Nogger's Blog

29/10/13 -- Soycomplex: Beans managed to stage a mini "Turnaround Tuesday" but fell well short of recovering all of Monday's losses. The strong demand scenario that was largely ignored yesterday underpinned the market today. Whilst the USDA is expected to raise US soybean production in next week's WASDE report, the trade is thinking that with export commitments already at 74% of the USDA's target for the season then they could also increase their foreign sales estimate too. In addition, with meal demand also very strong, there's the possibility of an increased domestic crush to further utilise some of this extra soybean production. The US harvest will likely be disrupted by widespread showers that are in the forecast for Wednesday and Thursday, dry weather returns Friday and into early next week though. Heavy rain is in the forecast for much of Argentina Thursday/Friday. The eastern half of the country and northern areas are set to receive above average rainfall across the next 15 days. The GFS model has much of Brazil also picking up better than average rains across the next 15 days, although other models are drier. Abiove estimated the 2013/14 Brazilian soybean crop at 86.0 MMT versus the USDA estimate of 88.0 MMT, although still a record output. Dr Cordonnier estimated the Brazilian bean crop at 88.0 MMT, unchanged from previous estimate. He said that 40-45% of the Brazilian bean crop has been planted. He estimated the Argentine crop at 55.0 MMT, also unchanged from previous estimate and put plantings so far at 3-4%. Nov 13 Soybeans closed at $12.79, up 7 3/4 cents; Jan 14 Soybeans closed at $12.70 3/4, up 2 3/4 cents; Dec 13 Soybean Meal closed at $410.80, down $3.90; Dec 13 Soybean Oil closed at 40.97, up 61 points.

Corn: The corn market stabilised a little from yesterday's more than 3-year lows, but still only managed to close with token gains. News that South Korea's Nofi had bought 140 TMT of US corn for March shipment, said to be the first such purchase of US origin corn by them in 16 months, added a bit of support. The trade is braced for the USDA to potentially raise US 2013 corn yields quite sharply from their last estimate issued in September in next week's WASDE report. What they will do re production is another matter. There was plenty of talk last month of a lower harvested area than the numbers that they were using. CNGOIC estimated China’s 2013 corn imports at 5.0 MMT versus the USDA's forecast for 2013/14 imports of 7.0 MMT. They said that China's imports of US corn this month are likely to be 100,000 MT, rising to 800,000 MT in November. Dr Cordonnier forecast the Brazilian corn crop at 70.0 MMT, unchanged from his previous estimate. In Argentina he has the corn crop estimated at 25.0 MMT, unchanged from previously, and said that 28-30% of the Argentine corn crop has been planted. He estimated 2013 US corn yields at 156.0 bu/acre, up 2 bu/acre versus his previous estimate and pegged 2013 production at 13.67 billion bushels. The USDA were 155.3 bu/acre and 13.843 billion bushels in September. Dr Cordonnier obviously sees harvested acres lower than the USDA did in September. Is the stage set therefore for a bullish USDA surprise on corn next week? Yields will surely be raised, but could they actually lower production, or at least not raise it by much, by virtue of a reduced harvest area? Their capacity to spring a surprise knows no bounds after all. With the market having been starved of information for an extra month this time too, next week's report has the potential to double the magnitude of the surprise element. And don't forget that funds are sitting on a near record short position in corn. Dec 13 Corn closed at $4.32, up 1 1/4 cents; Mar 14 Corn closed at $4.44 1/4, up 1 cent.

Wheat: Wheat managed to close with minor gains, having traded both sides. It's large premium to corn remains a bearish factor. So too does European wheat plantings well advanced and crop conditions looking good heading into winter. Plantings in the Black Sea have also caught up to much better levels than were expected a couple of weeks ago, even if they do still lag year ago levels. The pace of US wheat sales is however ahead of normal levels, thanks to Brazil and China. The market will be highly sensitive to signs that this demand is dropping off, which is why yesterday's export inspections of only 16.3 million bushels were so disappointing. The USDA will release three week's worth of export sales data on Thursday, to bring us back into line following the partial government closures earlier this month. The market will be looking to see how well, or otherwise, wheat sales have held up during this period, and who's been buying. South Korea's Nofi bought 65 TMT of optional origin feed wheat for Feb shipment in a tender. Bangladesh re-issued a tender for 50 TMT of optional origin wheat for Nov-Dec shipment. It will be interesting to see if any Indian wheat is offered there, and at what price. Ukraine said that they expect to ship 3 MMT of grains this month, around the maximum possible given logistical and infrastructure constraints. APK Inform said recently that although they have an exportable surplus of 30 MMT this season, grain exports are likely to be limited to around 23.5 MMT by these problems. The Russian wheat harvest is 95.7% done at 53.5 MMT in bunker weight, suggesting that the USDA's clean weight estimate of 54 MMT is a little too high. With the barley crop 91.5% harvested at 15.8 MMT, they may be a bit high on that too. Dec 13 CBOT Wheat closed at $6.81 1/4, up 1/4 cent; Dec 13 KCBT Wheat closed at $7.51 3/4, up 1 cent; Dec 13 MGEX Wheat closed at $7.36 3/4, up 1/4 cent.