Nogger's Blog

08/11/13 -- Soycomplex: It was always going to be a choppy day, with the USDA releasing it's first world supply and demand numbers for two months, and so it proved. Front month Nov 13 beans traded from 4 cents lower to almost 28 cents higher, and closed almost at the session highs. The USDA gave us 2013 US soybean yields of 43 bu/acre, towards the top end of the range of expectations and above the average trade guess of 42.4 bu/acre. Production was estimated at 3.26 billion bushels, which was also towards the upper end of the range of estimates and above the average guess of 3.22 billion. Harvested acres were however lowered from the USDA's September estimate of 76.378 million, and the average trade guess of 75.93 million, to 75.69 million. US 2013/14 ending stocks came in slightly below trade forecasts of 172 million bushels at 170 million. World old crop ending stocks were trimmed from 61.55 MMT to 60.11 MMT, with new crop ending stocks cut from 71.54 MMT to 70.23 MMT. It was these reductions in stocks that was given credit for being behind today's rally. There were no changes in production for Brazil (88 MMT), Argentina (53.5 MMT) or Paraguay (9 MMT) from September. Brazil's 2013/14 exports were raised 1.5 MMT to 44 MMT, but Argentina's were cut by 3 MMT to 9.7 MMT. A near 3 MMT increase in US production was just about matched by a 820 TMT rise in the US crush and an extra 2.1 MMT worth of exports. US meal exports were raised from 8.6 MMT to 9.3 MMT. China's soybean imports in 2013/14 were left unchanged at 69 MMT. Separately, Chinese customs data revealed October soybean imports of 4.19 MMT, down 11% on September, although up 4% versus a year previously. Jan/Oct 13 imports now stand at 49.94 MMT, a 3.3% rise year-on-year. The USDA's estimate for 2013/14 imports of 69 MMT represents an increase in Chinese imports of over 15% season-on-season, so that clearly looks somewhat ambitious. Conab forecast Brazil's 2013/14 soybean crop at a record 87.9-90.2 MMT versus 81.5 MMT in 2012/13. The Buenos Aires Grain Exchange said that Argentine farmers will probably sow more than the 20.2 million hectares of soybeans that they currently have factored in. Plantings are so far around 11% done, they added. Nov 13 Soybeans closed at $13.06, up 27 1/4 cents; Jan 14 Soybeans closed at $12.96, up 29 1/2 cents; Dec 13 Soybean Meal closed at $422.30, up $18.50; Dec 13 Soybean Oil closed at 40.24, down 50 points. For the week Nov 13 beans were up 40 cents, with meal rising $27.40 and oil dropping 135 points.

Corn: Corn also traded both sides, from 5 cents lower to 9 cents higher, for once breaking out of the narrow trading range and steady grind lower that we've seen for most of the past two weeks heading into this report. The USDA placed 2013 US corn yields at 160.4 bu/acre, versus a range of guesses of 155.6-163.3 bu/acre, and the estimate of 155.3 bu/acre used in September and the average pre-report forecast of 158.9 bu/acre. They place production marginally below 14 billion bushels (the estimated range was 13.42-14.37 billion) versus their September estimate of 13.84 billion, and up sharply on 10.78 billion a year ago. Harvested acres were pegged at 87.23 million versus an average trade estimate of 88.09 million. They put 2013/14 US ending stocks at 1.89 billion bushels compared to the average trade guess of 2.03 billion. As with soybeans, it was these lower than anticipated ending stocks that were ultimately given the credit for pulling the market higher at the close. In the end, the market brushed aside the news that world corn ending stocks were forecast almost 13 MMT higher this month than in September at 164.33 MMT, and almost 30 MMT more than a year previously. Brazil's corn crop was trimmed 2 MMT to 70 MMT, Argentina's was left unchanged at 26 MMT. Mexico's corn imports were raised 2.5 MMT to 10.5 MMT. China's were left unchanged at 7 MMT. Separately, Conab estimated Brazil's 2013/14 total corn crop far higher than the USDA's 70 MMT at 78.5-79.2 MMT compared to a previous estimate of 78.4-79.6 MMT and 81.0 MMT in 2012/13. They estimated Brazil's 2013/14 corn exports at 18 MMT versus 21 MMT in 2012/13 and the USDA's forecast of 20 MMT. The Buenos Aires Grain Exchanged said that corn plantings in Argentina are 39% complete. Now that Brazilian corn has been quarantine approved for export to China, the Brazilian Ag Minister wasted no time in saying that he wanted his country to export 10 MMT to the Chinese. As ever, there are reports that all is not well with the Chinese corn crop, and that production there this year could fall well short of the USDA's re-affirmed 211 MMT estimate of today. Dec 13 Corn closed at $4.26 3/4, up 6 1/4 cents; Mar 14 Corn closed at $4.38 1/2, up 7 cents. For the week Dec 13 corn was 1/2 cent lower despite today's mini rally.

Wheat: Wheat ultimately finished lower on all three exchanges, but also featured choppy two-sided trade. Front month CBOT wheat had a daily trading range of almost 15 cents, whilst in Minneapolis it was almost 25 cents. The USDA numbers were seen as negative, although as with corn and soybeans there was something for both the bull and the bear camp to cling on to. The main bearish surprise came from the USDA forecasting 2013/14 US all wheat ending stocks of 565 million bushels. That was up slightly on September's 561 million, whilst the average trade guess was for a cut to 519 million. There was also a rise of 2.2 MMT to world 2013/14 ending stocks to almost 178.5 MMT, contrary to trade expectations of a small cut to 175.9 MMT. US 2013/14 all wheat production was raised from 57.54 MMT to 57.96 MMT. Argentina's wheat crop was only trimmed by 1 MMT to 11 MMT, the trade was probably expecting a bit more of a cut. Canada's crop was raised from 31.5 MMT to 33.2 MMT, maybe a little higher than expected. The bottom line is that there is no shortage of wheat on a global level, and that matched with a record world corn crop the USDA sees demand for it waning and stocks rising. The USDA estimated Brazil's wheat import requirement at 7.7 MMT. Conab today suggested that imports would be 1 MMT lower than that. China's wheat import requirement was dropped 1 MMT from September to 8.5 MMT, and India's exports were raised 1 MMT to 6.5 MMT. Russia and Kazakhstan both had their wheat production and export potential cut. Australia's wheat crop was left unchanged at 25.5 MMT, around the middle of the range of various private estimates. Stiff competition for US wheat on the world export stage is seen coming from Europe. The USDA raised EU wheat exports from the 23 MMT forecast in September to a record 24 MMT today (and versus 22.6 MMT in 2012/13). The EU granted export licenses for 461 TMT of soft wheat this week, which pushed cumulative sales to 9.4 MMT compared with 5.7 MMT last year at this time. This week's weakening of the euro, following the ECB's decision to cut interest rates in the eurozone, should keep EU wheat competitive, especially at a time when Black Sea exports are dropping off. Dec 13 CBOT Wheat closed at $6.49 3/4, down 3 1/4 cents; Dec 13 KCBT Wheat closed at $7.08 1/2, down 4 cents; Dec 13 MGEX Wheat closed at $7.08, down 1 1/2 cents. For the week CBOT wheat closed 18 cents lower, with Kansas down 25 cents and Minneapolis 12 1/2 cents easier.