Nogger's Blog

16/08/13 -- Soycomplex: The USDA announced 284 TMT of new crop US soybeans sold to China along with a further 126 TMT to unknown. These sales to China are most likely to be shipped in the first half of 2013/14. There are reports that China bought 7-15 Brazilian soybean cargoes for Feb/Mar shipment this week. The robust export program already on the books for new crop US beans is undeniably supportive however. Based on yesterday's weekly export sales report, cumulative sales for 2013/14 already stand at 47.5% of the USDA forecast for the season versus a 5 year average of only 30%. Talk of a 160 MMT South American soybean crop in 2013/14 however is negative going forward, although of course that is a long way off being a reality. Having traded higher every day this week though, profit-taking ahead of the weekend was the order of the day. This was especially so given that there was a bit more rain in the offing for the upper Midwest in some of the revised weather forecasts today. How things pan out over the weekend and the revised Sunday night US weather forecasts may dictate market direction on Monday morning. Cargill are said to be gearing up to restart it's Lafayette, Indiana, crushing plant next week. The plant has been idled since May due to tight supplies. Today's Commitment of Traders report shows managed money increasing their net long position in soybeans by 3,597 contracts for the week through to Tuesday night. That brings their total net long position to a modest 47,177 contracts. Sep 13 Soybeans closed at USD12.83 1/4, down 5 cents; Nov 13 Soybeans closed at USD12.59 1/4, down 6 1/4 cents; Sep 13 Soybean Meal closed at USD408.80, down USD1.00; Sep 13 Soybean Oil closed at 42.81, down 31 points. For the week Nov 13 beans gained a respectable 77 cents.

Corn: It's not just in soybeans where US exporters have a healthy forward book. Following yesterday's weekly export sales report, as of August 8th, cumulative US corn sales stand at 33% of the USDA forecast for 2013/14 versus a 5 year average of 22% at this time. Also as with soybeans, the chance of a bit of rain later next week led to profit-taking following decent gains yesterday heading into the weekend. Not everyone is convinced about this possible rain event though. "The GFS model indicates sparse rainfall for the Midwest over the next 5 days. Temperatures would moderate, moving closer to normal, especially in the Upper Midwest. These changes are due to a shift in the jet stream. A cool trough over the Midwest would be replaced by a warm ridge. Rainfall would be average to below normal. That would not be enough to reverse drought, especially with the warming temperatures," said Martell Crop Projections. Today's Commitment of Traders report shows managed money increasing their net short position in corn by 10,149 contracts for the week through to Tuesday night. That brings their total net short position to a new record 123,221 contracts. The size of that short most likely means that more volatility is in store for corn with each change in the weather forecast until there is a greater degree of certainly over final US 2013 yields. FranceAgriMer left French corn crop conditions unchanged from last week at 55% good/excellent. They said that 88% of the crop is flowering, up from 74% a week ago but 10 points behind last year's progress. Sep 13 Corn closed at USD4.73 3/4, down 7 3/4 cents; Dec 13 Corn closed at USD4.63 1/2, down 8 3/4 cents. For the week Sep 13 corn rose 8 cents and Dec 13 was 10 1/4 cents higher.

Wheat: Wheat fell on all three exchanges, mirroring corn once more. If US corn yields ultimately come in higher than the USDA's surprisingly revised lower estimate of 154.4 bu/acre on Monday, and remember that some estimates are still above 160 bu/acre, then corn looks like moving closer to USD4/bu. If that happens then wheat, which has already struggled to maintain a USD2/bu premium to corn in the Dec 13 position, must surely also slip below USD6/bu? As with corn and soybeans though, US exporters have so far managed to make good sales for 2013/14, aided by increased demand from Brazil (coupled with reduced supplies from their normal seller, Argentina) along with large new demand from China. As of August 8th, cumulative US wheat sales now stand at 47% of the USDA forecast for the 2013/14 season versus a 5 year average of 37%. Sales of 373 TMT are needed each week to reach the USDA forecast, yesterday's sales were 490 TMT, so it is entirely possible that the USDA have underestimated US exports for 2013/14. South Korea today bought 47,800 MT of US milling wheat for Oct shipment, along with 25,500 MT of US wheat for Oct/Nov shipment. Reuters report that Brazil is likely to expand its 2 MMT import-duty-free wheat quota due to recent frost damage to the domestic crop in Parana state. That will likely mean increased purchases from the US, an origin much favoured by Brazilian millers compared to Black Sea wheat although they have been known to also buy German wheat in the past. Today's Commitment of Traders report shows managed money decreasing their net short position in Chicago wheat by 3,339 contracts for the week through to Tuesday night. That brings their total net short position to 43,996 contracts. Sep 13 CBOT Wheat closed at USD6.31, down 6 1/2 cents; Sep 13 KCBT Wheat closed at USD6.98 1/4, down 4 3/4 cents; Sep 13 MGEX Wheat closed at USD7.37 1/4, down 2 1/4 cents. For the week CBOT wheat was 2 1/2 cents lower, with Kansas up a cent and Minneapolis 5 1/4 cents firmer.