Nogger's Blog

04/11/13 -- Soycomplex: Beans closed mostly firmer, with the exception of front month Nov 13 which ended a couple of cents easier and at the lowest levels for a front month since Feb 2012. Open interest in the Nov 13 contract stands at less than 9,000 contracts versus over 275k lots in the Jan 14 position. and still has another 10 days on the board yet before contract expiry. Decent rains in Brazil see planting progress there making good strides. Safras e Mercado said Brazil has now planted 44% of their 2013/14 soybean crop versus 26% a week ago, 42% a year ago and 36% on average. AgRural put plantings even higher at 48% done. Some of Argentina'a driest areas, the provinces of Córdoba, south and centre of Santa Fe and in the east of Entre Rios, got up to 200mm of rain over the weekend. The Buenos Aires Grains Exchange last week pegged soybean planting in Argentina at 4.6% complete versus 2.4% a week ago and 3.6% a year ago. Sunflower planting is 60.9% complete versus 46.6% a week ago and 54.5% a year ago. After the close the USDA said that the 2013 US soybean crop is 86% harvested, a little less than the 90% that the trade was expecting. Weekly export inspection posted another very strong week at 80.559 million bushels. The trade is now fully focused on Friday's upcoming WASDE report from the USDA. This one is particularly important as October's was shelved due to the partial government shut down. For soybeans the general feeling is one of better yields and higher production than we were given in September (41.2 bu/acre and a crop of 3.149 billion bushels respectively), but that should be tempered by increased domestic usage and higher exports. The upshot of that would be potentially little change to US carryout in 2013/14. South American production estimates could be scaled higher. Nov 13 Soybeans closed at $12.64, down 2 cents; Jan 14 Soybeans closed at $12.56 1/2, up 5 cents; Dec 13 Soybean Meal closed at $396.90, up $2.00; Dec 13 Soybean Oil closed at 41.25, down 34 points.

Corn: The corn market continues to grind lower by a cent or two most days, from within a narrow daily trading range, and today was no exception. Tonight's close on the Dec 13 contract was the lowest for a front month since August 2010. This position has a hefty open interest of well over 650k contracts. The Deutsche Bank "roll" begins today and ends on Friday. They are expected to be rolling long Dec 2013 corn positions into Dec 2014. The Goldman Sachs roll is due to take place Nov 7-13, they will be rolling long Dec 13 corn positions into Mar 14. The Buenos Aires Grains Exchange said that Argentina's corn crop is 34.8% planted versus 26.8% a week ago and 40% a year ago. The heavy weekend rains there will be of benefit. South Korea bought 60 TMT of Black Sea origin corn for April shipment in a tender, having been a featured buyer of US corn last week. The USDA attaché in China estimated their 2013/14 corn crop at a record 210 MMT, with imports at 7 MMT. The USDA said that the 2013 US corn crop is 73% harvested versus the 75% that the trade was expecting. Even so, that's now better than the 5-year average pace of 71% at this time. Export inspections were big, and towards the top end of expectations, at 31.316 million bushels. Friday's USDA report is widely expected to show much better average US corn yields this year than the 155.3 bu/acre reported in September, with production potentially rising to 14 billion bushels, maybe even higher, versus 13.843 billion previously. There's a very wide range of production estimates for this report, as some analysts see the possibility that the USDA will cut harvested acres quite significantly even if they do put yields closer to 160 bu/acre. One survey has the range of production forecasts in the trade at 13.421-14.367 billion bushels, so not everyone is betting on a big increase in output in this report, some think it could actually drop. This makes the range of estimates for 2013/14 US ending stocks also pretty wide at 1.8-2.3 billion bushels. Corn production potential in South America for 2013/14 could also be trimmed. A bullish surprise from the USDA in corn could be explosive. The most recent Commitment of Traders report that we have shows non-Commercial and non-reportable combined traders sitting on a record short position in CBOT corn. Dec 13 Corn closed at $4.26 1/4, down 1 cent; Mar 14 Corn closed at $4.37, down 1/2 cent.

Wheat: Wheat was lower on all three exchanges, unable to extricate itself from the gravitational pull of corn. A Saudi Arabian purchase of 720 TMT of hard wheat from multiple origins offered some support. The USDA attaché in China cut his estimate for wheat production there by 3 MMT to 118 MMT. Argentine rains are expected to have arrived to late to be of benefit to wheat there, harvesting has already begun in some parts. Bloomberg released their analysts estimates for Friday's report, suggesting that the market is looking for all-wheat ending stocks for 2013/14 to come in at 529 million bushels, down sharply from the September forecast of 561 million. This is likely due to the significant boost that US exports have received of late from their new best friend - Brazil. With Argentina's 2013/14 wheat crop likely to be little better than 10.5 MMT this year, their exports are highly unlikely to exceed 3 MMT, and may possibly be restricted to less than that. That could continue to see Brazil buying significant volumes of US wheat right through the current marketing year. Looking a little further ahead, US prospects for a large wheat crop in 2014/15 are very promising. The USDA said that winter wheat plantings for next year's harvest are now 91% done, and that emergence is at 78%. The top wheat producing state of Kansas is 96% planted and 86% emerged - both are better than the 5-year average. Overall, the USDA sees 63% of the nation's winter wheat crop in good/excellent condition, up 2 points on last week and compared to only 39% a year ago. Weekly export inspections of only 7.146 million bushels were poor. Friday's USDA report is likely to be more about corn and soybeans than it is wheat, with the latter likely to follow the direction of corn. The Russian wheat harvest is wrapping up, but the quality of what is coming in isn't great. That will make them less aggressive sellers on the international stage going forward. Ukraine will soon start to concentrate on exporting corn, and the other cheap Black Sea/Eastern Europeans could soon be sold out on wheat. That should provide a nice window of opportunity for France/Germany, along with the US, Canada and Australia. Dec 13 CBOT Wheat closed at $6.62 3/4, down 5 cents; Dec 13 KCBT Wheat closed at $7.29 1/4, down 4 1/4 cents; Dec 13 MGEX Wheat closed at $7.19 1/4, down 6 1/4 cents.