Nogger's Blog

10/09/13 -- Soycomplex: The trade looks like it's more or less given up on the weather adding anything extra to US soybean yields this year. What is out in the field will soon be in the barn. At least there's no early frost talk. The trade also now seems to have positioned itself where it wants to be heading into Thursday's USDA report, judging by tonight's close at least. Trade expectations for that centre around a US 2103 soybean crop of 3.1-3.2 billion bushels, with yields seen around 41.2-41.2 bu/acre. The USDA were 3.225 billion and 42.6 bu/acre last month. Michael Cordonnier left his US 2013 bean yield estimate unchanged at 40.5 bu/acre today. The other big thing to watch out for as far as beans are concerned on Thursday are where will 2013/14 US soybean ending stocks be placed? The USDA cut 75 million bushels off their July estimate last month, from 295 million to 220 million. The average trade guess for this report is a further sharp decline to 165 million, which is not that much better than the 2012/13 "line in the sand" of 125 million - a level that was seen as being sufficiently tight to send prices much higher than where they currently reside. To add further demand support to new crop, the USDA today announced the sale of 121 TMT of US soybeans sold to "unknown" for 2013/14 shipment. Customs data this week showed that China imported 6.37 MMT of soybeans in August. Their imports are seen falling to 4.9 MMT in September and again to 4.6 MMT in October, before they start to pick up again. Safras e Mercados said that Brazil has sold 25% of their 2013/14 bean crop versus 17% a month ago, although well behind the level of 43% a year ago. Sales have picked up due to the recent price rally and the continued depreciation of the Brazilian real, they said. They estimated Brazil’s 2013/14 bean crop at a record 88.17 MMT, up 7.5% versus 82.0 MMT a year ago. Planting of that will begin within a week. Argentine growers are also expected to "go large" with soybean plantings. Paraguay’s Ag Ministry estimated their 2013/14 soybean crop at 9.3 MMT, matching last year's record crop. Sep 13 Soybeans closed at USD14.03 3/4, down 1/2 cent; Nov 13 Soybeans closed at $13.55, down 1 1/2 cents; Sep 13 Soybean Meal closed at USD462.50, down USD3.30; Sep 13 Soybean Oil closed at 42.73, down 8 points.

Corn: Corn was mixed, but mostly higher, as fund money did some light short-covering ahead of Thursday's WASDE report. The trade is expecting the USDA to come out with a 2013 US corn production number around the 13.6 billion bushels mark, with yields in the 153.5-153.9 bu/acre region. Last month the USDA were at 13.763 billion bushels and 154.4 bu/acre. Reports today suggest that Michael Cordonnier left his US 2013 corn yield estimate unchanged at 152.0 bu/acre. The trade will also have an eye on 2012/13 and 2013/14 demand/carryout on Thursday. It seems that the USDA have overstated demand from the ethanol sector for the 2012/13 marketing year based on the weekly reports from the Energy Dept, so old crop ending stocks could come in a bit higher than last month's 719 million bushels should they make an adjustment there. As far as new crop goes, current forward sales are ahead of themselves, and 2013 production is probably lower than thought in August, so the trade is expecting a reduction to 2013/14 carryout from the 1.827 billion bushels estimated last month to around 1.70-1.75 billion. Unlike soybeans, South American corn production is seen trending lower for 2013/14. They do have plenty of old crop left though, and Brazilian corn is currently the cheapest in the world - even lower than Ukraine origin. Brazil's CONAB today estimated the 2012/13 corn crop at 81.3 MMT, up 1.0 MMT from previously, and a new record. UkrAgroConsult meanwhile forecast Ukraine's corn crop this year at a record 25.5 MMT. A report on Reuters today suggested that Chinese feed mills are buying US sorghum as corn import quotas run out. Some also suggest that China's DDGS imports could double to 4 MMT in 2013/14 as they seek corn alternatives. The US corn harvest in the south is fairly well advanced. In Georgia the harvest is 69% complete, Louisiana is 97%, and Arkansas is 43%. The cash market is already beginning to feel the impact of this increased supply. The latest weekly ethanol production data comes out tomorrow, last week's report showed production at only 819,000 barrels/day. Sep 13 Corn closed at USD4.74 3/4, down 2 1/2 cents; Dec 13 Corn closed at USD4.69, up 5 1/2 cents.

Wheat: Wheat closed with modest gains on all three exchanges. As with corn, there was light fund buying and short-covering ahead of Thursday's USDA report. No major changes are expected for wheat, but there's always the capacity for a surprise. It's certainly possible though that corn could do something dramatic, and wheat would likely follow suit. UkrAgroConsult forecast the Ukraine wheat crop at 21 MMT, up by a third on a year ago. The Russian grain harvest currently stands at 66.8 MMT off 63% of the planned area. Kazakhstan's grain harvest (mostly wheat) currently stands at just over 6 MMT off almost a third of the planned area. Both suggest that official Ministry forecasts for 2013 could be on the low side. Egypt were back in the market again for wheat (for Nov shipment), buying two cargoes from Ukraine and one each from Russia and Romania. They say that they have sufficient purchases to cover their needs through to February, but the market expects them to buy more for Nov/Dec shipment in the coming days/weeks. In a "half full or half empty" move, ABARES cut their forecast for the 2013 Australian wheat crop from 25.4 MMT to 24.5 MMT, although that's still 11% more than they produced in 2012. They also said that Australia will export a hefty 80% of their production in 2013/14 - 19.5 MMT. Oman bought 30 TMT of Russian wheat for Nov shipment. Japan seeks 113,572 MT of US, Canadian, and Australian milling wheat for Oct/Dec shipment in their regular weekly tender. Iraq are tendering for at least 50 TMT of wheat, but usually buy more. As the trade continues to evaluate the magnitude of losses to the 2013 Brazilian wheat crop caused by frost, CONAB today cut their forecast to 4.95 MMT versus previous estimate of 5.62 MMT. The Brazilian government increased the volume of duty-free wheat that local millers can import from 2.3 MMT to 2.7 MMT, and extended the duty-free period up until the end of November, to coincide with the end of their own harvest and the beginning of that in neighbouring Argentina. Sep 13 CBOT Wheat closed at USD6.33 3/4, up 5 cents; Sep 13 KCBT Wheat closed at USD7.06 3/4, up 5 1/4 cents; Sep 13 MGEX Wheat closed at USD7.01, up 2 1/4 cents.