Nogger's Blog

25/11/13 -- Soycomplex: Beans rallied to fresh 2-month highs on the old chestnut that is strong Chinese demand. There's talk of Chinese crushers having sold good volumes of forward soybean meal of late. The theory being that a healthy forward book might see demand for US beans remain strong into the new year, as crush margins stay profitable for a longer period of time. Weekly export inspections were something of a two-edged sword. Pretty strong at 66.93 million bushels, but below the 80 million plus levels that we've see for the past few weeks. The USDA reported 120 TMT of soybeans sold to unknown for 2014/15 delivery. Ag Rural said that Brazilian soybean planting was 79% complete on a national basis, with the leading producing state of Mato Grosso 96% done. Good and widespread rains are in the forecast for them, Argentina is a bit drier however. Chinese and South American weather demand holds the key to where this market goes from here. Early beans could be getting harvested in six weeks in parts of Brazil and unlike this year the old crop supply line hasn't been completely stripped bare. Bean-starved Brazilian crushers were eager to take all the early new crop beans that came onto the market back in January and the early part of February you will recall. Things may not be quite so tight this time round. Supply disruptions seem inevitable once the market is hit with a deluge of new crop beans come Mar/Apr/May, just as they were this year, in my opinion - despite Brazilian assurances to the contrary - so front end premiums (and probably large ones) look pretty likely come the northern hemisphere spring. The USDA didn't report on soybean harvest progress in their weekly report, so I guess we can assume that that is more or less over. Jan 14 Soybeans closed at $13.29 1/4, up 9 3/4 cents; Mar 14 Soybeans closed at $13.14 3/4, up 8 3/4 cents; Dec 13 Soybean Meal closed at $437.20, up $9.40; Dec 13 Soybean Oil closed at 40.66, down 50 points.

Corn: The corn market finished around a couple of cents higher, but generally extending the recent narrow sideways trade. The daily trading range was less than 5 cents. Weekly export inspections came in at a decent 30.24 million bushels, up at the top end of trade expectations and about the same as last week. The USDA reported the 2013 US corn harvest at 95% done, up 4 points from a week ago and about what the market expected. Northern states like Wisconsin (82% complete), Michigan (84%) and North Dakota (86%) are the least advanced. It may be a struggle to get the last of the crop in. "Winter has arrived early in the Great Plains and Upper Midwest where temperatures have been running 6-10 F below normal," said Martell Crop Projections. Tonight's crop progress report is expected to be the last for corn. Israel is tendering for up to 100,000 MT of option origin corn. Ukraine's corn harvest is winding down, and this seems to now be where they are concentrating their export push. Out of the 1.16 MMT of grains exported in the week through to Nov 24, over 80% was corn, according to APK Inform. The Russian corn harvest is also entering the final leg, and private estimates suggest that they may export 3.0-3.5 MMT of corn in 2013/14 versus less than 2.0 MMT last year and the USDA's current forecast of 2.5 MMT. Corn appears to have found it's level for the time being, supported by good margins in the ethanol business and the fact that it is such a large discount for wheat. The latter may encourage a bit more Asian buying too. Any further advancement in world wheat prices may allow for some modest appreciation in corn levels as long as usage holds up. South American production might be down a bit more than the market currently anticipates in the new year, which could also provide a bit of support. There is a very large volume of US corn to shift however, and the prospect of 2013/14 ending stocks in the region of 1.9-2.0 billion bushels is hardly bullish. Dec 13 Corn closed at $4.24 3/4, up 2 1/2 cents; Mar 14 Corn closed at $4.31 1/4, up 2 cents.

Wheat: Wheat finished around 1-3 cents higher, amidst talk of lower production prospects in Australia and Argentina. Both countries are mid-harvest, yet production estimates still vary quite widely. EU wheat prices are clawing their way higher as supplies from the cheaper FSU countries dwindle following their usual early season aggressive market strategy. Competition is still out there though, with India seemingly ready to release significant volumes of it's wheat surplus onto the market prior to the start of it's 2014 harvest in March/April. Iraq bought 200 TMT of Australian and Canadian wheat in it's tender. The interim deal struck with Iran over its nuclear program immediately met with reports of private Iranian buyers being back in the market to buy 300-500 TMT of milling wheat after a two year enforced absence. The USDA reported winter wheat crop conditions in the good/excellent category down one point on last week at 62%, although much better than only 33% a year ago. Idaho, Illinois, Michigan, Ohio, Oklahoma, South Dakota and Washington all have at least 75% of their winter wheat rated as good/excellent. Wheat in Texas is in the worst shape at 28% poor/very poor. Weekly export inspections of 12.597 million bushels weren't great, and down versus 18.113 million the previous week. Low world corn prices are what's holding wheat back, and we probably need to see a rally in that market for wheat to move much higher than where it is now. Both US and EU wheat are heading into winter in generally very good shape, certainly in far better condition than a year ago. There are some concerns over the FSU though. Planting has been late, so maturity is retarded, some crops never got planted at all, and there's some talk of a lack of snow cover possibly being an issue when the Russian winter arrives. Very early ballpark guesses for Russian wheat output in 2014 are around 47-48 MMT. Dec 13 CBOT Wheat closed at $6.52 1/2, up 3 cents; Dec 13 KCBT Wheat closed at $7.03 1/2, up 1 3/4 cents; Dec 13 MGEX Wheat closed at $7.00 3/4, up 1 1/2 cents.