Nogger's Blog

01/11/13 -- Soycomplex: Beans and meal slumped to their lowest levels since August on harvest pressure and upwardly revised private crop production estimates. A firmer US dollar didn't help either, even though yesterday's export sales announcement brings total US commitments on soybeans to 86.4% of the USDA forecast for the 2013/2014 marketing year versus a 5 year average of 58.4% for this time of the year. Informa raised their US 2013 soybean production forecast from 3.176 billion bushels to 3.298 billion, with yields increased from 41.7 bu/acre to 43.3 bu/acre. That announcement came during trading hours. After the close FCStone released some similar numbers, pegging production at 3.27 billion bushels (from 3.16 billion previously) and yields at 42.8 bu/acre (versus 41.4 bu/acre previously). The USDA were at 3.149 billion and 41.2 bu/acre back in September. There are reports that privately JP Morgan/Cargill estimated 2013 US soybean yields at 43.5 bu/acre. The IGC yesterday raised their forecasts for 2013/14 soybean production in the US (from 85.7 MMT to 86.0 MMT), Brazil (from 86.5 MMT to 87.6 MMT) and Argentina (from 52.5 MMT to 54.5 MMT). Soybean exports from the two big South American countries were also raised. Brazil is now seen exporting 44.5 MMT of soybeans in 2013/14 versus a previous forecast of 43 MMT and a 5.5% increase on the 42.2 MMT shipped in 2012/13. Argentina's soybean exports in the season ahead were raised from 11.8 MMT to 12.8 MMT, a whopping 62% rise on 2012/13. All of this sets the scene nicely for a HUGE November WASDE report from the USDA next Friday. At least with last weekend's change from BST to GMT that means that this should be released at 4pm London time, rather than the 5pm on a Friday that many of this year's WASDE reports have been given to us on this year. In other news the USDA announced the sale of 115 TMT of beans to China for 2013/14 delivery under the daily reporting system. The latest Commitment of Traders report for the week ending Oct. 22 shows funds sitting on a net long in beans of 119,295 contracts. Nov 13 Soybeans closed at $12.66, down 14 1/4 cents; Jan 14 Soybeans closed at $12.51 1/2, down 14 3/4 cents; Dec 13 Soybean Meal closed at $394.90, down $8.70; Dec 13 Soybean Oil closed at 41.59, up 26 points. For the week beans were down 34 cents on the front month, meal dropped $28.60 whilst oil rose 86 points.

Corn: Corn closed with modest losses, but even so this was still a fresh more than 3-year closing low for a front month. Informa raised their US 2013 corn production forecast from 14.01 billion bushels to 14.223 billion. Yields were increased from 158.8 bu/acre previously to 161.2 bu/acre. The USDA was at 13.843 billion and 155.3 bu/acre back in September. There are reports that privately JP Morgan/Cargill estimated 2013 US corn yields at 164.0 bu/acre. The IGC yesterday surprisingly raised their estimate for Argentine corn production in 2013/14 from 25.0 MMT to 26.0 MMT (although below the previous year's output of 30.0 MMT). They also increased exports by the same 1 MMT to 17 MMT. Their estimates for corn production in Brazil and Ukraine were left unchanged at 72 MMT and 28 MMT respectively. Exports from these two are seen at 19 MMT in the case of Brazil (versus 22 MMT in 2012/13) and 18 MMT for Ukraine (versus 12.8 MMT in 2012/13). The IGC also raised their forecast for US corn production from 350 MMT to 352 MMT, a 28.6% rise on last year. Informa cut their Argentine corn production forecast from 27 MMT to 25 MMT. In Brazil they see the total corn crop at 71.1 MMT, unchanged from previous estimate. They increased their production forecast in China by 1 MMT to 216 MMT. The USDA attaché in Argentina estimated the 2013/14 corn crop at 24.0 MMT versus the September USDA estimate of 26.0 MMT. Argentina's 2013/14 corn exports were forecast at 16.0 MMT versus a USDA estimate of 18.0 MMT. Argentina’s Ag Ministry's weekly crop progress report said that corn planting there is 31% complete versus 42% a year ago. Monday night's crop progress report from the USDA is expected to show the US corn harvest at around 75% complete, with soybeans maybe as much as 90% done. The Midwest has seen rain during the second half of this week, which may have slowed harvesting a little. A drier weekend should allow harvesting to pick up again, although there are more showers in the forecast midweek before drier weather returns into next weekend. South Korea's KFA bought 60 TMT of US corn for March shipment along with a similar sized cargo of European corn for April shipment. South Korea have been big buyers of mostly US corn for delivery in the new year this week. The latest Commitment of Traders report to Oct. 22 shows funds sitting on a 159,242 short in CBOT corn. Dec 13 Corn closed at $4.27 1/4, down 1 cent; Mar 14 Corn closed at $4.37 1/2, down 1 3/4 cents. For the week front month corn was down 12 3/4 cents.

Wheat: The wheat market was flat to 7 cents lower. Informa now have this year's Russian wheat crop estimated at 53.0 MMT versus previous estimate of 54.5 MMT. They also trimmed their Australian wheat crop estimate to 25.0 MMT from previous estimate of 26.0 MMT, and cut Argentina's crop from 11.0 MMT to only 9.8 MMT. They are also starting to look at next year's production potential in some places. They have Russia's 2014 wheat crop estimated at 48.5 MMT and Ukraine's at 20.5 MMT. Winter grains are said to be only planted on 85.8% of the original target area, according to the Ag Ministry there. Things are better in Ukraine where 93% of the intended wheat area has been planted, although how these late-planted crops will get through winter and look in the spring is far from certain. The USDA attaché in Argentina estimated the 2013/14 wheat crop there at 10.5 MMT versus the USDA's own September estimate of 12.0 MMT. The attaché estimated Argentina's 2013/14 wheat exports at 4.2 MMT versus the current USDA estimate of 6.0 MMT. Others think that only 2-3 MMT is more likely. The latest Commitment of Traders report to Oct. 22 sees fund money now sitting on a wheat long of 29,203 contracts, having been short for almost the entire last 12 months. South Korea's MFG bought 55 TMT of optional origin feed wheat for Jan shipment in a tender. Yesterday's export sales update from the USDA means that total all wheat commitments now stand at 68.4% of the USDA forecast for the season, versus a 5 year average of 57.4%. Sales of 301,000 MT are needed each week to reach the USDA forecast. The USDA will update us on winter wheat plantings and crop conditions in the US on Monday night. A week ago they said that the US winter wheat crop was 86% planted, just above the five year average of 85%. Good/excellent crop conditions were pegged at 61% versus only 40% a year previously. The wheat/corn price differential is what seems to be holding wheat back. In Chicago this gap is now over $2.40 versus $1.38 1/2 twelve months ago. Today's price action seems to be related to unwinding of spreads that were long Kansas wheat against shorts held in Chicago. Dec 13 CBOT Wheat closed at $6.67 3/4, up 1/4 cent; Dec 13 KCBT Wheat closed at $7.33 1/2, down 7 cents; Dec 13 MGEX Wheat closed at $7.25 1/2, down 4 3/4 cents. For the week that means that Chicago wheat was 23 cents lower, with Kansas down 15 1/2 cents and Minneapolis losing 19 1/2 cents.