Nogger's Blog

11/07/14 -- Soycomplex: Beans crashed below USD13/bushel for the first time on a front month since the early days of February. The USDA report was expected to be bearish, and they didn't disappoint. Yet, despite front month Jul 14 closing 34 cents lower, it actually ended up in the middle of the day's trading range. The contract was over 80 cents down at one point, and Aug 14 meal, despite ending with losses of $11.50, was actually more than $10 off the lows of the day. The main bearish surprise for beans was a rise in old crop ending stocks to 140 million bushels versus the 128-130 range expected. New crop ending stocks were pushed sharply higher, to 415 million. The trade had been looking for a number in excess of 400 million, so whilst not a surprise as such, actually seeing it on paper maybe added a bit more of a bearish tone as these would be the highest since 2006/07. US 2014 soybean yield potential was left unaltered at 45.2 bu/acre. They implied that production last year may have been understated. They raised their projections for the US crush "reflecting increased domestic soybean meal disappearance in line with adjustments for 2013/14 and higher US soybean meal exports" and also their estimate for US soybean exports. World 2014/15 soybean ending stocks were estimated at a record 85.3 MMT. The US 2014 soybean crop was raised from 98.93 MMT to 103.42 MMT, reflecting the increased plantings forecast in the Jun 30 Acreage Report. Chinese demand in 2014/15 was raised from the 72 MMT forecast in June to a new record 73 MMT, which is 4 MMT higher than in 2013/14. Price expectations for beans and the by-products were all reduced, with 2014/15 soybeans forecast trading in the range $9.50 to $11.50, with meal prices at $350 to $390 and oil in the region of 36-40 cents/pound. "Global oilseed production for 2014/15 is projected at a record 521.9 MMT, up 5.8 MMT from last month with soybeans and rapeseed accounting for most of the change," they said. The bulk of the increase for soybeans came from the US. Canada's and Australia's rapeseed production potential was also raised. Jul 14 Soybeans closed at $12.95 3/4, down 34 cents; Nov 14 Soybeans closed at $10.75, down 18 cents; Jul 14 Soybean Meal closed at $421.80, down $12.50; Jul 14 Soybean Oil closed at 36.71, down 68 points. For the week, that puts front end beans 92 cents lower, with meal down $25.20 and oil losing 185 points lower.

Corn: The corn market ended around 7-8 cents lower, save for front month Jul 14 which finished with only nominal losses. Even so that was still enough to take it below $4/bu. A front month hasn't finished that low since August 2010. In fact the first four months on the board are now all sub-$4/bu. The USDA report wasn't as bearish for corn as it was for soybeans and wheat, with most of the numbers coming in at around (or even below) trade estimates. For a start they didn't raise their forecast for US corn yields this year. Whilst the unchanged figure of 165.3 bu/acre is a record, the average trade guess was for a tweak upwards to around the 166 bu/acre level. "Favourable early July crop conditions and weather support an outlook for record yields across most of the Corn Belt, however, for much of the crop, the critical pollination period will be during middle and late July," they noted. Maybe that was a hint that yield potential could eventually be increased in future reports if the weather continues to co-operate for the rest of the month? They dropped their forecast for the US 2014 crop by 75 million bushels, reflecting the lower planted area already reported at the end of June. That sees production at 13,860 million bushels, which is 65 million bushels below last year’s record. Old crop US ending stocks were expected to rise to 1.233 billion bushels, with new crop stocks at something like 1.8 billion. The actual numbers given today were 1.246 billion and 1.801 billion. World corn ending stocks were raised to 188 MMT versus 182.65 MMT a month ago. China's corn crop was raised 2 MMT to a record 222 MMT, their import needs were seen unchanged at 3 MMT, with their ending stocks rising more than 2 MMT to 80.36 MMT. "The projected range for the season-average US corn price is lowered 20 cents on each end to $3.65 to $4.35 per bushel," they forecast. Jul 14 Corn closed at $3.99 3/4, down 3/4 cent; Sep 14 Corn closed at $3.78 1/4, down 8 cents. For the week that puts Jul 14 corn down 17 1/4 cents, with Sep 14 falling 31 1/4 cents.

Wheat: The wheat market closed lower, save for the extremely thin and about to expire front end Jul 14 Minneapolis future. Essentially the USDA said that the short-comings in winter wheat production in the US this year would be more than made up for by a bigger spring wheat crop. "Projected US wheat supplies for 2014/15 are raised this month with a sharp increase in forecast Hard Red Spring (HRS) wheat more than offsetting a decrease for Hard Red Winter (HRW). The HRW crop was damaged by drought and April freezes in the Southern and Central plains; however, the HRS crop in the Northern Plains has benefitted from abundant soil moisture and cooler than normal early summer temperatures. Yields for Durum and other spring wheat are forecast to be above average," they said. The average trade guess for US all wheat production was 1.964 billion bushels, with ending stocks seen around the 590 million level. The actual numbers given were 1.992 billion and 660 million, both therefore well above trade expectations. The USDA painted a picture of lower domestic wheat usage, reduced exports and therefore higher ending stocks. "Feed and residual use for all wheat in 2014/15 is lowered 15 million bushels to 145 million as tight supplies of HRW wheat and relatively more attractive prices for feed grains reduce expected feed and residual use. All wheat exports for 2014/15 are lowered 25 million bushels reflecting expectations of large world supplies and strong competition in export markets. Ending stocks are projected 86 million bushels higher," they said. World wheat production was raised 3.6 MMT from last month to 705.2 MMT. The Australian wheat crop was raised 0.5 MMT to 26 MMT, although Canada's was lowered a similar amount to 28 MMT. Ukraine's crop was increased 1 MMT from last month to 21 MMT, although again this was matched by a 1 MMT reduction for Kazakhstan to 13.5 MMT. Europe's crop was increased from 146.3 MMT to 147.9 MMT, with a rise of 1 MMT in EU feed usage to 54.5 MMT. The projected season-average farm price range was lowered 40 cents at the midpoint to $6.00 to $7.20 per bushel. Jul 14 CBOT Wheat closed at $5.14 3/4, down 22 cents; Jul 14 KCBT Wheat closed at $6.34 1/4, down 21 1/4 cents; Sep 14 MGEX Wheat closed at $6.28 3/4, down 13 cents. For the week Jul 14 Chicago wheat was down 53 1/4 cents, with Kansas falling 62 3/4 cents.