Nogger's Blog

24/10/14 -- Soycomplex: Beans closed lower on the day, but higher for the week. It was a choppy session, in which front month Nov 14 beans hit a six week high above $10/bushel, before ultimately retreating to close within a cent of the lows of the day. That could be viewed as negative technically. It would also seem that producer selling was evident, with $10/bu being a trigger point for many. The trade is expecting good progress to have been made with the US harvest this week. The USDA will report on that on Monday night. As of last Sunday the harvest was 53% complete, look for that to be in the upper 60's done this time round. MDA CropCast raised their forecast for the 2014 US soybean crop by 44 million bushels to a record 3.894 billion yesterday, although not the highest estimate in the ring. The USDA were at 3.927 billion themselves earlier this month. I read that the USDA have only increased US soybean production estimates in both September and October seven times since 1990, including this year, and that on all the previous six occasions they went on to increase again in November. That would suggest that a further hike might be on the cards again next month. Production prospects in Brazil however are declining, according to Oil World this week. Certainly at the very least their 2015 harvest is going to be later than originally expected/hoped for. MDA CropCast though left their forecasts for output in both Brazil and Argentina in 2104/15 unchanged on a week ago at 93.5 MMT and 56.65 MMT respectively. Both would be records. The Argentine Ag Ministry estimated 2014 soybean plantings there at 20.3 million ha, up 2.5% versus 19.8 million a year ago. Sowing of that is now just about underway. Planting in Brazil is slow, awaiting rain, but the forecast is promising. "The GFS model continues with a wet forecast in Mato Grosso, and the tropics at large. Along with heavy rain would come moderating temperatures. Strong showers would eventually spread into South Brazil toward month end," said Martell Crop Projections. Nov 14 Soybeans closed at $9.77 1/2, down 15 3/4 cents; Jan 15 Soybeans closed at $9.83 1/4, down 16 3/4 cents; Dec 14 Soybean Meal closed at $350.20, down $2.20; Dec 14 Soybean Oil closed at 32.39, down 28 points. For the week though front month beans were still up 25 3/4 cents, with meal up almost $20 and oil 37 points higher.

Corn: The corn market closed the best part of 7 cents lower on the day, but still higher for the week. The USDA announced 101,600 MT of US corn sold to unknown for 2014/15 shipment under the daily reporting system. The market is looking for the 2014 US corn harvest to have advanced to around 45% done when the USDA report on that on Monday night. A week ago it stood at only 31% complete. "As producers roll through their soybean crop in the eastern belt and allow the corn crop to dry down in portions of the western belt I am not convinced harvest progress on the corn crop has been all that great this week. Additionally, I am not convinced the producer that has made progress is a willing seller. However, the prospect of better harvest progress next week was a negative factor in today’s trade," said Benson Quinn's Brian Henry. Is this simply deferring the bulk of the harvest pressure, or are the seasonal lows already in, that is the six million dollar question. It is certainly not unusual to see US corn prices remain under pressure right through the last quarter of the calendar year, indeed in two of the last three years the lows haven't been put in until November and December. So Societe General could indeed be right when they this week said that there could still be time for "one last leg down in corn prices". The US corn belt weather forecast retains a friendly outlook for the next 10-14 days. Russia said that their 2014 corn harvest was three quarters of the way through, producing a crop of 9.1 MMT to date. Ukraine said that their corn harvest now stands at 16.4 MMT off 65% of the planned area. The Argentine Ag Ministry forecast corn plantings there this year at 5.5 million hectares, a near 10% decline versus a year ago, and 100k ha below their previous estimate. There's a "too close to call" weekend election looming in Brazil, which Agrimoney say could "prove crucial for the future of world farming". The two contenders are President Dilma Rousseff and Senator Aécio Neves. The Buenos Aires Herald say that this is "a race that combines every conceivable ingredient: a woman vs. a man, a socialist vs. a conservative, a defender of the Mercosur vs. a champion of opening up trade." Essentially a Rousseff victory is seen keeping the Brazilian real under pressure - and thereby making them more competitive in the export market. A Neves win is likely to have the opposite effect. Maybe the uncertainty of this was a factor behind some pre-weekend profit-taking? Dec 14 Corn closed at $3.53, down 6 3/4 cents; Mar 15 Corn closed at $3.66 3/4, down 6 3/4 cents. For the week, Dec 14 corn was up 5 cents, with Mar 15 adding 5 1/2 cents.

Wheat: The wheat market closed lower, pressured by falling corn and soybeans. Even so Dec 14 Chicago wheat did still manage a fourth consecutive weekly gain, even if it was only by less than a couple of cents. The Argentine Ag Ministry raised their forecast for the 2014/15 wheat planted area there from 4.5 million hectares to 4.6 million. A Bloomberg survey pegged the Australian wheat crop at 23.2 MMT, which is 1 MMT below the current ABARES estimate. There were apparently unconfirmed reports of EU feed wheat trading into the US south east coast at levels below those of rail corn. Iraq are tendering for 50 TMT of hard wheat for Dec-Feb arrival, but frequently buy much more. The Ukraine Ag Ministry said that their 2014 wheat harvest totalled 23.7 MMT in clean weight. Russia said that they'd harvested 61.1 MMT of wheat in bunker weight off 94.5% of the expected area. Early strength in wheat appeared to be tied to reports that Russian analysis firm SovEcon were saying that the 2015 grain crop there could already be in trouble, and serious trouble at that. They suggested that final grain production next year could drop below 90 MMT, and wheat output under 50 MMT. The reasons are a combination of lack of rainfall (at least until very recently), which may have allowed autumn plantings to progress in a timely manner, but have hindered crop development meaning that plants are "extremely week" heading into winter. Russian temperatures are expected to be well below normal (and also well below freezing) across almost the entire country this weekend. The weakness of the Russian rouble, caused by the problems between them and the West over sanctions and Ukraine, also means that spring plantings and the money to purchase inputs next year could be severely impacted. Russian growers are also hoarding wheat rather than selling it, as a hedge against this currency weakness, it is said. Not everybody has thrown in the towel quite yet on Russia's 2015 crop prospects though, with Rusagrotrans issuing a preliminary grain production forecast for next year of 96-104 MMT only yesterday. If Russian growers do continue to sit on their grain as a hedge against the falling rouble, then carryin to 2015/16 will also be higher of course. The weekly commitment of traders report shows fund money reducing their net wheat short by around 9k contracts for the week through to Tuesday night. Dec 14 CBOT Wheat closed at $5.17 3/4, down 9 cents; Dec 14 KCBT Wheat closed at $5.93 3/4, down 11 1/2 cents; Dec 14 MGEX Wheat closed at $5.67, down 4 cents. For the week Chicago wheat still managed a small 1 3/4 cent gain, with Kansas down 8 cents and Minneapolis losing 3 cents.