Nogger's Blog

10/01/14 -- Soycomplex: The eagerly awaited USDA report was relatively neutral for beans. They upped the world crop by almost 2 MMT courtesy of a 1 MMT rise for Brazil to a record 89 MMT, although it could have been more considering that several trade estimates are now above 90 MMT, and that the Brazilian Ag Minister was quoted as saying this week that output could easily top 95 MMT. The USDA also raised US 2013 soybean production by almost 1 MMT to 89.5 MMT. Maybe they just didn't want Brazil to beat the US to the top of the global production table? As recently as 2009/10 US soybean production was 22.5 MMT more than that of Brazil. Chinese import demand in 2013/14 was left unchanged at a record 69 MMT. US soybean exports were tweaked a little higher to 40.7 MMT, although the US have already shipped over 25 MMT this season and have a further 15.7 MMT on the books waiting to go. As you may notice 25 + 15.7 = 40.7, so the new USDA target has already been achieved less than 4 1/2 months into the 2013/14 season. The USDA held their Argentine soybean production estimate steady at 54.5 MMT, which would match the 2009/10 record crop. US 2013/14 soybean ending stocks were seen unchanged at 150 million bushels, or 4 MMT. Separately the USDA also announced the sale of 216,000 MT of US beans to China for 2014/15 shipment. South American weather developments and early Brazilian harvest progress may now dictate market direction next week. Will Chinese demand for US beans hold up, or will the much talked about cancellations soon start to filter through? Fund money trimmed some length heading into this report, but still sit on a net long in excess of 100k contracts. Jan 14 Soybeans closed at $13.03 3/4, up 7 1/2 cents; Mar 14 Soybeans closed at $12.78 1/2, up 4 3/4 cents; Jan 14 Soybean Meal closed at $435.20, up $2.20; Jan 14 Soybean Oil closed at 37.95, up 21 points. For the week Jan 14 beans were up 14 1/2 cents, with Jan 14 meal up $10.70 and Jan 14 oil 39 points lower.

Corn: The corn market jumped 18-20 cents as the USDA surprised the trade by lowering 2013 US production from 13.989 billion bushels last month to 13.925 billion this time round. That's still a record crop, but fell below trade forecasts for an increase to 14.066 billion. Average yields were unexpectedly cut from 160.4 bu/acre to 158.8 bu/acre, contrary to expectations for a rise to 161.2 bu/acre. This was a bushel/acre below even the lowest trade estimate in the market. The USDA left their Brazilian corn production estimate unchanged at 70 MMT, which is far lower than CONAB's forecast of almost 79 MMT released only yesterday. They also trimmed 1 MMT off Argentina's projected corn crop to 25 MMT, which was in line with trade ideas. China's crop was hiked from 211 MMT to 217 MMT, with consumption there coming in at 216 MMT and imports pared back from the previously forecast 7 MMT to 5 MMT. US corn exports were seen holding steady at 37 MMT, which Brazil's were raised 0.5 MMT to 21 MMT and Argentina's cut by 2 MMT to 14 MMT. The bottom line is that US 2013/14 ending stocks were cut by 161 million bushels to 1.631 billion versus trade expectations for a 69 million increase to 1.861 billion. World inventories were cut from the 162.5 MMT estimated last month to 160.2 MMT, which is 3 MMT lower than the average trade guess. Dec 1 US corn stocks were pegged at 10.4 billion bushels versus an average trade forecast of nearly 10.8 billion, suggesting that more corn feeding went on in the period than was expected. The latest Commitment of Traders report shows fund money reducing their net short position a little in the week through to Tuesday night. Nevertheless as of then they were still holding a sizeable short of over 90k contracts. Today's news from the USDA may therefore have spooked them quite a bit, as at the end of the session they were given credit for having finished up as net buyers of around 30,000 lots on the day. In separate news the USDA announced 180,000 MT of US corn sold to unknown for 2013/14 shipment. Mar 14 Corn closed at $4.32 3/4, up 20 3/4 cents; May 14 Corn closed at $4.40 3/4, up 20 1/2 cents. For the week Mar 14 corn finished 9 1/4 cents firmer.

Wheat: The wheat market crashed to fresh lows for the move, with funds estimated to have been net sellers of around 6,000 CBOT wheat contracts on the day. The USDA reports had a bearish slant to them for wheat, although there were one or two bullish elements in there as well. The latter however got largely overlooked as the trade chose to focus on a 1.2 MMT global production hike to new record levels and increased US and world carryout. US 2013/14 wheat ending stocks were forecast at 563 million bushels in the average trade guess, but the USDA put the actual figure at 608 million. World ending stocks were expected by the trade to be little changed from last month at 182.6 MMT, but instead the USDA gave us 185.4 MMT. Essentially it would seem that the sudden large price disparity between corn and wheat that the market has seen since the 2013 US corn harvest began has indeed cut demand for wheat. What the market wasn't expecting however, was the news from the USDA that US farmers have planted just under 41.9 million acres of winter wheat for the 2014 harvest. The average trade guess for that was 43.5 million, and the range of trade forecasts had a floor of 42.5 million, with some estimates as high as nearly 44.6 million. Although all classes of winter wheat saw plantings come in below the average trade estimate, the SRW wheat area in particular was especially different at 8.44 million acres versus the average forecast of over 9.5 million. Elsewhere around the world the USDA cut it's estimate for the Argentine wheat crop from 11 MMT to 10.5 MMT, China's was raised from 121 MMT to 122 MMT and Russia's increased from 51.5 MMT to 52.1 MMT. On the demand side Egypt's wheat imports were raised from 10 MMT to 10.5 MMT, with China's left unchanged at 8.5 MMT. Separately the USDA confirmed the sale of 125,700 MT of US wheat to Venezuela for 2013/14 shipment. Mar 14 CBOT Wheat closed at $5.69, down 15 1/4 cents; Mar 14 KCBT Wheat closed at $6.26, down 13 cents; Mar 14 MGEX Wheat closed at $6.20 1/2, down 8 3/4 cents. For the week CBOT wheat lost 36 3/4 cents, with Kansas down 16 1/2 cents and Minneapolis falling 10 cents.