Nogger's Blog

09/09/13 -- Soycomplex: Beans ended sharply lower on front month Sep 13, which expires on Friday, with most active Nov 13 also posting double digit losses. Profit-taking and book-squaring ahead of Thursday's upcoming USDA WASDE report were probably the main reasons behind the declines as Midwest weather forecasts were little changed, and weekend rains were as scattered as advertised. A Reuters survey esitmated US 2012/13 soybean ending stocks at an average 123 million bushels, from within a range of 107-145 million and the USDA's previous "line in the sand" of 125 million. World 2012/13 ending stocks are seen little changed from last month's 62.22 MMT at 61.73 MMT. For 2013/14 the average trade guess for US carryout was seen well below the USDA's August forecast of 220 million bushels at 165 million. Note that this was as high as 295 million from the USDA just a couple of months ago and reflects the strong pace of new crop US sales. Factoring in Friday's weekly export sales figures, cumulative 2013/14 US soybean sales now stand at 54.5% of the USDA forecast for the season versus a 5-year average of 40%. The Reuters survey pegged world 2013/14 soybean ending stocks at 71.17 MMT, a little over a million down on last month's 72.27 MMT. China's August soybean imports were 6.37 MMT, down 11.5% versus July but up 44% compared to July 2012. That puts Jan/Aug Chinese soybean imports at just over 41 MMT, a rise of 4.4$ year-on-year. Recent dry weather in Argentina is seen pushing some intended corn area into beans. Agritrend said 120,000 hectares of land planned to go into corn production will be switch to bean acres. They forecast the 2013/14 Argentine soybean crop at a record 53 MMT. Brazil is also seen producing a record 85-88 MMT of soybeans in the coming season. Planting there begins next week. After the close the USDA cut the proportion of the US soybean crop rated good/excellent by "only" 2 percentage points to 52%. The trade was expecting a more dramatic 3-5 point cut. Soybean good/excellent ratings this time a year ago were only 32%. They have 97% of the crop setting pods versus 99% this time last year, and 11% dropping leaves versus 34% in 2012 and 19% normally. Weekly export inspections came in at 2.222 million bushels, in line with the expected 1-3 million. Sep 13 Soybeans closed at USD14.04 1/4, down 32 3/4 cents; Nov 13 Soybeans closed at USD13.56 1/2, down 11 1/4 cents; Sep 13 Soybean Meal closed at USD465.80, down USD16.30; Sep 13 Soybean Oil closed at 42.81, down 55 points.

Corn: The corn market slumped to double digit losses as traders gear up for the USDA to underline their forecast for record 2013 US corn production on Thursday. How record large is this crop is the big question? Linn Group forecast production thus year at 13.751 billion bushels, with yields at 156.8 bu/acre. A Reuters survey came up with an average trade estimate of 13.62 billion bushels and yields at 153.7 bu/acre. Bloomberg said 13.641 billion bushels and 153.9 bu/acre on Friday. The USDA's August estimates were 13.763 billion bushels and 154.4 bu/acre. Some trade estimates are still very bullish on this year's corn crop (and therefore bearish on prices). Informa said Friday that they expect the USDA to raise their forecast for the 2013 US corn crop to above 14 billion bushels. A Reuters survey estimated 2012/13 US corn ending stocks at 718 million bushels, barely changed from the USDA's 719 million in August. For 2012/13 world ending stocks they found an average trade estimate of 122.8 MMT versus 123.1 MMT last month. US 2013/14 corn ending stocks are seen rising sharply to 1.732 billion bushels, although that's a little below the 1.837 billion that the USDA forecast in August. World 2013/14 carryout is seen at 146.93 MMT versus 150.17 MMT previously. South Korea have been busy booking an assortment of corn cargoes over the weekend. Various South Korean feed millers are said to have bought 383 TMT of optional origin corn for Feb-March shipment since Friday. There is said to be carryover interest of a further 220 TMT still in the market. How much, if any, of this corn will ultimately come from the US remains to be seen. New crop US corn is priced around USD219/tonne FOB NOLA versus Brazilian corn at USD194/tonne FOB. Both Argentine and Brazilian growers are seen trimming their corn acreage for 2013/14 on a combination of weather and low prices, although output there will still be large and cheap. After the close, the USDA cut the proportion of this year's US corn crop rated good/excellent by 2 percentage points from last week to 54%,  in line with trade expectations. That's still hugely better than only 22% this time last year. Maturity still lags though, despite the warm weather, at 9% versus 55% a year ago and 28% normally at this time. The crop is 64% dented versus 92% this time last year and 75% normally. Weekly corn export inspections came in at 9.827 million bushels versus trade expectations of 11-15 million. Harvest pressure continues. Reports of better than expected yields in the south are rife, although many of these will be from irrigated land. Sep 13 Corn closed at USD4.77 1/4, down 14 1/4 cents; Dec 13 Corn closed at USD4.63 1/2, down 4 3/4 cents.

Wheat: Corn was down, so wheat went with it. Fund money is short on CBOT wheat, and has been so for the past year. Friday's Commitment of Traders report showed non-Commercial traders were net short 41,323 CBOT wheat contracts, up 6,410 contracts for the week through to Tuesday night. ABARES Australian crop report is due out tomorrow. Conditions are said to have improved dramatically in Western Australia and are also getting better for wheat in South Australia, Victoria and southern New South Wales. Dryness and heat is still said to be an issue in northern New South Wales and southern Queensland. Macquarie estimated the 2013 Australian wheat crop at 24.0 MMT versus the current USDA estimate of 25.5 MMT. Weekend rains have improved things in the winter wheat belt in Southern Argentina, although Western areas remain dry. Macquarie estimated Argentina’s 2013 wheat crop at 10.5 MMT versus the current USDA estimate of 12.0 MMT. Russia has harvested over 41 MMT of wheat, more than last year's entire crop, with almost 40% of the planned area still to be cut. Yields are up 41%. A Reuters survey estimated 2013/14 US wheat ending stocks at 551 million bushels, unchanged from the USDA's August estimate. World 2013/14 ending stocks were seen at an average of 172.76 MMT, from within a range of estmiates of 169.35-175.72 MMT, little changed from the USDA's August forecast of 172.99 MMT. The USDA said that 80% of the US 2013 spring wheat crop has now been harvested, slightly above the 5-year average of 79%. They said that 5% of the 2014 US winter wheat crop has been planted, which is comparable with normal. Weekly export inspections came in at 31.589 million bushels, down from 37.105 million the previous week, but in line with trade expectations of 29-33 million. US wheat sales are holding up well, thanks to new business from Brazil and China, even if the latter have gone quiet of late. As of August 29th, cumulative sales stand at 53% of the USDA forecast for 2013/14 versus the 5-year average of 43%. This, and the size of the fund short in CBOT wheat, should continue to provide support and buying interest on the dips. The outlook for potentially lower still US corn prices however provides the pressure for the wheat market to move lower yet. Sep 13 CBOT Wheat closed at USD6.28 3/4, down 6 1/4 cents; Sep 13 KCBT Wheat closed at USD7.01 1/2, down 7 cents; Sep 13 MGEX Wheat closed at USD6.98 3/4, down 9 cents.