Nogger's Blog

09/05/14 -- Soycomplex: Beans closed sharply higher on old crop, and with small gains of generally 2-3 cents on new crop. The thinly traded May 14 future goes off the board next Wednesday. The more active Jul 14 closed towards the top end of a 27 cent trading range on the day. Fund money was said to have finished up as a net buyer of around 6,000 soybean contracts. The USDA confirmed what everybody already knew, that old crop US soybean stocks are very tight, as reflected in the nearby premiums. They cut the 2013/14 US carryout from their April estimate of 135 million bushels to 130 million. World soybean ending stocks in 2013/14 were estimated at 66.98 MMT, down 2.44 MMT on last month and below the average trade estimate of 69.77 MMT. There was no change to 2013/14 production in Brazil (87.5 MMT) or Argentina (54 MMT). Once again though, it's jam tomorrow for the soybean market. US soybean plantings in 2014 were forecast up 5 million acres on last year to 81.5 million. US soybean production for 2014 was projected at a record 3.635 billion bushels, up 346 million from the 2013 crop, on both record yields and a record harvested area. Yields this year were projected at 45.2 bushels/acre, up 1.9 bu/acre versus 2013. Brazil's 2014/15 crop will climb to a new record 91 MMT, on increased plantings and a small improvement in yield. Argentina's 2014/15 soybean crop was pegged at the same levels as this year. The bottom line is a jump in US soybean ending stocks to 330 million bushels in 2014/15, a more than 150% hike on this season and around 30 million higher than expected. World carryout will leap to a record 82.2 MMT versus the average trade estimate of 80.34 MMT, they said. "The season-average US soybean price for 2014/15 is forecast to decline to $9.75 to $11.75 per bushel compared with $13.10 per bushel in 2013/14. Soybean meal prices are forecast at $355 to $395 per short ton, compared with $485 per ton for 2013/14," they forecast. Chinese soybean imports in 2013/14 were left unchanged at 69 MMT, rising to a new record 72 MMT in 2014/15. Brazil's soybean exports in 2014/15 were seen eclipsing those of the US (44.23 MMT) at 45 MMT. May 14 Soybeans closed at $15.01, up 26 3/4 cents; Jul 14 Soybeans closed at $14.87, up 17 1/2 cents; May 14 Soybean Meal closed at $497.50, up $6.90; May 14 Soybean Oil closed at 40.98, up 4 points. For the week that puts May 14 beans 20 1/4 cents higher, with May 14 meal up $6.40 and May 14 oil 31 points lower.

Corn: The corn market ended 8 to 12 cents lower. "Global corn production in 2014/15 is expected to be unchanged from last year’s record, and above global consumption for the fourth year in a row," according to the USDA. They forecast both the world and US 2014 crops at almost identical levels to last year's records - 979 MMT and 354 MMT (or 13.935 billion bushels) respectively. The US corn planted area was forecast at 91.7 million acres, down 3.7 million on last year, with yields at 165.3 bushels/acre, up 4% versus 2013. Old crop US ending stocks of 1.146 billion bushels were down 185 million bushels from April and well below the average guess of 1.314 billion. New crop carryout will however rise to 1.726 billion bushels versus the average trade estimate of 1.672 billion. World old crop ending stocks were placed at a large 168.42 MMT, versus 158 MMT in the April report and the average guess of 157.31 MMT. Global carryout in 2014/15 was estimated rising further to 187.73 MMT versus the average trade forecast of 159.41 MMT and above the top end of the range of guesses. Brazilian production in 2013/14 was raised 3 MMT to 75 MMT, whilst Argentina's was left unchanged at 54 MMT. For 2014/15 the USDA forecast Brazil's crop at 74 MMT and Argentina's at 56 MMT. They also estimated Ukraine's 2014 corn crop at 26 MMT versus last year's record 30.9 MMT. China's 2013/14 corn import needs were reduced by 0.5 MMT to 4.5 MMT, and those for 2014/15 pegged at only 3 MMT. China will produce a record 220 MMT of corn this year, they said. US corn prices were forecast at averaging $3.85-4.55 per bushel versus $4.50-4.80 per bushel this season. The latest Commitment of Traders report showed managed money increasing their net long position in corn by 2,088 contracts as of Tuesday night, giving them a net long of 266,479 contracts. All eyes will now be on the USDA again on Monday night when they release their planting progress figures, with some trade estimates suggesting that corn planting could be as much as 60% done, up from 29% a week ago. "Corn planting made good progress during a period of strong drying in the last week, but the weather is deteriorating. Very heavy rain is predicted the next few days, followed sharply cooling next week. The 6-10 day outlook keeps a cool weather pattern in the Midwest, Great Plains and South. Below-average rainfall is also predicted, a welcome change after heavy Midwest rainfall," said Martell Crop Projections. That sounds consistent with a developing El Nino weather pattern. May 14 Corn closed at $5.05, down 8 1/4 cents; Jul 14 Corn closed at $5.07 1/2, down 9 cents. For the week that puts May 14 corn 9 cents higher.

Wheat: The wheat market closed lower across the board. "Global wheat production is projected to reach 697 MMT, down from the 2013/14 record. Black Sea regional production is down, particularly Ukraine, but exportable supplies are still ample. The US crop is projected lower than last year due to adverse weather in Hard Red Winter wheat growing areas. Global consumption is expected to decline marginally as corn continues to displace wheat in feed rations. Global ending stocks are forecast to rise marginally to 187 MMT," said the USDA. They forecast lower 2014/15 wheat production in Australia (at 25.5 MMT versus 27 MMT), Canada (28.5 MMT versus 37.5 MMT) Turkey (15 MMT versus 18 MMT) and Ukraine (20 MMT versus 22.3 MMT), as well as the US (53.4 MMT versus 58 MMT). That was partially offset by increases this year from Argentina (12.5 MMT versus 10.5 MMT), Brazil (6 MMT versus 5.3 MMT), China (123 MMT versus 121.7 MMT) and Europe (144.9 MMT versus 143.3 MMT). World consumption in 2014/15 will also decline from 702.8 MMT this season to 696.2 MMT. Because of increased production in 2014/15 Brazil's import needs will decline from 7.5 MMT to 6.5 MMT. Algeria's imports will drop from 6.7 MMT to 6 MMT, China's will more than halve from 7 MMT down to 3 MMT, Iran's will also drop steeply from 6 MMT to 4 MMT, along with Mexico's from 4.5 MMT to 3.7 MMT. Significantly increased wheat imports are seen from the EU (up from 3.8 MMT to 5.5 MMT) and Turkey (4.2 MMT to 5.5 MMT). Despite a production decrease in 2014/15, Australia's exports will rise from 18 MMT to 19 MMT, and Canada's will only fall slightly, from 21.5 MMT to 21 MMT. Europe's exports will drop from this season's record 30 MMT to 27.5 MMT. Ukraine's will fall from 9.5 MMT to 8.5 MMT, whilst Russia's will rise from 18.2 MMT to 19 MMT, they said. "This was the first look at state production estimates for the 2014 winter wheat harvest. The 3 main hard red winter wheat states Kansas, Oklahoma and Texas are predicted to harvest 33% less wheat than a year ago, 378 million bushels against 490 million bushels in 2013. No surprise there. However, the other 4 bread wheat states Montana, Colorado, Nebraska and South Dakota are expecting a 52% increase in wheat production, bolstering bread wheat supplies. Wet weather has increased wheat potential in the northern United States, while severe drought has damaged wheat in Kansas, Oklahoma and Texas. Thus, the 7-state bread wheat production would be down a more modest 13%," said Martell Crop Projections. May 14 CBOT Wheat closed at $7.14, down 12 3/4 cents; May 14 KCBT Wheat closed at $8.19, down 13 1/2 cents; May 14 MGEX Wheat closed at $7.94 3/4, down 1/4 of a cent, although other months were generally around 10-11 cents lower. For the week that puts CBOT wheat 6 1/4 cents higher, with KCBT down 37 cents and MGEX up 31 3/4 cents.