Nogger's Blog

12/07/13 -- Soycomplex: The soybean market closed sharply lower to end the week, but still managed to post weekly gains. Profit-taking ahead of the weekend was probably the most likely reason for today's crash. Sunday night's latest weather forecasts may decide where we go to start next week. A slightly cooler and wetter outlook in this afternoon's forecasts was all that was needed to get traders to take some money off the table. Jul 13 contracts went off the board in a fittingly volatile fashion. Jul 13 beans, which closed just over USD16/bu last night traded in a range of around 75 cents, from an intra day high of USD16.10 to a low of USD15.34 1/2 before expiring at USD15.63 1/4, down 38 cents on the day. New front month Aug 13 closed at USD14.29, down 43 cents, Nov 13 beans closed at USD12.57 1/4, down 33 1/2 cents. Jul 13 Soybean Meal closed at USD535.50, up USD9.80, yet new front month Aug 13 closed USD15.10 lower at USD442.90. Jul 13 Soybean Oil closed at 46.09, down 40 points, Aug 13 closed at 46.22, down 31 points. For the week Nov 13 beans gained 29 cents and Aug 13 meal finished USD19.60 higher.

Corn: If I told you that the USDA today announced a sale of almost a million tonnes of US corn to China (it was 960 TMT to be precise) and that this was the eighth largest reported US corn sale of all time, then I guess that you'd expect the market to close higher, right? Not today my friend. Ever heard the expression buy the rumour, sell the fact? The sale appeared to confirm rumours from earlier in the week that China's state-owned Sinograin had bought 1 MMT of US corn (some say up to 1.3 MMT) to replenish government stocks. On a jittery Friday, where about to expire Jul 13 had already gained 32 cents on the week and Dec 13 had added 35 3/4 cents, heavy fund selling and profit-taking ahead of the weekend saw corn prices give up around half of those gains. The Commitment of Traders report shows managed money increasing their short position in corn for the week through to Tuesday night to almost 56k lots. The market will be watching Monday night's crop condition report to see if the US corn crop has made any improvement in the past week. Last week had good/excellent at 68%. Jul 13 Corn closed at USD7.01 1/2, down 15 1/4 cents; New front month Sep 13 Corn closed at USD5.45 1/2, down 15 1/4 cents; Dec 13 Corn closed at USD5.09 1/4, down 17 3/4 cents. For the week Dec 13 corn was 18 cents higher.

Wheat: Wheat closed little changed on all three exchanges, which wasn't a bad performance given the thrashing dished out to beans and corn. Wheat appears to be setting itself up to recreate it's position as maintaining a healthy premium over corn, with the USDA standing by their forecast for a huge US crop of the latter later this year. They cut world wheat stocks sharply in yesterday's WASDE report, much more so than the trade anticipated. Even whilst doing so they held steady on their forecast for a Russian wheat crop of 54 MMT and an Indian one of 92 MMT. They are probably at least 2 MMT, and possibly more like 4 MMT, too high on the former and around 5 MMT too high with the latter. That's another 7-9 MMT that may also disappear in future reports. The Commitment of Traders report shows managed money decreasing their short position on CBOT wheat for the week through to Tuesday night by around 2,300 contracts. They still sit on a short of around 48k lots however. China's Stats Bureau forecast the winter wheat crop there at 115.67 MMT, up 1.3% on last year. Many think that this is deliberately too high. Jul 13 CBOT Wheat closed at USD6.75 1/2, down 3 3/4 cents; Jul 13 KCBT Wheat closed at USD7.12 3/4, up 1 1/4 cents; Jul 13 MGEX Wheat closed at USD7.96 1/4, down 1/4 cent. For the week that puts CBOT wheat up 19 1/2 cents, with Kansas rising 36 1/4 cents and Minneapolis up 35 cents.