Nogger's Blog

22/05/14 -- Soycomplex: Beans rose to fresh highs on a brighter outlook for the Chinese economy, and news from the USDA of 120,000 MT of new crop US beans sold to China. Note though that if China is to import the record 72 MMT of soybeans that the USDA is now forecasting for 2014/15 then they need to buy around 300 TMT every single working day of the year, allowing for holidays. So you could just say that this is routine business. You could also draw the conclusion that beans at $15/bushel are going to attract a lot of attention from growers from Ukraine to Uruguay, not just the obvious Big Three. For example, Indian farmers are likely to plant a record soybean area this year, according to a report on Reuters today. Meanwhile the summer harvest is winding down in South America. The Cordoba Grain Exchange in Argentina reported record soybean yields in the state this year, with 81% of the crop harvested they are expecting production to be in excess of 14 MMT. Weekly export sales of 164,400 MT of old crop US beans beat expectations, and maybe left a few wondering "where are all these beans coming from?" given that takes total commitments to almost 44.9 MMT versus a USDA forecast for the season of just over 43.5 MMT. Of that commitment total 42.6 MMT has already been shipped. The old crop situation on US beans is undeniably tight, but without a major weather scare in the summer, new crop holding onto current price levels close to $13 on new crop looks to me to be a tall order. The USDA also reported new crop soybean sales of 451,200 MT. Jul 14 Soybeans closed at $15.17 1/2, up 12 1/4 cents; Aug 14 Soybeans closed at $14.46 3/4, up 16 cents; Jul 14 Soybean Meal closed at $501.80, up $3.70; Jul 14 Soybean Oil closed at 40.78, up 31 points.

Corn: The corn market closed a couple of cents firmer. Weekly export sales of 507,900 MT of old crop were in line with expectations, although new crop sales of only 62,500 MT were a bit disappointing. The US now has 93% of the USDA's projected export target on the books, which is about average for this point in the season. Unlike soybeans, unshipped corn sales represent a much larger proportion of total commitments, at 13.6 MMT for a season that ends in August. Also unlike soybeans, the corn market doesn't have the crutch of the oft quoted "insatiable" Chinese demand to lean on. The US shipped only 8,500 MT of corn to China in April, as the dispute over MIR 162 corn has essentially brought shipments of US corn to a halt. That isn't necessarily to whole story though, Chinese customs data showed that they only imported 93,062 MT of corn last month anyway, down 78% from a year ago. The Chinese government have now begun auctioning off corn from state reserves. Today's first sale of the year had an offering of 1.2 MMT, of which nearly 1 MMT got booked. Good planting weather with warm temperatures are in the forecast for the northern and eastern Midwest for the weekend. The Argentine Ag Ministry estimated their 2013/14 corn crop at 31.1 MMT versus a previous estimate of 29.8 MMT and far higher than the USDA's 24 MMT forecast. Their harvest is behind schedule. The Cordoba Grain Exchange estimated the state's corn crop at just under 10 MMT and said that harvesting is only 23% complete. The EU Commission estimated the EU-28 corn crop at 69.2 MMT versus 64.9 MMT in 2013. They see the French crop at 17.2 MMT versus 15.1 MMT last year, and forecast ending stocks rising to 14.9 MMT from 13.7 MMT this season. APK Inform said that Ukraine will export 19.5 MMT of corn next season, a figure pretty similar to the 2013/14 record (19.4 MMT shipped so far). Russian corn planting for the 2014 harvest is 91.6% done. Jul 14 Corn closed at $4.77, up 2 1/2 cents; Sep 14 Corn closed at $4.74, up 1 1/2 cents.

Wheat: The wheat market extended it's recent declines, closing around 5-9 cents lower across the three exchanges. Weekly export sales were lukewarm at 142,200 MT of old crop and 209,800 MT of new crop. Heavy rain is on the way for the parched Southern Plains, but could come too late to make a big impact. "Wheat in Texas, Oklahoma and Kansas are expected to receive up to 4 inches of rain. Wheat development is too advanced for a significant improvement in the yield, as wheat heading is virtually completed. Grain filling would benefit from a soaking rain increase kernel weights and boosting the yield slightly," said Martell Crop Projections. The Russian Ag Minister increased his forecast for this year's grain crop there to 100 MMT versus 92.4 MMT in 2013, and the highest since 2008. Spring wheat planting in Russia is 61.2% complete, alongside 83.4% of the spring barley crop. Current conditions are hot and dry, but relief is in the forecast a week from now. Most of Ukraine is apparently in pretty good shape apart from a bit of dryness in the less productive east. China raised the price it will pay local farmers for wheat by 5.4% to the equivalent of around $380/tonne to encourage plantings. Their 2014 winter wheat crop is expected to total 117.6 MMT, a 1.5% rise on production last year. China also grows a relatively small amount of spring wheat, for which recent rains have been beneficial. Chinese wheat imports in 2014/15 are only expected to total 3 MMT versus 7 MMT this season. Their 2013 wheat crop suffered with quality issues caused by heavy rains at harvest time. A Reuters survey estimated the EU-28 soft wheat crop at a second highest ever 137.5 MMT. Agritel forecast production at 137.9 MMT and one analyst went as high as 141.5 MMT. Algeria bought 150,000 MT of feed barley of optional origin for July- August shipment. Jordan are tendering for 100,000 MT of hard milling wheat of optional origin for Oct–Nov shipment. Tunisia are tendering for 50,000 MT of optional origin milling wheat for June–July shipment. Jul 14 CBOT Wheat closed at $6.59 1/4, down 5 cents; Jul 14 KCBT Wheat closed at $7.52 1/2, down 9 cents; Jul 14 MGEX Wheat closed at $7.30 3/4, down 8 cents.