Nogger's Blog

26/02/14 -- Soycomplex: Beans marched on to close at fresh highs, despite the setback of weaker overnight trade, on widespread talk of yield losses in Brazil caused by excessive rains. "Extreme weather continues in Brazil soybeans, the latest threat coming from widespread flooding in Mato Grosso. When it rains it pours. Soybeans in Mato Grosso have been hit with excessively rainfall, disrupting the soybean harvest in Brazil’s leading soybean state," said Martell Crop Projections. The town of Sorriso in Mato Grosso state was said to have declared a state of emergency due to excessive rains. The soybean harvest in Mato Grosso is said to be around 45/50% done. Mato Grosso do Sul is said to be around 70% complete. Further south in Brazil it's dryness that's been the problem, with yields in Parana said to be coming in lower than expected due to lack of rains earlier in the year. "Less than 40% of normal rainfall in Parana and NW Rio Grande do Sul stressed soybeans in the month through to Feb 17," said Martell Crop Projections. The Parana state government said that 2.0 MMT of soybeans have been lost due to drought and the hot weather in January and February. They estimated the Parana bean crop at 14.47 MMT versus a previous estimate of 16.5 MMT. Tomorrow's weekly export sales report will be of interest. Will the widely talked about, but largely absent, Chinese cancellations show up? Trade estimates for beans are for sales around 400-800 TMT. Fund money continues to pile in for beans. They were estimated as net buyers of around 5,000 contracts on the day. Last week's Commitment of Traders report already showed them as sitting on their largest long position in beans since September 2012. Mar 14 Soybeans closed at $14.07 1/4, up 8 1/4 cents; May 14 Soybeans closed at $13.97, up 9 3/4 cents; Mar 14 Soybean Meal closed at $468.30, down $1.30; Mar 14 Soybean Oil closed at 41.20, up 62 points.

Corn: The corn market closed barely changed. Choppy and two-sided trading continues for the corn market, but the edge still goes to the bulls, with front month Mar 14 up more than 10% from the mid-January lows. The USDA announced 101,600 MT of US corn sold to unknown for 2013/14 shipment. Taiwan bought 60,000 MT of US corn for April/May shipment. The extremely wet weather in northern and central areas of Brazil's Mato Grosso, where the main concentration of the state's "safrinha" corn production is focussed, is causing planting delays. Mato Grosso is estimated to be 60% done on corn planting, with Mato Grosso do Sul around 52% complete. Deral estimated Parana’s first corn crop at 5.5 MMT versus a previous estimate of 5.62 MMT. They said that Parana’s second corn crop planting has been delayed due to rains. Despite official figures appearing to show that Ukraine's corn exports have been largely unaffected by the ongoing political turmoil and civil unrest in the country, the trade continues to see things differently. The situation could provide a short-term boost for other sellers, although the recent devaluation of the Ukraine hryvnia (down 15% in a month against the US dollar) should ultimately mean that they return as aggressive sellers again once the situation calms down. The Ukraine Stats Office said that the country had exported a record volume of corn in December - 3.9 MMT. Of that total 28% went to buyers in East Asia, with Korea (630 TMT) and Japan (445 TMT) the largest buyers in the region. Both would be considered "traditional" homes for US corn. The US Energy Dept reported weekly ethanol production up marginally on a week ago at 905,000 barrels/day, but that's still below the circa 930k bpd needed to hit the USDA's target for the season. Estimates for tomorrow's weekly export sales are around 400-800 TMT. Mar 14 Corn closed at $4.55 1/2, down 1/4 cent; May 14 Corn closed at $4.61, down 1/4 cent.

Wheat: The wheat market crashed lower on ideas that the recent rally to 2-month highs will cut off export business. Egypt's surprise cancellation yesterday of 110 TMT of US SRW wheat added a bit of fuel to the fire. It was private buyers, not the government agency GASC who cancelled the purchase. Traders said that the actions were due to price, and not because of politics or the recent news that officials were being prosecuted for corrupt trade practices in the rice market. Late in the session, reports that Argentina had cleared a further 500 TMT of wheat for export also knocked hopes for US exports to Brazil. That appeared to be enough to foster the belief that US wheat is too expensive into all but "traditional" US homes. Fears of US winter wheat damage by another hard blast of Arctic air this week were brushed aside. So too were worries about continuing drought on the southern Plains. European and FSU weather conditions are nowhere near as harsh as those being experienced in the US. Spring planting is underway in near ideal seeding conditions in the south of Russia, according to Agritel. Planting has also begun in Ukraine, despite the ongoing upheaval. High prices will encourage Brazilian farmers to increase their wheat plantings this year, and they could harvest a record 7.33 MMT crop towards the end of 2014, according to Safras e Mercado. The last thing that US wheat needs now is a set of disappointing weekly export sales from the USDA tomorrow to apparently "confirm" that US prices have indeed risen far enough to choke off demand. Trade estimates for that are anywhere from 250-750 TMT. After the close Egypt issued a tender for wheat for March 15-31 shipment with the results expected around 13.30 GMT Thursday. This is GASC's first tender since late January when the bought 240,000 MT of Russian and US wheat for shipment March 1-10. Mar 14 CBOT Wheat closed at $6.00, down 15 cents; Mar 14 KCBT Wheat closed at $6.79, down 11 1/2 cents; Mar 14 MGEX Wheat closed at $6.70 1/4, down 3 3/4 cents.