at a record 13.3 billion bushels, they said. A Reuters survey came up with and average estimate 95.113 million acres versus the USDA's 97.3 million. Interestingly the same survey estimate the US corn yield at an average of 158.231 bu/acre, from within a range of estimates of 156.0-165.0 bu/acre, and actually slightly higher than the USDA's May estimate of 158.0 bu/acre. After the close the USDA said that corn planting progress had only advanced modestly on the week, up from 86% last week to 91% as of Sunday night, and versus the 5-year average of 95%. North Carolina is the only state seen 100% done. Iowa is a notable laggard at 84% complete versus 99% on average, meaning that 1.7 million acres intended for corn remain unplanted in the state. Nationally the figure is 8.75 million acres versus 4.8 normally. Corn emergence is 74% versus 82% on average. Crop conditions at this early stage are 63% good/excellent versus 72% last year, 67% in 2011 and 76% in 2010. Jul 13 Corn closed at USD6.55 3/4, down 6 1/4 cents; Dec 13 Corn closed at USD5.60, down 7 1/4 cents. An assortment of banks are lining up to predict corn prices in the USD4-5/bu range for the 2013/14 period. Morgan Stanley were fairly optimistic today with an estimate of USD5.30/bu, few see much in the way of upside at the moment, although that could change. US weather developments between now and August will dictate price direction, although you can be sure that things will remain volatile.

Wheat: It was a choppy session for wheat. Overnight strength also quickly gave way to weakness, encouraged by sharply lower corn, but wheat managed to turn that around, possibly on the back of unwinding of corn longs/wheat shorts. Weekly export inspections of 16.799 million bushels were down on last week's 21.220 million. Saudi Arabia bought a 525 TMT combo of hard/soft wheat over the weekend for Sep/Oct shipment. US origin wheat was in amongst the options along with Australian, European and South American wheat. Brazil's Rio Grade do Sul is expecting wheat plantings to rise 4% this year to over 1 million hectares, with production in the state seen rising by almost a third to 2.47 MMT as yields return to more like "normal" levels. Rains have slowed early plantings a little, but should ultimately aid germination, which are only 5% complete versus 8% this time last year. There are reports that the Indian government has been failing to procure as much wheat as it expected following the recent harvest. Whether this is due to farmer dissatisfaction with prices and/or lower production than forecast is unclear. Government agencies in the state of Haryana are said to only have taken 5.88 MMT of new crop wheat into local granaries versus a target of 8.71 MMT and the 8.325 MMT that they had received by this time last year. In Punjab procurement currently stands at 10.9 MMT versus a government target of 14.0 MMT. After the close the USDA said that US spring wheat planting was up just one point from last week to 80% done, and versus the 5-year average of 92%. Emergence is at 61% versus 80% normally. Crop conditions are 64% good/excellent versus 78% this time last year. Winter wheat is 73% headed versus 80% normally, Winter wheat good/excellent conditions rose one percentage point to 32%, but so too did poor/very poor to 43% highlighting the diversity around this year. Jul 13 CBOT Wheat closed at USD7.08 3/4, up 3 1/4 cents; Jul 13 KCBT Wheat closed at USD7.51 1/2, up 1/2 cent; Jul 13 MGEX Wheat closed at USD8.23, up 3 cents.