Nogger's Blog

20/03/14 -- Soycomplex: Beans closed mixed, with strong (and not negative on old crop as some had suggested) export sales supporting. They came in at 202,200 MT of old crop and 437,500 MT of new crop versus expectations of -100 TMT to +300 TMT on old crop, and with new crop sales of 300-600 TMT. US weekly soybean shipments of 1,119,149 MT take exports so far to 94% of the USDA target for the season, with commitments now running at 107%. Separately, the USDA announced 120,000 MT of US new crop beans sold to China. Talk that the latter are still actively looking to sell already purchased Brazilian beans into US homes is rife. Some suggest that the effects of the bird flu outbreak in China have being under-estimated and that the country is therefore over-bought. One report I saw today said that Chinese soybean imports could fall to 63 MMT this year, a huge amount but far less than the 70-72 MMT that others have been forecasting. Traders will be mindful that US growers are soon expected to begin planting their largest soybean crop on record. FAPRI estimated US soybean acres at 78.7 million this year, up from 76.5 million last year, but below some of the other trade estimates that we've seen in the last week that have been in the 81-83 million region. They forecast 2014/15 US soybean prices averaging only $9.84/bushel versus $12.57 this season. What would they have forecast for prices using an acreage in the 80's? Lanworth estimated the Brazilian soybean crop at 87.8 MMT and the Argentine crop at 56.6 MMT. MDA CropCast peg them at 86.37 MMT and 54.39 MMT respectively. The USDA's attaché in Brazil estimated ‘13/14 Brazil bean crop at 88.0 MMT versus a USDA estimate of 88.5 MMT, with exports at 45 MMT - the same as the USDA. They see the 2014/15 Brazilian crop soaring to 97 MMT, with exports of 50 MMT - both would easily be record levels. The Rosario Grain Exchange says Argentine farmers still sitting on 5 MMT of old crop soybeans as a hedge against inflation. May 14 Soybeans closed at $14.33 3/4, up 2 1/2 cents; Jul 14 Soybeans closed at $14.10, down 3/4 cent; May 14 Soybean Meal closed at $466.50, up $4.50; May 14 Soybean Oil closed at 41.31, down 79 points.

Corn: The corn market slumped on ideas that bird flu in China is reducing demand, which may explain their lack of urgency to approve the disputed MIR 162 variety for import. COFCO said that China might import less than 3 MMT of corn in 2013/14 versus the current USDA estimated of 5 MMT. You may recall that not that long ago some were pegging Chinese corn imports this season at 8-10 MMT. Weekly export sales came in at 745,800 MT of old crop, with no new crop. Trade estimates for that had been for a combined 500 TMT to 1.05 MMT. Net commitments are now 94% of the USDA's export forecast for the season, compared to 75% in an average year. Note though that, unlike in soybeans, the proportion of unshipped sales is still high. Lanworth estimated the Brazilian corn crop at 71.2 MMT, with the Argentine crop at 25.5 MMT. MDA CropCast went 69.7 MMT and 23.7 MMT respectively. FAPRI estimated US corn plantings for 2014/15 at 91.3 million acres, a 4.1 million fall from last year's 75-year high. They suggest that the harvest might come in at 13.638 billion bushels, down 0.289 billion on last year, with exports at 1.875 billion, a 0.38 billion drop on 2013/14. They see US corn prices in 2014/15 averaging $4.17/bushel. AgResource estimated the 2014/15 global corn crop at 978.4 MMT, a new record versus the 967.5 MMT produced in 2013/14. Strategie Grains estimated the 2014/15 EU-28 corn crop at 65.2 MMT, a 1% rise on last year. Taiwan Sugar Corp cancelled a tender to buy 20,000 MT of US corn and 15,000 MT of US beans for May shipment. The Buenos Aires Grains Exchange said that the Argentine corn harvest is 7% complete, up from 4% a week ago, but down versus 14.5% a year ago. They estimated the Argentine corn crop at 23.5 MMT, unchanged from their previous figure. APK Inform said that some Ukraine farmers will plant soybeans instead of corn this spring due to price considerations. Japan seem to be using more corn and less feed wheat at current price differentials. The Japanese Ministry said that in January the use of corn in animal feed was 45.7% versus 45.2% in December and versus 42.2% in January 2013. Fund selling was estimated at around a net 7-9,000 lots on the day. May 14 Corn closed at $4.78 1/2, down 9 1/4 cents; Jul 14 Corn closed at $4.83 1/2, down 9 1/4 cents.

Wheat: The wheat market made new highs for the recent move, but then stumbled lower on profit-taking. Weekly export sales of 401,800 MT of old crop and 195,200 MT of new crop were in line with expectations for sales of 250,000-500,000 MT of old crop and 50,000-200,000 MT of new crop. MDA CropCast raised their 2014/15 US winter wheat production estimate by 11 million bushels to 1.569 billion due to acreage and yield improvements in the Pacific North West. They cut Ukraine's potential this year by 0.7 MMT to 20.3 MMT, but raised Russia by 1 MMT to 48.3 MMT. FAPRI estimated the US all wheat area for 2014/15 at 57 million acres versus 56.2 million last year. They see the coming all wheat harvest at 2.203 billion bushels (versus 2.130 billion last year), with exports at 1.069 billion (1.120 billion) and the average US wheat price next season at only $5.55/bushel versus $6.82 this season. AgResource estimated the global wheat crop at a record high 713.8 MMT in 2014/15. Strategie Grains increased their forecast for the EU-28 soft wheat crop by 0.2 MMT from last month to 137.7 MMT, a 2% increase on last year. They also raised their 2013/14 soft wheat export estimate by 1.3 MMT to a record 25.6 MMT and increased 2014/15 exports from 21.7 MMT to 22.4 MMT. They suggested that some buyers in North Africa and the Middle East might shy away from buying Ukraine wheat for the time being and prefer to buy from Europe. If they are correct, all that will happen is that Ukraine origin will be offered even cheaper than its normal harvest-time discount until a buyer is found. As shipments have continued out of the region more or less normally across the height of the Crimean crisis, it seems unlikely that Ukraine's reliability as a supplier will worsen later in the year - as things stand. There's some talk that today's reversal may have been down to a slightly wetter outlook for US wheat on the Southern Plains. It should be considered that although US winter wheat conditions have deteriorated sharply over the past few months, they did enter dormancy with one of the best good/excellent ratings in recent history, so the starting level was rather elevated. It should also be noted that even with the decline, ratings in states like Kansas, Colorado and Nebraska are still better than they were a year ago. May 14 CBOT Wheat closed at $7.03 3/4, down 12 cents; May 14 KCBT Wheat closed at $7.82, down 6 1/4 cents; May 14 MGEX Wheat closed at $7.55 1/4, down 5 3/4 cents.