Nogger's Blog

11/10/13 -- Soycomplex: We should have had the Oct WASDE report from the USDA today, but we didn't get it due to the partial government shutdown in the US. For what it's worth, the trade was said to be expecting an average 2013 US soybean yield of 41.548 bu/acre and production at 3.156 billion bushels versus 41.2 bu/acre and 3.149 billion from the USDA in September. US 2013/14 soybean ending stocks were estimated at 167 million bushels versus the USDA's September estimate of 150 million. For world 2013/14 carryout the average trade estimate was 72.164 MMT versus the USDA's September estimate of 71.540 MMT. With no USDA data to go on, the big talking point was a proposed "moving of the goalposts" by the US Environmental Protection Agency concerning the current mandate, established by 2007 law, that 18.15 billion gallons of fuel from renewable sources must be included in fuel sold in the US (mainly utilising corn-based ethanol, but also including "advanced biofuels" produced from soyoil) is cut to 15.21 billion gallons. The leaked EPA proposal has not been publicly released, and would still need to be approved by the White House, but the implications are clearly bearish for soybean and soyoil demand in the US - the latter recently slumped to 3 year lows in Chicago and closed with heavy losses again tonight. Amidst a soybean harvest that some think could be as much as 50% done by Monday, with spec money still thought likely sitting on net long position in beans, and the lack of USDA information keeping traders in the dark, then it's perhaps not surprising that the market sold off today. Meanwhile, the president of the World Bank said that the US is just "days away from a very dangerous moment" as Thursday's debt ceiling deadline approaches. There's talk that China has been buying US beans this week, but no confirmation of course. "Brazil’s top soybean state Mato Grosso received scattered heavy rainfall this week, perhaps marking the beginning of the monsoon season. The rainy season typically begins in October, but the exact date may vary. Last year soybean planting did not begin in earnest until late October from a delayed monsoon," said Martell Crop Projections. Nov 13 Soybeans closed at USD12.66 3/4, down 21 1/4 cents; Jan 14 Soybeans closed at USD12.66 1/4, down 19 1/4 cents; Oct 13 Soybean Meal closed at USD422.00, down USD2.40; Oct 13 Soybean Oil closed at 40.11, down 93 points. For the week front month beans were down 28 1/4 cents, with meal USD9.30 easier and oil up 12 points.

Corn: The news concerning the leaked EPA proposal was bearish for corn. The agency may call for the use of 13 billion gallons of conventional corn-based ethanol in the US next year, versus the current mandate of 13.8 billion this year, it is thought. The mandate was supposed to rise to 14.4 billion for 2014. Taken at face value, this could mean a drop of almost 300 million bushels in corn used for ethanol usage from the current USDA estimate of 4.9 billion bushels. We also have a corn market under pressure from the ongoing US harvest and continued "better than expected" yield reports. If the USDA had been open for business today, then the trade was expecting them to release a revised US 2013 corn yield estimate of 156.533 bu/acre versus their September estimate of 155.3 bu/acre. Production was expected to come in at 13.802 billion bushels versus the USDA's September estimate of 13.843 billion. This slightly lower figure was due to an anticipated near 1 million acre drop in harvested area to 88.142 million acres. Note that the range of production estimates was a very wide 13.483–14.150 billion bushels. Just imagine how far apart various trade estimates might be if we have to go another month before we get any more data from Washington. US 2013/14 ending stocks were estimated at an average of 1.923 billion bushels, from within an also fairly wide range of estimates of 1.644–2.160 billion and the USDA's September estimate of 1.855 billion. World 2013/14 carryout was seen at 151.567 MMT versus the USDA's September estimate of 151.420 MMT. Macquarie Bank today pegged US corn yields at 158.1 bu/acre. "A hard freeze is not predicted in the northern Midwest corn and soybeans Sunday morning, though frost is expected in northwestern Iowa, Nebraska and South Dakota. The weather forecast continues very wet in the Upper Midwest, where 1-2 inches of rain is expected. One wave of showers is moving into the Northern Plains this morning; a second wave would quickly follow. Corn and soybean producers in the northern growing areas may welcome a heavy soaking rain, needed to replenish parched fields, even though the harvest would be set back for a few days," said Martell Crop Projections. Dec 13 Corn closed at USD4.33 1/4, down 5 cents; Mar 14 Corn closed at USD4.46 1/4, down 4 3/4 cents. For the week Dec 13 corn fell 10 cents.

Wheat: The wheat market continues to do a decent job of paddling it's own canoe, whilst fund money continues to cover in shorts and world demand remains brisk. Slumping corn values in the midst of a record harvest are capping upside gains though. India announced a 30 TMT milling wheat sale to the UAE, their first successful venture into publicly declared international markets since August. Indian wheat stocks at government warehouses were said to stand at 38 MMT as of September 1st, more than double the Ministry target of 17.1 MMT. They begin harvesting again in March, with production expected to be "at least as good" as 2013's crop of 92.5 MMT. Russia said that they'd harvested 50.6 MMT of wheat in bunker weight off 88.8% of the planned area. They also said that winter grains have now been planted on almost 10 million hectares, just over 60% of the original expected area. Ukraine said that as of Oct 10, they'd planted 5.1 million ha of winter grains, versus 6.7 million this time a year ago. Wheat accounts for 4.4 million ha of that, around two thirds of original expectations. As of Oct 7, Ukraine had planted 3.6 million ha of winter wheat, so they've managed to progress at around 266k ha/day since then. At that rate they could be all done in little over a week if the weather holds. Ukraine and Russian conditions are still improving, and the forecast is dry and warmer for the next 5-7 days. In their first estimate for this season the Buenos Aires Grains Exchange forecast the Argentine 2013/14 wheat crop at 10.35 MMT, up 18% versus 2012/13. The wheat planted area was estimated at 3.62 million ha versus 3.37 million a year ago. Old crop wheat in Argentina is extremely tight, with local millers said to be prepared to pay USD500/tonne for readily available wheat, double the price they are paying for late November availability once the harvest gets underway. US winter wheat conditions are looking up. "Generous rains are expected in Kansas, Oklahoma and Texas, improving field moisture for hard red wheat planting. Compared to last year field conditions are much wetter," said Martell Crop Projections. It's highly unlikely that there will be any crop progress data from the USDA on Monday, if there was it would probably show much better winter wheat conditions than a year ago. Dec 13 CBOT Wheat closed at USD6.92 1/4, up 6 3/4 cents; Dec 13 KCBT Wheat closed at USD7.60 1/4, up 4 3/4 cents; Dec 13 MGEX Wheat closed at USD7.54 3/4, up 3 3/4 cents. For the week CBOT wheat was up 5 1/4 cents, with KCBT 10 cents firmer and MGEX rising 8 1/2 cents.