Nogger's Blog

05/09/13 -- Soycomplex: It was another choppy day for beans, particularly so in front month Sep 13 which had a daily trading range of 43 1/2 cents, and closed right up at the top end of that spread. The weekly Drought Monitor indicated increases in the percentage of the Midwest impacted by drought (28.7% this week versus 25.1% last week) and severe drought (7% this week versus 3.7% last week). There was a wetter look to the latest 15-day weather forecast though, but the trade is making the assumption that much of the damage is done. The 15-day forecast calls for wetter than normal conditions in northern and western Corn Belt states and the Upper Plains. Crop conditions in the Dakotas and Minnesota should see some improvement if the forecast holds true. China sold 417,448 MT of soybeans in today’s government auction - 82.95% of the total offered - the best response yet since sales began five weeks ago. MDA CropCast cut their forecast for US 2013 soybean production by 34 million bushels to just over 3 billion on continued dryness. In their first forecast for world 2013/14 soybean production the FAO's AMIS predicted a crop of an all-time high 284 MMT, up 18 MMT or 6.8% on last year and 2 MMT more than the USDA's current figure. Usage will grow by 3.8% in 2013/14, compared to 4.2% growth in the current season. Consequently "stocks (ending 2013/14) are forecast to rebound strongly in 2013/14, notably in the United States, Argentina and Brazil," they said. Macquaire Bank cut their forecast for 2013 US soybean yields to 40.9 bu/acre from 42.5 bu/acre previously. They pegged the Brazilian 2013/14 crop at a record 87 MMT. The trade now has one eye on the changing daily weather forecasts and the other on next Thursday's upcoming USDA WASDE report. Before that we get the latest one day delayed weekly export sales report from the USDA tomorrow. Trade expectations for that are in the 600-800 TMT region for beans, along with 100-200 TMT for meal. Sep 13 Soybeans closed at USD14.23, up 25 1/4 cents; Nov 13 Soybeans closed at USD13.67 1/2, up 15 cents; Sep 13 Soybean Meal closed at USD479.50, up USD10.90; Sep 13 Soybean Oil closed at 43.19, down 37 points.

Corn: The slightly wetter outlook for the US weather provided a negative tone for corn, although the notion that the crop is already made suggests that it stands to benefit less than soybeans from any moisture that may come its way next week. It may be more likely that the trade thinks that the warm and dry weather will accelerate the harvest, and one that is still generally thought to be record large. There are plenty of reports of the corn basis continuing to weaken as new crop comes onto the market in the south, moving gradually north. Better than expected yields are being reported in what has been cut so far. There are some reports of corn being cut wet in an attempt to get the most out of the nearby premiums. Aflatoxin problems are being mentioned in some cases. MDA CropCast cut their forecast for the US 2013 corn crop by 74 million bushels to 13.467 billion, still comfortably a record crop. Crop growth is finishing up and moisture needs are therefore declining, they noted. Particularly bearish was the FAO's AMIS adding 11 MMT to their previous forecast for the world corn crop in 2013/14, pegging production at a record 983 MMT, up 108 MMT or 12.3% vs. 2012/13 and way higher than the USDA's current 957 TMT estimate. The rise is due to "larger crops officially reported in Argentina and improved outlook for the EU and Ukraine," they said. "General conditions are good. In the US approximately half of the corn is in good to excellent condition and in spite of dry weather and rising temperatures in August, a bumper production is expected largely due to increased planted area. In Canada, conditions are favourable and yields are expected to be average to above average," they added. The weekly ethanol production report offered no support, with output down 1,000 barrels/day from last week to 819,000 bpd. The market is conscious that demand from the ethanol sector in the soon to end 2012/13 season is heavily overstated by the USDA. That will add some extra bushels to the carry in for 2013/14. Ethanol demand for next season looks questionable too. Malaysia seeks 120 TMT of optional origin corn for Nov/Dec shipment. South Korea's Nofi is looking for 140 TMT of optional origin corn for Feb shipment. South America/Black Sea corn may fare better than US origin in both of those tenders. Trade estimates for tomorrow's weekly export sales report for corn are around 400-650 TMT. Sep 13 Corn closed at USD4.89 1/2, down 4 1/2 cents; Dec 13 Corn closed at USD4.61, down 8 1/2 cents.

Wheat: Wheat followed corn lower. The FAO's AMIS went the whole hog and forecast a record world wheat crop in 2013/14, as well as all time high corn and soybean production. They now see world output at 710 MMT in 2013/14 versus their previous estimate of 704 MMT and the USDA's current 705 MMT. That's a cool 50 MMT more than last year, an increase of 7.6%. The rise is due to "an improved outlook in the EU and the CIS as well as more favourable prospects in Australia, Argentina and Canada," they say. Ending stocks (for 2013/14) are forecast "to rebound by some 8%, with most of the increase concentrated in the EU, China and CIS countries" to 170 MMT, they said. South Korea's Nofi are tendering for 60 TMT of optional origin feed wheat for December shipment. Japan bought 116,350 TMT of US/Canadian milling wheat in a routine tender. Tunisia are tendering to buy 42,000 MT of durum wheat. Russia has now harvested 40.5 MMT of wheat off less than 60% of the planned area, yields are up 42% on last year and only lag those of 2011 by 0.08 MT/ha. Good harvest weather is being reported in Canada and a bumper wheat crop is expected there. Stats Canada comes out tomorrow with their July stocks report. EU soft wheat sales continue at a brisk pace, with Brussels issuing 550 TMT of export licences this past week. That brings the total issued so far to 4.5 MMT, well ahead of 2.1 MMT this time a year ago. Barley exports are also running full steam ahead at a cumulative 2.5 MMT versus 1.45 MMT this time last year. MDA CropCast trimmed their forecast for Australian wheat production by 340 TMT to 22.44 MMT due to dryness in some parts of the east. "Rains continued across western portions of Western Australia as well as Victoria this past week, which further improved moisture for crop growth. Rains should favour eastern portions of Western Australia, southeastern South Australia, and Victoria this week. However, dryness will continue to stress wheat across northern New South Wales, Queensland, and western New South Wales. Yield potential continues to decline due to the ongoing dryness," they said. Trade estimates for tomorrow's weekly export sales report for are around 450-600 TMT. Sep 13 CBOT Wheat closed at USD6.27 1/4, down 7 cents; Sep 13 KCBT Wheat closed at USD7.01 1/4, down 3 3/4 cents; Sep 13 MGEX Wheat closed at USD7.06, down 9 cents.