Nogger's Blog

30/06/14 -- Soycomplex: The USDA's ability to throw up a surprise is legendary. Their ability to produce one with the June Acreage and quarterly stocks report is bordering on routine, and so it proved again today. They surprised some with a Jun 1 US soybean stocks number of 405 million bushels, around 25 million higher than the average trade guess - the range of expectations was 340-440 million. That's still down 7% on a year ago, but not as tight as many people thought. They then went on to stun everybody by placing 2014 US soybean plantings at 84.839 million acres, that's 11% more than was planted a year ago (76.533 million), 2.6 million more than the average trade guess and 3.3 million more than estimated in March. It was also above the top end of the range of trade estimates of 80.5-84.0 million. "Tight old crop stocks are now a thing of the past and market is now looking forward with USDA to adjust (the) acreage higher in July’s WASDE report which assuming all else is unchanged US ending stocks would be 490 million bushels, near 4 times larger than current and if realised would be largest since 2006/07," said Benson Quinn Commodities. Needless to say the market fell hard, particularly on new crop, following the news. Fund selling was estimated at a whopping 24,000 lots in beans. You will recall that Friday's Commitment of Traders report had them cutting their overall net long position down to just 41,221 contracts as of last Tuesday night. They were estimated to have trimmed that by around 6,000 on Friday on profit-taking ahead of this report, so next Friday's COT report could see them sitting on only a nominal long position. As mentioned on Friday "Are they gearing up to play beans from the short side for a change?" The last time they were net in beans was late 2011, when front month prices hit $11/bu. After the close the USDA reported that 72% of the nation's soybean crop was in good to excellent condition, unchanged from a week ago. That also leans a bit bearish as the trade was expecting a fall to around 70%. It is also 5 points ahead of year ago levels. Emergence was placed at 94%, which is in line with the 5-year average. They said that 10% of the crop is blooming, also on par with the 5-year norm. Jul 14 Soybeans closed at $14.00 1/2, down 31 1/2 cents; Nov 14 Soybeans closed at $11.57 1/4, down 70 3/4 cents; Jul 14 Soybean Meal closed at $458.30, down $11.50; Jul 14 Soybean Oil closed at 38.85, down 113 points.

Corn: The corn market closed sharply lower. This was partly in sympathy with steep declines in beans and meal, but also due to the fact that the USDA again pegged US Jun 1 corn stocks higher than market expectations, just as they had done for 5 of the previous 7 years. They placed those at 3.854 billion bushels versus an average trade guess of 3.722 billion, from within a range of estimates of 3.046-3.950 billion. That figure represents a 39% increase on where stocks were this time a year ago. As far as US 2014 corn plantings were concerned, they were "right on the money" with a figure of 91.641 million acres, almost identical to the average trade guess of 91.725 million, from within a range of estimates of 91.0-92.2 million. It is also only a short hop away from the 91.691 million estimated in March. Plantings in 2014 were a 75-year high of 95.365 million, so this represents a 4% decline on last year and is actually the smallest planted area for corn since 2010. After the close the USDA reported corn crop conditions in the good to excellent category up a point on a week ago to 75%. Many were expecting at 1-2 point cut. To have 75% of the crop rated this high heading into July is unusual, and augurs well for robust yields with pollination coming up. The USDA said that 5% of he crop was now silking versus 9% normally. Fund selling in corn was estimated at a net 18-20,000 contracts on the day. They have also been steadily reducing the size of their net long holding in corn of late. "Global demand for corn remains light as buyers sit back for lower prices regardless of the point of origination. Brazilian prices have broken below support prices and Ukraine is going to need to find a market," said Benson Quinn Commodities. Jul 14 Corn closed at $4.24 1/4, down 18 3/4 cents - the lowest close for a front month since January; Sep 14 Corn closed at $4.18 3/4, down 23 1/2 cents.

Wheat: The wheat market ended with losses of around 15-20 cents across the three exchanges. An attempt to resist the gravitational pull from the corn and soybean pits proved to be futile. The USDA report did offer a bit of bullish content for wheat, placing Jun 1 US wheat stocks at 590 million bushels. That was below the average trade estimate of 598 million (from within a range of estimates of 560-633 million), and 18% down on year ago levels. They did however place 2014 US all wheat plantings at 56.474 million acres, above the average trade guess of 55.818 million and the 55.815 million forecast in March. It is also slightly above 56.156 million from a year ago. Fund selling was estimated at a net 6,000 Chicago wheat contracts on the day, further extending the size of their short position. The USDA reported the 2014 US winter wheat harvest at 43% complete, up 10 points on a week ago, and versus the 5-year average of 48%. Winter wheat rated good/excellent was unchanged on a week ago at 30%. Spring wheat crop conditions fell one point on a week ago to 70% good/excellent. Spring wheat headed was 26% against 29% normally. Mexico are said to be seeking wheat for August shipment. Turkey are looking for 10,000 MT each of milling wheat and barley, both of optional origin, for Jul/Aug shipment. The USDA's FAS in Tunisia raised their estimate for the 2014 grain crop there from 2.2 MMT to 2.36 MMT, up sharply from last year's drought damaged crop of only 1.3 MMT. They see Tunisia's 2014/15 grain imports falling to 1.6 MMT, including 900 TMT of wheat, 300 TMT of durum and 300 TMT of barley. Reuters reported that Algeria had imported 4.86 MMT of grains in the Jan-May period, a 29% increase on a year previously. The USDA's FAS in Kazakhstan said that the country will plant 15.7 million hectares of grains this year, producing a crop of 18.5 MMT, a 5% increase on a year ago. That will include 14.8 MMT of wheat, a 6% rise versus last year. Kazakh wheat exports in 2014/15 will hold steady at 7.5 MMT. Jul 14 CBOT Wheat closed at $5.64 3/4, down 20 1/2 cents; Jul 14 KCBT Wheat closed at $7.10 1/2, down 15 1/2 cents; Jul 14 MGEX Wheat closed at $6.67 1/4, down 15 3/4 cents.