Nogger's Blog

27/03/15 -- Soycomplex: Beans, meal and oil all closed lower on the day and a bit lower for the week. After starting the week with decent gains, beans have now slid a little lower in each of the last 4 trading sessions. Production in South America seems to be getting bigger (and it was already predicted to be at record levels) and US farmers are expected to "go large with that" when they begin their 2015 spring soybean planting campaign. Exactly how large they might go will be revealed by the USDA on Tuesday. An increase of 2-3 million acres on last year's 83.7 million is what most people are expecting. Considering that the USDA were only lining up at 83.5 million at their February Outlook Forum AND that they came out with a forecast that, at 81.5 million acres, was in fact more than 2 million on the low side of what eventually got planted in last year's March 31 report, then it seems entirely possible that the USDA may not go "all in" with their soybean acreage estimate quite this early in the game. The new crop soybean:corn price ratio ends the week below 2.3:1 tonight versus 2.4:1 a fortnight ago, continuing to slide into the favour of planting corn. In other news, Coceral forecast the EU-28 rapeseed crop at 21.6 MMT, down more than 10% versus 24.1 MMT a year ago. Strategie Grains however raised their forecast from 21.6 MMT to 21.9 MMT, by virtue of an extra 100 TMT each for Germany (to 5.5 MMT), Poland (2.9 MMT) and the UK (2.3 MMT). The latest commitment of traders report shows managed money sitting on a net short of around 39,000 contracts in beans as of Tuesday night. May 15 Soybeans closed at $9.67 1/4, down 7 1/4 cents; Jul 15 Soybeans closed at $9.72 1/4, down 6 1/2 cents; May 15 Soybean Meal closed at $321.40, down $1.00; May 15 Soybean Oil closed at 30.60, down 57 points. For the week that puts front month beans 6 1/2 cents lower, with meal dipping $2.60 and oil losing 8 points.

Corn: The corn market closed virtually unchanged on the day, but higher for the week, continuing to erode into the soybean:corn price ratio. The trade is gearing up for the USDA to predict a near 2 million acre switch away from corn plantings this spring. For the same reasons that they might not see as large a switch away from corn and into beans as described above, at least not at this early stage, then next Tuesday's report might come in a little bearish for corn. A year ago the USDA predicted corn plantings of 91.7 million acres, which ultimately proved to be more than a million too high. It may take until the June plantings report for the USDA to get a better handle on what has/will really go into the ground. Elsewhere, Safras e Mercado increased their forecast for the Brazilian corn crop by 1.2 MMT to 75.9 MMT, which is now 0.9 MMT higher than the USDA's estimate. The Argentine corn harvest is said to be around 7.5% complete versus 5.6% a week ago and 10% done a year ago. Coceral estimated the EU-28 corn crop to fall more than 10% this year to 66 MMT. Output in Europe's largest producing nation, France, is seen almost 8% lower at 15.68 MMT. Production in Romania will decline more than 14% to 9.82 MMT and output in Hungary will slide 18% to 7.43 MMT, they predict. FranceAgriMer said that corn planting in France is yet to really get going. Planting is just 1% complete in the Poitou-Charentes region. Crude oil slid more than $2.50/barrel today on an apparent easing of tensions in Yemen, but was still more than $2/barrel higher for the week. South Korea's KFA bought 60,000 MT of optional origin corn for November delivery in a tender. May 15 Corn is at $3.91, down 1/4 cent; Jul 15 Corn is at $3.99, down 1/4 cent. For the week, May 15 corn was 6 cents higher.

Wheat: The wheat market closed higher on the day, but lower for the week. US wheat export sales of barely more than 100 TMT revealed yesterday were the lowest in more than 25 years, according to Bloomberg. Dollar strength is really hurting US wheat sales, much more so than those for corn or soybeans, with the EU issuing export licences for more than seven times the volume of the US this past week. US winter wheat conditions on the Plains aren't great, but what does that matter if nobody but the US wants US wheat anyway? The fact that managed money is already net short around 66,000 Chicago wheat contracts is about the only other supportive factor around at the moment for US wheat. Next Tuesday's USDA acreage report is expected to predict a US all wheat acreage of around 55.7 million for the 2015 harvest, down more than a million from 56.8 million a year ago. The USDA's take on the 2014 planted area this time last year ultimately proved to be a million too low as they lined up at 55.8 million back then. Europe is seen producing less wheat, corn and barley in 2015, according to Coceral. Large carryover stocks from last year's bumper production will still keep European sellers aggressive next season though, helped by the weak euro and nearby proximity to North African and Middle Eastern buyers. There's talk of India having to import wheat after late season heavy rains and hail have had a negative impact on the quality (and possibly quantity) of their crop this year. Russia said that early spring plantings there were 1.6% complete on 840k ha. There's talk of Russia's President Putin holding a meeting on Monday to discuss spring sowing aid. May 15 CBOT Wheat is at $5.07 3/4, up 8 1/2 cents; May 15 KCBT Wheat is at $5.53, up 10 cents; May 15 MGEX Wheat is at $5.75, up 11 3/4 cents. For the week that still puts CBOT wheat 22 1/4 cents lower, with KCBT down 16 1/2 cents and MGEX losing 14 1/2 cents.