Nogger's Blog

21/11/13 -- Soycomplex: Beans rallied on continued evidence of very strong nearby demand, Weekly export sales for bean came in at almost 1.4 MMT, well ahead of trade expectations of 6-800 TMT Cumulative sales are now 90% of the USDA's target for the entire season, one which we are only 2 1/2 months into. Sales this time a year ago were running at 74% of the USDA target and the 5 year average is 65%. This week's soybean shipments were huge at 2,488,600 MT, of which China took 1,926,100 MT. This is the third week in a row of shipments in excess of 2 MMT - something which has never happened before. That appears to contradict bear speculation that a lot of these existing sales are "protection" against possible supply disruptions from South America later in the season. Brazil is said to have assured China that there won't be a repeat of this year's delays in 2014. Even if they can cope with the logistics of handling another potentially record crop (which is doubtful - they struggled with the last one), there may not be much they can do about the almost inevitable dock/truck workers strikes. Dr Cordonnier notes that soybean planting in Brazil's top producing state of Mato Grosso was very concentrated around a short period, and that therefore a concentrated harvest effort is also likely. A lack of on-farm storage means that growers there are already attempting to contract trucks to move their beans in the second half of Jan/first half of Feb period, he says. There's a little bit of excitement following the news that Brazil has issued a state of national emergency this week for areas of Mato Grosso regarding the invasion of a particularly destructive infestation of Helicoverpa caterpillars. Chinese customs data shows that they imported 4.19 MMT of soybeans in October, a 3.9% rise versus a year ago. Meal export sales were below expectations of 150-350 TMT at 116 TMT, whilst oil sales beat trade forecasts coming in at almost 96 TMT. Jan 14 Soybeans closed at $12.91 1/2, up 17 3/4 cents; Mar 14 Soybeans closed at $12.79 3/4, up 15 1/2 cents; Dec 13 Soybean Meal closed at $411.00, up $4.00; Dec 13 Soybean Oil closed at 41.54, up 122 points.

Corn: The corn market closed higher, aided by export sales of 945,100 MT versus trade expectations of 600-800 TMT. There's also support from ideas that corn is simply cheap relative to wheat. South Korea's MFG cancelled a tender to import feed wheat, which was priced up at around $300 C&F. They bought Black Sea corn at less than $240 C&F earlier in the week, and US corn at not much more. US ethanol prices are trending higher (the Dec 13 future closed above $2.00 for the first time since June tonight), and production margins there are said to be very attractive with corn at not much more than $4/bushel. US ethanol production last week was 904,000 barrels per day, up 11.5% compared to the same week last year. DDGS values continue to trade at firm levels which is helping margins as well. This week's export sales included 321,600 MT to China and shipments of 756,300 MT saw China (339,700 MT) as the top home. This was the biggest weekly shipment total (apart from end 2012/13 and start 2013/14 adjustments) since May 2012. Shipments to China do need to pick up, Chinese customs data shows that the country only imported 39 TMT of corn in October, a 91% decline on October 2012. The USDA estimate China's 2013/14 corn imports at 7.0 MMT. That's up from 2.7 MMT in 2012/13. There's speculation that the eventual corn planted area in both Brazil and Argentina will prove to be significantly lower than current official forecasts. This is due to a combination of low corn prices and weather-related planting delays in Argentina. The Ukraine corn harvest is 87% done at 26.13 MMT, with yields averaging 6.2 MT/ha. They remain aggressive sellers and active shippers. The Ukraine Farm Association said that the country exported 2 MMT of corn in the Nov 1-12 period. APK Inform said that Ukraine exported 412 TMT of corn to Egypt alone in the the Nov 1-15 period. Dec 13 Corn closed at $4.23, up 6 cents; Mar 14 Corn closed at $4.29 1/2, up 4 1/4 cents.

Wheat: The wheat market couldn't manage to replicate gains in corn and soybeans, closing narrowly mixed. Talk of consumers shying away from wheat, as indicated by South Korea's MFG cancelling a feed wheat tender due to prices being around a $60/tonne premium to corn, weighs on upside potential unless corn can rally from here. India is flexing its muscles again on the export front. Another state-owned firm, MMTC, announced a tender for 55 TMT of wheat for Dec 22-Jan 25 shipment out of the west coast port of Paypavav. They were confirmed to have sold 50 TMT of wheat to Bangladesh. Further tenders are said to be in the pipeline. An Egyptian official indicated that French wheat prices were too high in their latest tender, and suggested that around 750 TMT of Black Sea wheat was available to the government from local private traders, in what looks like a fairly transparent bluff. Russia appears to mostly only have low grade wheat for sale, and it looks like Ukraine has already shipped most of it's exportable surplus. Likewise Romania. The IGC reported that the differential between feed and milling wheat FOB the Black Sea is now around $30/tonne. Lebanon managed to pick up 20 TMT of Romanian milling wheat at $316.60 C&F for December delivery, their second such purchase in the past few days. Chinese customs data shows that they imported an impressive 1.3 MMT a wheat in October, a 273% increase on the same period in 2012. Concerns for production potential for Australia and Argentina are also helping to support the market. Although output from both should be up on last year, production in Australia now looks like it might only be around 24.0-24.5 MMT versus some early season estimates that were in the 26.5-28.5 MMT region. Argentina's crop may be closer to 9 MMT than the 12 MMT that was forecast a few months ago it would seem. Japan bought it's regular combo of US/Australian and Canadian milling wheat (133,480 MT) for Dec-Feb shipment. Dec 13 CBOT Wheat closed at $6.48 3/4, up 1 1/2 cents; Dec 13 KCBT Wheat closed at $6.94 3/4, down 3/4 cent; Dec 13 MGEX Wheat closed at $6.96 1/4, down 1 1/2 cents.