Nogger's Blog

12/08/13 -- Soycomplex: The eagerly awaited USDA report came in bullish for soybeans with US yields, production and 2013/14 ending stocks all lower than expected. A cut in yields from last month's 44.5 bu/acre to an average guess of 43.472 bu/acre is what was expected. What the trade got was 42.6 bu/acre. US production of 3.338 billion bushels was the average trade forecast. The USDA came up with 3.255 billion bushels. The old favourite line in the sand of 125 million bushels for 2012/13 ending stocks was maintained. What wasn't expected though was a sharp drop in new crop 2013/14 ending stocks from 295 billion bushels to 220 billion. The surprisingly large cut in US soybean production this year took global 2013/14 output down from the 285.9 MMT forecast last month to 281.7 MMT. Ending stocks for 2013/14 were trimmed 1.85 MMT from last month to 72.3 MMT. China's import requirement was left unchanged at what many still consider to be an optimistic 69 MMT. Adding support to the bullish theme of the WASDE report however was news that private exporters had sold 713 TMT of US soybeans to China, along with a further 140 TMT to unknown destinations under the daily reporting system. Weekly soybean export inspections came in at 3.417 million bushels versus 1.381 million last week. The market will now turn it's attention back to watching the weather. "Midwest corn and soybeans are deteriorating with persistent drought, the most intense in the top 2 producing states Iowa and Illinois. Rainfall has been sparse over the past 45 days in the western, northern and central corn belt," said Martell Crop Projections. After the close the USDA reported soybean good/excellent crop conditions unchanged at 64%, with 88% of the crop blooming and 58% setting pods. Aug 13 Soybeans closed at USD13.73 3/4, up 33 cents; Nov 13 Soybeans closed at USD12.25 1/4, up 43 cents; Aug 13 Soybean Meal closed at USD425.70, up USD5.20; Aug 13 Soybean Oil closed at 42.32, up 92 points.

Corn: The USDA threw another curve ball for the corn market, surprisingly dropping potential 2013 US yields from 156.5 bu/acre to 154.4 bu/acre. The market was expecting an increase to 157.72 bu/acre, but this figure was down at the low end of the range of trade estimates of 154.0-161.2 bu/acre. The lower than anticipated yield meant that 2013 US corn production also came in lower than expected at 13.763 billion bushels versus the 13.95 billion estimated last month and the average trade guess of 13.98 billion. The trade was expecting 2012/13 world ending stocks at around 124 MMT, rising to around 151 MMT in 2013/14. The USDA said 123.1 MMT and 150.2 MMT respectively. US feed and residual use for 2013/14 was lowered 50 million bushels this month due to the smaller crop. Exports were projected 25 million bushels lower due to reduced domestic supplies and increased foreign competition. (Ukraine's crop was increased 3 MMT to a record 29 MMT). Mexico's corn crop was lowered 1 MMT to 22 MMT, with imports raised from 6.5 MMT to 8.0 MMT. Separately the USDA said that private exporters had reported the sale of 252 TMT of US corn to Mexico. The projected season-average farm price for corn was raised 10 cents at both ends of the range to USD4.50 to USD5.30 per bushel. China's crop was left unchanged at 211 MMT and imports were also unchanged at 7 MMT. Weekly export inspections for corn came in at 14.759 million bushels versus the expected 11-14 million and 15.149 million the previous week. That takes year to date shipments to 657.5 million bushels versus 1.453 billion bushels this time last year. "Despite cooler temperatures, reducing evaporation, moisture stress worsened in corn during the key pollination stage," referring to Iowa and Illinois, said Martell Crop Projections. After the close the USDA reported 64% of the US corn crop in good/excellent condition, the same as last week. They reported 94% of the crop as silking, 32% in the dough stage and 5% now dented. Sep 13 Corn closed at USD4.72, up 6 1/4 cents; Dec 13 Corn closed at USD4.64, up 10 3/4 cents. Fund buying/short covering was estimated at around 14,000 contracts on the day.

Wheat: Sep 13 CBOT wheat traded down to 6.30 1/2 overnight, a lifetime contract low and the lowest for a front month in 14 months. Today's USDA report was always more likely to be about corn and soybeans rather than wheat, and so it proved. The USDA left US all wheat production for 2013/14 virtually unchanged at 2.114 billion bushels versus 2.269 billion last year. "Small increases for Soft Red Winter wheat and Durum are mostly offset by decreases for White, Hard Red Spring and Hard Red Winter wheat" they said. US exports in 2013/14 were raised 25 million bushels "reflecting continued strong early season sales and an increased outlook for China imports. Despite larger expected crops in several major exporting countries, strong early season demand and higher projected world imports and consumption also boost prospects for US shipments. Ending stocks are projected 25 million bushels lower," they said. China's import requirement was increased from 8.5 MMT to 9.5 MMT, more than triple their needs in 2012/13. On a global level, wheat production was raised in Europe, Ukraine, Kazakhstan, Canada, India and Turkey. "Partly offsetting this month’s production increases are reductions in South America where crops will not be harvested until late 2013. Production is lowered 1.0 MMT for Argentina based on lower reported seedings. Brazil production is lowered 0.3 MMT reflecting the late July freeze event that appears to have damaged developing wheat in limited areas of southern Brazil," they added. In other news for wheat, US weekly export inspections came in at 23.789 million bushels, versus the expected 20-25 million and 29.407 million the previous week. Current market year to date shipments are now 240.116 million bushels versus 190.543 million a year ago. After the close the USDA said that 92% of the US winter wheat crop is harvested versus 91% on average. Spring wheat is only 6% harvested versus 24% normally for this date. Spring wheat good/excellent conditions fell from 68% last week to 66%. Sep 13 CBOT Wheat closed at USD6.35, up 1 1/2 cents; Sep 13 KCBT Wheat closed at USD7.00 1/4, up 3 cents; Sep 13 MGEX Wheat closed at USD7.36 3/4, up 4 3/4 cents.