Nogger's Blog

06/03/14 -- Soycomplex: Beans closed sharply higher on old crop after the USDA's weekly export sales report showed no let-up in export demand for US soybeans. Old crop sales came in above expectations at 772,700 MT, including 469,100 MT for "unknown" destinations. There were also net new crop sales of 256,700 MT, primarily for China (183,000 MT). Weekly shipments of 1,173,600 MT were down 35 percent from the previous week, but still pretty impressive for this time of year nevertheless. The primary destination was China taking 645,000 MT. Old crop commitments are now 107% of the USDA's target for the season, which gives them an interesting problem to solve in Monday's WASDE report given their "line in the sand" strategy of refusing to cut US ending stocks below 150 million bushels. The USDA attaché in Paraguay estimated their 2013/14 soybean crop at only 8.1 MMT versus a USDA estimate of 9.3 MMT. The attaché  estimated Paraguay's 2013/14 bean exports at 3.6 MMT versus a USDA estimate of 5.8 MMT. The FAO's Agricultural Market Information System (AMIS) cut their forecast for world soybean production in 2013/14 by 6 MMT to 283 MMT, which is now 5 MMT below the USDA's Feb estimate. They trimmed global ending stocks by 2 MMT from last month to 32 MMT, which is way below the USDA's comfort blanket estimate of 73 MMT. "In Argentina, conditions are good with approximately 85% of the first crop, and approximately 75% of the second crop (planted after winter crops) in good condition. In Brazil, conditions are mixed. They have deteriorated since last month due to excessive wetness in Mato Grosso and dry hot conditions in Parana. A bumper crop is still expected because area planted relative to last year was expanded significantly at the expense of maize. Harvest is currently underway although it is likely to be delayed in some areas due to wetness," they said. Funds were said to have added a net 5,000 soybean contracts to their already huge long position. Will tomorrow see some profit-taking ahead of Monday's report? Mar 14 Soybeans closed at $14.37 1/2, up 17 1/2 cents; May 14 Soybeans closed at $14.38, up 17 1/2 cents; Mar 14 Soybean Meal closed at $458.40, up $0.70; Mar 14 Soybean Oil closed at 44.27, up 109 points. Soyoil has suddenly gone from zero to hero, closing at the best levels for a front month since late last August tonight as palm oil prices rise on dryness in Malaysia and Indonesia.

Corn: The corn market jumped around 9-10 cents, also aided by a set of strong weekly export sales from the USDA. These came in at 1,518,000 MT for old crop - up 81 percent from the previous week and 35 percent from the prior 4-week average. There were also new crop sales of 164,500 MT reported for Japan. Shipments this week came in at a respectable 1,138,147 MT, taking total exports for the season so far to 18.4 MMT, with a further 19.2 MMT of sales outstanding. If the latter were all to get shipped, and that is potentially quite a big if, then total commitments are 37.6 MMT, or nearly 92% of the USDA's target for the season which is only halfway through. That would suggest that the USDA might have to increase this forecast on Monday. They already upped it by 4 MMT in February. The FAO's AMIS raised their forecast for the world corn crop in 2013/14 by 6 MMT to 1006 MMT, although increased consumption meant that ending stocks remained unchanged at 175 MMT. That's still a fair rise on carryout of only 131 MMT last season though and is 18 MMT higher than the USDA's current forecast. "In the southern hemisphere conditions are mixed. In Argentina, approximately 70 % of the crop is rated in good condition. Welcome and timely precipitation across the major growing regions helped to support crop development and harvest has begun in northern growing regions for the early planted crop. In Brazil, conditions are mixed and have been slightly reduced since last month due to dry hot conditions in south east and south central growing areas. Planting of the second crop is underway though is delayed in Mato Grosso due to wetness, which is delaying soybean harvest. Planted area for both the first and second crops is down, due to an increased area planted to soybeans," they said. Fund money was estimated as adding around 14,000 corn contracts to their net long position on the day. Mar 14 Corn closed at $4.85 3/4, up 10 1/2 cents; May 14 Corn closed at $4.91, up 9 cents.

Wheat: The wheat market was only modestly higher, with the exception of soon to expire and extremely technical Mar 14 Minneapolis wheat, which had something of a fit closing almost 40 cents higher on the day. It feels like wheat would possibly have finished lower if it wasn't for spillover support from corn and beans. Weekly export sales for wheat came in at 556,100 MT of old crop and 44,400 MT of new crop which was in line with expectations for sales of 350-650 TMT. Mexico (213,100 MT), Brazil (93,100 MT), unknown destinations (63,600 MT) and China (60,000 MT) were the main takers. Total wheat shipments now stand at 23 MMT with a further 5.6 MMT of outstanding sales. The USDA target for the season is 31.5 MMT. The FAO's AMIS raised their estimate for the global wheat crop by 2 MMT to a record 716 MMT, and increased ending stocks by 3 MMT to 179 MMT. The USDA are currently at 712 MMT and 184 MMT respectively, but will issue revised forecasts on Monday. "In Ukraine and Russia, conditions are good and the crop is in the dormancy phase. Following the extreme cold temperatures last month, unseasonably warm weather moved into southern regions of Ukraine and southern Russia, melting much of the snow cover which could increase their vulnerability to frost damage in the event of a drop in temperatures. To date, no wide-spread winter damage has been reported and an assessment of wintering and crop damage will be made at the end of dormancy. In the US, dryness across the Southern Plains is continuing to raise some concern over the dormant crop, particularly in areas that have experienced colder than normal temperatures and lack protective snow cover. However, no damage has been reported to date," they said. Iraq bought 200 TMT of wheat from Canada and Australia. Taiwan bought 83,150 MT of US milling wheat. Japan bought 111,779 Mt of wheat for April–June shipment from the US, Canada and Australia. Mar 14 CBOT Wheat closed at $6.41 1/2, up 4 1/4 cents; Mar 14 KCBT Wheat closed at $7.06 1/4, up 3 cents; Mar 14 MGEX Wheat closed at $7.41 1/4, up 39 3/4 cents.