Nogger's Blog

30/08/13 -- Soycomplex: Beans and meal were mostly lower in light pre-weekend consolidation. In line with recent comments on here, Benson Quinn noted that "Over the last two years, November futures have peaked into new contract highs right around Labor Day and then turned sharply lower on harvest off take." The market is nervous that the same is going to happen again this year, they say. That all depends on weekend rainfall totals. The USDA announced 110 TMT new crop US beans sold to China in routine business. Today was first notice day for Sep 13 contracts. As expected there were no deliveries against beans or meal. There were 651 deliveries against soyoil. Oil World forecast a record world oilseeds crop in 2013/14, including 282.5 MMT of soybeans, an increase of 6% on 2012/13. The IGC were a bit less bullish, cutting their forecast for world soybean production in 2013/14 by 4 MMT from last month to 280 MMT, although that's still also a record. World 2013/14 soybean stocks are likely to expand for the second consecutive year, up by 22%, they said. Macquarie estimated US soybean yields at 41.4 bu/acre versus a previous estimate of 42.2 bu/acre and the USDA's estimate of 42.6 bu/acre. Morgan Stanley estimated US soybean yields at 42.1 bu/acre. Rabobank predicted soybean plantings in Argentina and Brazil to rise 5-7% this year, in line with other private estimates. Recent dryness in Argentina will favour soybean plantings over corn, whilst in Brazil the falling Real will also encourage soybean sowings versus corn, they said. They forecast CBOT soybean prices at USD13/bu at the turn of the year, falling slightly to USD12.50 by Q2 of 2014. These are above the levels they were predicting in July. Following yesterday's weekly export sales report, cumulative soybean sales now stand at 52% of the USDA forecast for 2013/14 versus the 5 year average of 33%. The weekly crop condition report from the USDA will be delayed until Tuesday. The trade is expecting to see a fall in soybeans rated good excellent of maybe as much as 4-6 percentage points following a week of hot and dry weather in much of the Midwest. The latest Commitment of Traders report shows funds adding 38,194 contracts to their net soybean long in the week through to Tuesday night, bringing their total net long position to 138,182 contracts. Sep 13 Soybeans closed at USD14.24, down 6 cents; Nov 13 Soybeans closed at USD13.57 1/2, down 11 cents; Sep 13 Soybean Meal closed at USD468.20, up USD0.80; Sep 13 Soybean Oil closed at 43.89, up 11 points. On the week that puts Sep 13 beans up almost 75 cents, with meal gaining nearly USD38 and oil adding a more modest 31 points.

Corn: Corn was narrowly mixed ahead of a long weekend that contains hopes for a chance for showers in the northern and eastern Corn Belt. The European Commission cut sharply its forecast for the EU corn crop from 70.9 MMT to 65.8 MMT. In contrast, the IGC added 3 MMT to it's forecast for the global corn crop to come up with a figure of 935 MMT, a 10% increase on last year and a record volume. Demand is seen rising 5% in 2013/14, they said. "Including a steep recovery in the US, world closing stocks are forecast to increase by 24% year on year; exporter stocks look set to be ample," they added. The jury is still out on US corn yield potential this year. Commodities Weather Group (CWG) estimated yields at 158.1 bu/acre, whilst down from a previous estimate of 159.5 bu/acre, that's still well above the USDA's forecast of 154.4 bu/acre. Macquarie estimated the US 2013 corn yield at 155.5 bu/acre versus a previous estimate of 158.0 bu/acre. Morgan Stanley also estimated yields at 155.5 bu/acre. The US corn harvest is well under way in the south, and moving forward in southeastern Arkansas, with some big yields being reported. Following yesterday's weekly export sales numbers, cumulative US corn sales for 2013/14 now stand at 36% of the USDA forecast for the season versus a 5 year average of 25%. The trade is thinking that the USDA may cut corn good/excellent ratings by 2-4 percentage points in Tuesday's crop conditions report. Rabobank said that "a bearish price outlook (on corn) is maintained, although downside expectations have eased" on US dryness issues. They now see Q4 2013 CBOT corn prices at USD4.75/bu, falling to USD4.60/bu in Q1 of 2014. "Without further production setbacks, the strength in futures in 2H August 2013 is likely to be short-lived," they cautioned. The USDA's next WASDE report, due Sep 12 will be "critical" they said. The latest Commitment of Traders report shows funds decreasing their net short position in corn by 34,350 contracts for the week through to Tuesday night. That still leaves them sitting on a total net short position to 57,428 contracts however. The German Ag Ministry estimated their 2013 corn crop at 3.99 MMT, down 27.6% from a year ago. The Buenos Aires Grain Exchange say that the Argentine corn harvest is over, producing a crop of 24.86 MMT, a 3.3 MMT rise on last year, although well below the official Ministry forecast for production of 32.1 MMT. Sep 13 Corn closed at USD4.95, down 2 1/4 cents; Dec 13 Corn closed at USD4.82, up 1/2 cent. That puts Sep 13 barely changed on the week - down half a cent - with Dec 13 up 12 cents compared to last Friday.

Wheat: Wheat closed mixed, looking to corn for direction but not finding any. Chicago wheat weekly export sales from yesterday were once again disappointing at only 48 TMT. Without China, sales of Chicago wheat look like they are going to struggle on the export front. Sales of HRW wheat are holding up on the back of "traditional" demand, plus the added bonus of fresh interest from Brazil. Overall, cumulative US all wheat sales however still stand at 51% of the USDA forecast for the 2013/14 season versus a 5 year average of 41%. The IGC increased their forecast for the world wheat crop by 4 MMT to 691 MMT. "Only a small increase in carryover stocks is expected in 2013/14, to 176 MMT, including a slight recovery in the major exporters; those in the US could shrink to a six-year low," they added. They forecast China's wheat import needs at 7.2 MMT versus the USDA's prediction of 9.5 MMT. There's talk of China being in the market for 150 TMT of Australian wheat to add to the 1.5 MMT of that origin that they already have on the books. A report on Reuters suggests that Australian farmers are reluctant sellers due to fears of weather damage in the east of the country and hopes that this new demand from China will push domestic prices higher. The German Ag Ministry estimated their 2013 wheat crop at 24.9 MMT, up 11% from a year ago, saying that the harvest there is almost complete. The Russian grain harvest now stands just shy of the 60 MMT mark off 53.5% of the cultivated area. Wheat accounts for 39.1 MMT of that, with yields averaging 2.84 MT/ha, well up versus 1.99 MT/ha in 2012 and not too far short of the 2.93 MT/ha average from 2011. Egypt's supplies Minister said that they will only need to import 5.0-5.5 MMT of wheat in 2013/14, which is far less than normal and would probably use up just about all their surplus stocks. There's talk of India re-entering the world wheat export market as a tumbling rupee potentially makes global prices in USD terms a more attractive proposition to the government. Rabobank said that the global wheat price outlook remains bearish. They forecast Q4 CBOT wheat prices at USD6.15/bu, falling to USD6.00 in Q1 of 2014. That's around half a dollar below where the Dec 13 future currently trades. The global wheat harvest has managed to avoid any major disasters so far in 2013/14 and production downgrades to some Southern Hemisphere crops "will likely be (of) limited consequence for the global wheat balance sheet," they said. Sep 13 CBOT Wheat closed at USD6.43 1/4, up 2 cents; Sep 13 KCBT Wheat closed at USD7.00 3/4, down 1/4 cent; Sep 13 MGEX Wheat closed at USD7.20 1/4, down 4 cents. For the week that puts Chicago wheat up 8 3/4 cents, with Kansas 5 1/4 cents higher and Minneapolis 4 cents firmer.