Nogger's Blog

16/09/13 -- Soycomplex: Widespread showers for some of the driest parts of the Corn Belt over the weekend, and the forecast for more to come in the week ahead, got soybeans off to a negative start to the week. There may also have been some elements of profit-taking following the recent rally. Trade opinion is divided on how much good these late rains will do. There is no denying that the crop is behind schedule developmentally, so maybe mid-September rains might be more beneficial than they would normally be for soybeans? Not everyone is so sure. "It is possible rainfall will help in late developing soybeans but the heat units needed to drive development would also be reduced. Temperatures will be mostly low 70s F days for highs and mid-40s to mid-50s F at night this week. In mid-August the main pod filling period temperatures are mid-80s F days and mid-60s F at night," commented Martell Crop Projections. Weekly soybean inspections were low at 2.972 million bushels, but in line with trade expectations. There's talk of dryness in Argentina and Brazil delaying corn plantings and maybe leading to an even larger switch into soybeans than the trade is already expecting, which could be bearish in the longer term. The USDA cut good/excellent crop ratings for soybeans by 2 percentage points from last week to 50%. That's still well up on 33% this time last year. They said that 26% of the crop is dropping leaves, up from 11% a week ago but still well behind 54% a year ago and 35% normally. Now the trade is looking to see what the USDA's Farm Service Administration (FSA) have to say tomorrow in relation to 2013 US planted acres, or rather unplanted acres. They said in August that an intended 1.6 million acres of US soybeans never got planted this year. The USDA have, thus far, left their 2013 harvested area estimate unchanged. The trade is expecting the FSA to fine tune their figures tomorrow, and maybe come up with an unplanted area for soybeans of around 350-750 thousand acres. The combination of lower plantings, and therefore a reduced harvested area, along with the potential for lower US yields to come would see 2013/14 US ending stocks come in far tighter than the 150 million bushels that the USDA estimated last Thursday without alterations to exports or domestic demand. Remember though that export commitments for 2013/14 are already well advanced at 58% of the USDA forecast for the season versus a 5-year average of 43% at this time. Throw in a serious weather scare in South America and the soybean market still holds the potential to be explosive across the next 6 months. Nov 13 Soybeans closed at USD13.48 1/4, down 33 1/4 cents; Jan 14 Soybeans closed at USD13.48 1/4, down 31 1/2 cents; Oct 13 Soybean Meal closed at USD431.20, down USD13.40; Oct 13 Soybean Oil closed at 42.13, down 21 points.

Corn: The corn market wasn't too excited by the weekend rains on the basis that the corn crop is already made. The USDA cut good/excellent ratings for corn by one percentage point from last week to 53%, far better than 24% this time last year. The crops in Colorado and Kansas are in the worst state at 40% and 33% poor/very poor respectively, but neither of these are major producing states. Kentucky, Pennsylvania and Tennessee have the best corn ratings, also not major producers, but Ohio (78% good/excellent), Indiana (64%), Nebraska (63%) and Illinois (56%) are big corn states with well over half the crop rated in the top two categories. The USDA said that 81% of the crop is dented versus 97% a year ago and 86% for the 5-year average. Maturity still lags at 22% versus 73% last year and 41% normally. In their first crop progress report of the season they said that 4% of the corn crop has been harvested nationally versus 24% last year and 10% on average. The FSA will also report on unplanted corn acres tomorrow. The trade is anticipating a number somewhere between 1-2 million of intended corn acres never went into the ground this spring (last month they suggested 3.4 million). Again, the USDA haven't made any allowance for this as yet. Unlike soybeans though there is a bit more flexibility for corn. Last week's projected 2013/14 US corn carryout number (1.855 billion bushels) was the highest in 12 years, and sharply up on 2012/13. Even a 3 million acre reduction with all else unchanged would imply a carryout of 1.43 billion bushels, more than double 661 million in 2012/13. A 2-3 million acre reduction in plantings would also of course likely see some downwards adjustment to US corn exports and/or domestic demand. Weekly corn export inspections came in at 20.111 million bushels, more than double the 9.986 million of the previous week and above trade expectations of around 10-15 million. Cumulative shipments for the marketing year are still only 28.277 million bushels versus 37.635 at this time last year. Argentine weather forecasters said that the local corn area is dry, delaying planting, which may ultimately push more farmers into planting beans instead of corn. Brazil's Mato Grosso is also dry, but soaking rains are in the forecast for southern states later in the week. Safras e Mercado said that Brazilian 1st corn crop is 3.9% planted versus 3.5% a year ago. Dec 13 Corn closed at USD4.56 1/2, down 2 1/2 cents; Mar 14 Corn closed at USD4.69, down 2 1/2 cents.

Wheat: The wheat market closed a little lower on all three exchanges. The USDA said that the US spring wheat harvest had advanced to 90% complete, up ten points from last week and slightly ahead of the 5-year average of 87%. Winter wheat planting is in line with normal at 12% done. There's talk of Brazil buying a couple of cargoes of US HRW wheat and similar of western red spring Canadian wheat last week. They may already be buying new crop Argentine wheat also. Parts of the Argentine wheat belt got welcome rain over the weekend. In Alberta the 2013 grain harvest is 19% done, a little behind 25-30% normally. "Overall, provincial average yields are estimated to be above their 10-year averages, with good quality. For the majority of crops still standing, quality will largely depend on receiving warm, dry weather, without a killing frost, over the next few weeks," said the local Ag Dept. Spring wheat harvesting is 17.4% complete and the barley harvest 19% done. In Saskatchewan the harvest is 30% done versus 28% normally with yields said to be above average. Spring wheat is 21% harvested, with 27% of the barley crop in the bin. Big crops are expected from Canada this year. Russia will also have a much larger wheat crop in 2013. Harvesting of that is just past two thirds done, producing a crop of 43.3 MMT so far. The entire 2012 wheat harvest was only 37.7 MMT. There's continued talk of quality issues with Russian wheat this year, although not that long ago they were indicating that yields would tail off once the harvest got past halfway done. Currently, on wheat, they are still up 38.5% on last year. Ukraine said that it had exported 4.6 MMT of grains so far this year, up 10.7% on a year ago. That total includes 2.6 MMT of wheat, 1.5 MMT of barley and 0.6 MMT of corn. The Ukraine's State Statistics Office said September 1st grain stocks were 20.8 MMT, up 7% from a year ago. That includes 15.1 MMT of wheat, 3.3 MMT of barley and 1.0 MMT of corn. The 2013 Ukraine corn crop, harvesting of which has only just begun, is expected to be a record 28-30 MMT. Heavy rain here is delaying the corn harvest and also hampering early sowing of winter wheat, although improving soil moisture conditions. The Ukraine Ag Ministry say that currently 691,000 hectares of winter wheat have been sown versus 1.9 million this time last year. Rain is also delaying winter grain plantings in Russia, where only 4.9 million of the intended 16.4 million hectares have been sown so far. This time last year plantings were at 6 million ha. Southern Australia’s state Ag Dept forecast their 2013/14 total grain crop at 8.7 MMT versus a previous estimate of 7.6 MMT. Wheat output is seen at 4.9 MMT versus a previous estimate of 4.3 MMT and 3.6 MMT in 2012/13. Dec 13 CBOT Wheat closed at USD6.41 1/4, down 1/4 cent; Dec 13 KCBT Wheat closed at USD6.89 3/4, down 2 1/4 cents; Dec 13 MGEX Wheat closed at USD7.01 3/4, down 4 cents.