Nogger's Blog

04/09/13 -- Soycomplex: Beans closed sharply lower in a one day holiday-delayed "Turnaround Tuesday" style. Having finished disappointingly well off the highs last night, that was no great surprise. The USDA cut soybean good/excellent ratings by 4 percentage points to 54% versus the 4-6 point reduction that the trade was forecasting. The fact of the matter is that this is still substantially better than the 30% G/E rating that the crop had this time last year, the so-called "worst drought year in a generation." It was surprising then to see Allendale issue a 2013 US soybean yield estimate of only 39.0 bu/acre, some 1.5% BELOW last year's 39.6 bu/acre. They have production at less than 3 billion bushels, 2.98 billion in fact, versus 3.105 billion in 2012. The USDA's August yield estimate was 42.6 bu/acre with production at 3.255 billion bushels. Everyone is agreed that some yield potential has been hit since then, but Allendale's farmer-survey led estimate is the lowest in the ring yet. Michael Cordonnier cut his estimate for 2013 US bean yields to 40.5 bu/acre from previous estimate of 41.0 bu/acre. Lanworth Inc revised theirs down from 40.8 bu/acre to 40.4 bu/acre, with production cut from 3.14 billion bushels to 3.114 billion. New Edge estimated the US soybean crop at 3.17 billion bushels. FCStone pegged the crop at 3.146 billion bushels with yields at 41.2 bu/acre. As you can see, despite it being relatively late in the season, opinion is still quite widely divided over the yield potential of this crop. A Reuters survey came up with a yield low of 39.0 bu/acre (Allendale, we assume) and a high of 42.3 bu/acre - a spread of more than 8% - giving an average guess of 41.09 bu/acre. QT Weather said that although there has been some noted deterioration in crop conditions in the week through to Sep 2 overall "the latest remote sensing says despite backing up in numerous areas of the Plains and Corn Belt last week...in the face of record heat and limited moisture, vegetation health remains vigorous across the Canadian Prairie and normal to better than normal in all key Corn Belt States except 50% of MN, 70% of WI and a bit surprising only 20% of IA and 10% of IL." Sep 13 Soybeans closed at USD13.97 3/4, down 37 3/4 cents; Nov 13 Soybeans closed at USD13.52 1/2, down 34 1/4 cents; Sep 13 Soybean Meal closed at USD468.60, down USD16.80; Sep 13 Soybean Oil closed at 43.56, down 26 points. Note: as of tonight's close Nov 13 beans have still added 10.4% in terms of price protection to cover potential yield losses since the USDA's Aug 12th yield and production estimates were released.

Corn: "Corn started out lower overnight and then just pretty much laid there for the rest of the day in what amounted to a pretty quiet, non-eventful session," said Benson Quinn Commodities. That pretty much sums up the situation. The market doesn't seem to feel that corn prices above USD5/bu are warranted at this time, but neither does it appear to fancy the downside too much either right at this moment. As with beans there were a plethora of US corn production and yield numbers thrown into the ring today, ahead of the USDA's own estimates due next Thursday. Doom-laden on soybean's production prospects, Allendale came out with a forecast more in line with trade expectations for corn, predicting US 2013 yields to average 153.4 bu/acre and production to come in at a record 13.676 billion bushels. The USDA's August estimates were 154.4 bu/acre and 13.763 billion bushels respectively. Lanworth estimated 2013 US corn yields at 151.6 bu/acre versus a previous estimate of 152.4 bu/acre. They now have production at 13.330 billion bushels versus a previous estimate of 13.406 billion. New Edge estimated the US 2013 corn crop at 13.705 billion bushels and said that US corn ending stocks in 2013/14 will reach 1.889 billion bushels versus the current USDA estimate of 1.837 billion, and far higher than the 719 million forecast at the end of the current marketing year. FCStone estimated the 2013 US corn crop still close to the magical 14 billion bushel mark at 13.942 billion, only marginally down on a previous forecast of 13.993 billion. They now peg yields at 156.4 bu/acre versus a previous estimate of 157.0 bu/acre. Michael Cordonnier left his 2013 US corn yield unchanged at 152.0 bu/acre, but didn't rule out the possibility of a reduction at some time in the future. A Reuters poll pegged US 2013 corn yields a fraction below 154 bu/acre. The surprisingly good remote sensing data referred to above also applies to corn. QT Weather said that "these recent images show that yields are potentially better than previously thought over some key growing regions that have some very dry soil and saw record late season heat...for example in Iowa. Did the heat help?" Only time will tell. There's a feeling that the US corn crop is "made" and that the recent warm and dry spell will speed up the harvest, which will soon be in full swing in the heart of the Corn Belt. Brazil’s Ag Ministry said that they expect China to approve corn imports from Brazil in 2013/14. The trade will be looking to tomorrow's Energy Dept data to see how the weekly ethanol grind is holding up, last week's number showed a 24,000 barrels/day fall in output to 820,000 bpd. Sep 13 Corn closed at USD4.94, down 4 cents; Dec 13 Corn closed at USD4.69 1/2, down 5 3/4 cents.

Wheat: At the risk of repeating myself, wheat remains a follower of corn. A third Egyptian tender in a week seems to indicate that they think that wheat at USD250-255/tonne is good value. Today they booked 180 TMT of Black Sea wheat for late October shipment, with two cargoes coming from Russia and one from Romania, all priced around USD252/tonne FOB. US wheat is closer to USD270/tonne. Ukraine wheat missed out, as too did French. Some think that Ukraine backing off may be down to the notion that they will be going full steam ahead on corn exports by late October and into November. The Ukraine Ministry has them down to export record volumes of corn in 2013/14. APK-Inform today said that Ukraine has the potential to export a record 30.4 MMT of grains and pulses in 2013/14, including 18 MMT of corn, 9.5 MMT of wheat and 2.5 MMT of barley. As Ukraine steps away from the wheat limelight, it is interesting to see Russia re-entering it. The Russian grain harvest now stands at 62.5 MMT off 56.9% of the combinable crop area. Yields are averaging 2.38 MT/ha, up 25.9% vs. last year, say the Ag Ministry. Russia has harvested "about 40 MMT" of wheat of 57.8% of the planned area. Yields are up 41% at 2.75 MT/ha, say the Ag Ministry. The current highest wheat production estimate in the hat for Russia is 54 MMT from the USDA. Lanworth estimated the 2013/14 global wheat crop at 701.84 MMT, up 3.0 MMT from their previous estimate, although slightly below the USDA's 705.38 MMT that's still a record volume and up 7% versus 2012/13. Recent rains in Western Australia are said to have completely turned the crop's fortunes there around. CBH Group estimated the volume of grain that they would handle in the state this year up from 9 MMT to 10.0-10.6 MMT. There's still talk of India re-entering the world wheat export market following the recent devaluation of the rupee. South Korea bought 22,500 MT of US milling wheat for Nov/Dec shipment. Bangladesh are tendering for 50 TMT of wheat, their third tender since the beginning of July. They expect to buy 850 TMT of foreign wheat this year. Jordan bought 50 TMT of optional origin feed barley for June shipment. They cancelled on a tender to buy 100 TMT of optional origin wheat for Mar-May shipment due to high prices. The world barley crop is seen 8.3% higher in 2013/14, according to the USDA - the highest output since 2009/10. The increased use of barley in feed rations this year, along with a record world corn crop is seen limiting the potential upside for wheat. The size of the current fund short in CBOT wheat should continue to see buying on any dips. Ultimately though downside harvest pressure on corn could drag wheat lower as buyers look at the price differentials between the two. Sep 13 CBOT Wheat closed at USD6.34 1/4, down 2 1/4 cents; Sep 13 KCBT Wheat closed at USD7.05, up 8 1/4 cents; Sep 13 MGEX Wheat closed at USD7.15, up 11 1/4 cents.