Nogger's Blog

28/02/14 -- Soycomplex: Beans closed sharply higher, getting back all of yesterday's losses and then some. It was a choppy session with the May 14 contract having a near 40 cent trading range in open outcry trade. Yesterday's "just because" fund-generated lower close was clearly seen as a buying opportunity. The USDA announced the sale of 120,000 MT of optional origin beans to Egypt for 2014/15 shipment. The Buenos Aires Grains Exchange estimated the Argentine soybean crop at 53 MMT, unchanged from last week. Brazilian analyst Safras et Mercado cut their forecast for soybean production there to 86.1 MMT, that's still a record crop, but now some way short of the 90-92 MMT that the market was talking about a few months ago. Brazil's crushing association, Abiove, stood by it's forecast for a record crop of 88.6 MMT. Earlier in the week Oil World said only 85 MMT. Logistics are worsening in Brazil where the Madeira River - an important link between Mato Grosso soybeans and Porto Velho, the capital of the state of Rondonia and gateway to the northern port of Itacoatiara - has reached historic flood levels. As a result soybean receivals from Mato Grosso are said to have ceased. Mato Grosso soybeans, where the harvest is only about halfway done, must now slog it out down Brazil's 1,500km long "soybean highway" the BR-163 en route to ports in the south. This highway was reduced to just one lane after a dam burst its banks earlier in the week. The time taken to repair the damage "could take several months" according to Dr Cordonnier. Funds were estimated to have been net buyers of around 9-10,000 soybean contracts on the day. Their net long as of Tuesday night is now well in excess of 200k contracts. Mar 14 Soybeans closed at $14.14 1/4, up 20 3/4 cents; May 14 Soybeans closed at $14.14, up 24 cents; Mar 14 Soybean Meal closed at $467.90, up $3.90; Mar 14 Soybean Oil closed at 41.52, up 62 points. For the week that puts the front months up 43 1/2 cents on beans, with meal up $12.10 and oil up 57 points.

Corn: The corn market also reversed yesterday's action, with fund money seen buying a net 12,000 contracts on the day - a similar volume to that they were said to have sold yesterday. The ongoing wet weather in Brazil is seen hampering the timely planting of second crop corn. The turmoil in Ukraine is seen potentially hindering corn exports there, and possibly even impinging on spring corn plantings and/or reducing inputs later in the season due to the weak hyrvnia/US dollar exchange rate. At least for now, buying corn from Ukraine doesn't look a very safe option if you want guaranteed delivery, even though some say that the ports are operating more or less normally. The Buenos Aires Grains Exchange said that Argentine corn harvesting is 1.6% complete, barely moved on 1.2% a week ago and well behind the 6% of a year ago. They have the Argentine corn crop estimated at 23.5 MMT, unchanged from their previous forecast. Safras et Mercado cut their Brazilian corn production forecast to 71.2 MMT from the 75.6 MMT estimated previously. CEC estimated South Africa’s 2014 corn crop at 12.40 MMT versus a previous figure of 11.69 MMT. There's talk of a potential increase to the US corn ethanol mandate from the EPA, or at least a reduction not as great as the originally proposed cut to 13 billion gallons from 14.4 billion. The new number being bandied about is 13.5 million gallons. The USDA announced 101,600 MT of corn sold to unknown for 2013/14 delivery. Israel bought 60 TMT of optional origin corn (possibly from the Black Sea) for May/June shipment. The weekly Commitment of Traders report shows fund money continuing to build on their newly established corn long for the week through to Tuesday night. They are now said to be sitting on their largest net long since early last summer. Mar 14 Corn closed at $4.57 1/2, up 9 1/2 cents; May 14 Corn closed at $4.63 1/2, up 9 cents. For the week front month Mar 14 corn was 4 1/2 cents higher.

Wheat: The wheat market also effectively reversed yesterday's sharp losses, posting gains of around 15-17 cents on the day. US weather remains cold and dry. Midwest winter precipitation averages 81% of normal, whilst temperatures have been exceptionally cold - averaging 4.9 F below normal, according to Martell Crop Projections. "A fresh blast of polar air would sink into the US heartland in the wake of an upcoming Midwest storm due Sunday. North Dakota temperatures may plummet to -35 F (-17 C) on Tuesday morning. Subzero F temperatures are predicted as far south as Kansas. Presently wheat fields are bare, but snow is predicted ahead of the cold wave in the weekend storm. Severe drought is plaguing the Southern Plains jeopardizing the wheat crop in Oklahoma and Texas. While Kansas is expecting generous precipitation this weekend, the 2 southern wheat states are not," they add. ABARES are due to released their 2014/15 Australian crop production estimates on Tuesday. A Reuters survey estimates the new season wheat crop at around 25 MMT, although traders note that it's still very early days as plantings there don't get underway until May. The Egyptian state-run Middle East News Agency (MENA) said that the country has enough wheat bought to last it until early June. Tensions in Ukraine are keeping wheat shorts nervous, even though they are effectively more or less out of the export market until new crop. "It's looking increasingly like Russia has taken Crimea; to contextualise it for my UK pals, it's like France taking control of the Isle of Wight," said my Ukraine agronomist chum Mike Lee. "The Commitments of Traders (report) shows that managed money continued to cover shorts at an almost frantic pace in Chicago Wheat," said Benson Quinn Commodities. They cut their net short by around 14k lots on the week through to Tuesday night and now sit on a net short of just over 20k contracts versus over 100k at the end of 2013. Mar 14 CBOT Wheat closed at $5.99, up 16 3/4 cents; Mar 14 KCBT Wheat closed at $6.77, up 14 3/4 cents; Mar 14 MGEX Wheat closed at $6.70 3/4, up 15 1/4 cents. For the week CBOT wheat was still 10 3/4 cents lower, with Kansas down 5 3/4 cents and Minneapolis rising 6 1/2 cents.