Nogger's Blog

13/08/13 -- Soycomplex: It was a particularly choppy day for front month Aug 13 beans, which go off the board tomorrow. That closed down 14 cents, almost on the lows of the day, although other months posted modest gains at the finish. The trade still seems to be digesting the USDA data from yesterday, and trying to decide if they were in reality too low on US yields. Much has subsequently been made of a change in methodology in compiling these numbers being responsible for lower yield estimates than the trade was anticipating. Planted acreage was estimated at 77.2 million acres versus 77.7 million in July and the national average yield was pegged at only 42.6 bu/acre versus 44.5 in July. As a result, total 2013/14 production fell to 3.255 billion bushels versus 3.420 billion last month. Michael Cordonnier estimated US soybean yields at 42.0 bu/acre, unchanged from his previous estimate. The market is now looking towards the weather, it's non threatening and cool, some will think it's too cool. "A cool air mass is pressing southward through the Midwest today, dropping temperatures in the low to mid 70s F for highs. Nights would chill down into the low-mid 50s F. Temperatures would be 10 F below normal in the 5-day forecast period," said Martell Crop Projections. China said that they will auction 500 TMT of soybeans from reserves on Thursday. They only sold 18% of the 500 TMT offered for sale last week. Safras e Mercado apparently said that total South American soybean production in 2013/14 could reach 160 MMT. The USDA currently has Brazil, Argentina and Paraguay down to produce a combined 146.9 MMT. The July NOPA crush numbers come out on Thursday. Aug 13 Soybeans closed at USD13.59 3/4, down 14 cents; Nov 13 Soybeans closed at USD12.27 3/4, up 2 1/2 cents; Aug 13 Soybean Meal closed at USD426.90, up USD1.20; Aug 13 Soybean Oil closed at 42.58, up 26 points.

Corn: Corn fell out of bed, quickly losing all of yesterday's post-USDA report gains and then some. Having been net buyers of 14,000 contracts yesterday, funds were said to have done a complete about turn and finished up as net sellers of the same volume today. The market clearly doesn't believe that the USDA's 154.4 bu/acre yield estimate is correct. The Deutsche Bank today pegged yields at 160.8 bu/acre - if they are correct then the 2013 US corn crop will come in at 14.33 billion bushels using the USDA's harvested area estimate, not the 13.76 billion that they gave the market yesterday, a difference of more than 4%. A MDA Weather Services crop tour of 53 corn fields across admittedly some of the more productive states of IN, IL, IA , MN, SD, and NE last week found an average yield potential there of 198.9 bu/acre! In the other camp, with the USDA, Michael Cordonnier estimated 2013 US corn yields at 154.0 bu/acre, unchanged from his previous estimate. Some analysts are saying that the fact that this year's late planted crop, which has also been slow maturing due to cooler than normal summer temperatures, means that final yields were probably more difficult to assess when the USDA conducted their field surveys to formulate this latest estimate. In the last 20 years, the August 1st USDA corn production forecast has been below the final estimate 10 times and above 10 times, so put your money down an take your pick. This delayed crop development will remain a big worry in the Upper Midwest for the next few months, say Martell Crop Projections. "Would late planted corn mature on time, before the first fall frost? Planting conditions in the spring were exceptionally cold and wet, leading to serious planting delays in Iowa, Minnesota, Wisconsin and the Dakotas. The 7% of Minnesota corn in the dough stage as of August 11 ranks among the slowest on record," they note. Sep 13 Corn closed at USD4.55 1/4, down 16 3/4 cents; Dec 13 Corn closed at USD4.47 1/4, down 16 3/4 cents.

Wheat: Wheat closed lower on all three exchanges, dragged down by corn. Sep 13 corn closed at the lowest level for a front month since September 2010 tonight. It's currently difficult to imagine wheat prices going up against the backdrop of record global production (for corn as well as wheat) and given that the current price differential between the two is already rather high at close to USD2.00/bushel. Large production from the FSU nations and their eager domination of the world export market is also a factor to consider. The USDA attaché in Australia estimated the 2013/14 wheat crop there at 24.5 MMT versus a previous estimate of 25.5 MMT (and also the USDA's own official forecast), although up on the 2012/13 crop of 22.0 MMT. UkrAgoConsult estimated Ukraine’s 2013 wheat crop at 20.69 MMT (the USDA are at 21.5 MMT) versus a previous estimate of 20.12 MMT and 15.76 MMT in 2012. The Ukraine Ag Min said that their wheat harvest is 99% complete at 22.9 MMT. That estimate will be in bunker weight, although that would still imply a crop of around 21.4 MMT after cleaning/screening. Bangladesh bought 200 TMT of wheat from Ukraine to boost domestic stocks. The USDA currently have them down to import 3 MMT of wheat in 2013/14 versus 2.6 MMT last season. Russia's wheat harvest is 43.7% complete at 33.4 MMT and yields are up more than 30% on last year. IKAR estimated Russia’s wheat crop at 51.8 MMT versus a previous estimate of 52.5 MMT (and the USDA's 54.0 MMT), although sharply higher than the 37.7 MMT produced last year. Bloomberg reported that CNGOIC said that the USDA are overestimating China’s 2013/14 feed wheat usage requirements. The USDA estimated it at 26.0 MMT yesterday versus a previous estimate of 25.0 MMT. Sep 13 CBOT Wheat closed at USD6.28 1/4, down 6 3/4 cents - the lowest close for a front month on CBOT wheat since June 2012; Sep 13 KCBT Wheat closed at USD6.96 1/4, down 4 cents; Sep 13 MGEX Wheat closed at USD7.32 1/2, down 4 1/4 cents.