Nogger's Blog

29/05/15 -- Soycomplex: The entire complex closed higher on the day and for the week. The leading story today was news that the EPA had revised up their biodiesel blending mandate for 2015 to 1.7 billion gallons, up from the 1.2 billion previously proposed. That sent soyoil screaming higher, supporting beans too, although the news was seen as a bit more bearish for meal. Increased soyoil usage equals more soybean demand equals higher meal production, that's the equation that the trade sees. Also supportive for beans today were the one day delayed weekly export sales coming in at a better than expected 322,400 MT on old crop, including 198,000 MT for China. New crop sales of 55,100 MT were however below expectations. Actual shipments of 349,700 MT were up 71 percent from the previous week and 55 percent above the prior 4-week average. That lent further support to the nears. US exporters have now shipped 46.4 MMT of soybeans already this season, and have a further near 3.6 MMT of outstanding sales. Assuming that these also do get shipped, and there's not much reason at this stage to suspect that won't be the case, then that takes total sales commitments to just about 50 MMT - a million tonnes more than the USDA currently have pencilled in with fully three months of the season left to run. That should support the front end for a while longer yet. New crop is a different kettle of fish. The trade is looking for the USDA to report soybean planting at maybe 75-80% complete on Monday, up from the 5-year average of 70% done, according to Benson Quinn. Personally I think that might be a bit too high and would go for a figure of around 72% done versus 61% a week ago. The USDA are also expected to release their first crop condition ratings of the season for beans on Monday. There are reports of a settlement having been reached in the Argentine crush workers strike. Funds were estimated to be net buyers of 11,000 contracts of soyoil and 7,000 soybeans on the day, according to Benson Quinn. Jul 15 Soybeans closed at $9.34, up 8 cents; Nov 15 Soybeans closed at $9.05 3/4, up 3 3/4 cents; Jul 15 Soybean Meal closed at $305.70, up $0.90; Jul 15 Soybean Oil closed at 33.33, up 127 points. For the week that places nearby beans 9 3/4 cents higher, with meal up $1.50 and oil up 169 points. For the month though beans are still down 44 1/2 cents, with meal shedding $9, during which time oil has added 189 points. The new crop soybean:corn price ratio ends the week at 2.46:1 versus 2.40:1 a week ago.

Corn: The corn market closed around a couple of cents lower. The EPA report was said to be in line with the markets anticipated numbers, with the 2015 ethanol mandate pegged at 13.4 billion gallons and at 14 billion gallons for 2016. The 2015 figure is well below the 15 billion originally mandated in 2007. Weekly export sales of 654,600 MT for delivery in 2014/15 were down 19 percent from the previous week and 8 percent below the prior 4-week average, said the USDA. A little surprisingly there were net sales reductions of 6,700 MT for 2015/16. The market was expecting net sales of 650 TMT to 1.1 MMT for both crop years combined. Shipments themselves came in at just over 1 MMT, where they have been for six weeks in a row now, and for 8 out of the last 10. Accumulated shipments are now at 31.24 MMT, with a further 11.76 MMT worth of outstanding sales. That takes total commitments to 43 MMT versus a USDA forecast for full season exports of 46 MMT, which is not too bad, although there's less certainty that all the outstanding sales will get shipped than there is for soybeans. US corn plantings are wrapping up, with progress maybe around 97% done as of Sunday night versus 92% complete a week ago. The USDA had 74% of the crop rated good to excellent in their first crop ratings of the season last week, there probably won't be much change on that this time around. The trade is keeping an eye on El Niño sensitive areas including India, Indonesia, Australia, and South Africa, where drought commonly occurs during this weather phenomena. However, in some areas of the world, very heavy rainfall develops with El Niño, say Martell Crop Projections. In the United States, heavy rainfall is common with El Niño in the southern Great Plains, just as has been experienced recently. "Summer rainfall in the Midwest corn belt is typically heavy with the El Niño, promoting strong yields. East of the Mississippi River, drier weather may develop in Illinois, Indiana and Ohio," they add. India, South Africa and Indonesia have all turned dry in recent weeks, further supporting the notion that the predicted "substantial" El Niño event is already here and establishing itself. US corn yields are typically above average in an El Niño year. In other news, Ukraine said that their 2015 corn crop is more or less all in on 4.26 million ha. French corn planting is also over, and FranceAgriMer rated the crop at 88% good to very good, down 2 points on a week and and in line with this time last year. Jul 15 Corn closed at $3.51 1/2, down 2 cents; Dec 15 Corn closed at $3.68, down 2 cents. On a front month basis for the week corn was down 8 1/2 cents and lost 11 cents during the course of the month.

Wheat: The wheat market closed with some hefty losses across the three exchanges. It was also sharply lower on the week, but still posted decent monthly gains on the continuous chart. Weekly export sales came in at 42,500 MT on old crop and 253,600 MT on the new crop. The 2014/15 marketing year is virtually over as it runs June-May. Shipments of 494,100 MT last week were up 34 percent from the previous week and 27 percent above the prior 4-week average. The US has now exported 21.9 MMT of wheat this season, and has outstanding sales of a further 1.4 MMT. That takes total commitments to 23.3 MMT versus a USDA target for the season of 23.2 MMT. The USDA left winter wheat conditions unchanged last week at 45% good to excellent. They might do the same again on Monday. Spring wheat was pegged at 69% good to excellent a week ago, up from 65% the previous week, and they might increase that again on Monday, according to Benson Quinn. The weather forecast leans drier for Texas, Oklahoma and eastern Kansas in the fortnight ahead using the GFS model. Other models have all of Kansas turning drier, which would be favourable right now after recent very heavy rainfall. "Australia is prone to severe drought with El Niño. The growing areas most strongly affected are New South Wales, South Australia and Victoria. All are important wheat states. Yet despite a strong El Niño signal, significant rainfall developed in April. The counterveiling influence was a warm Indian Ocean, Australia scientists explained. This promoted a humid atmosphere, conducive to showers. Weather conditions in May have trended drier, however," noted Martell Crop Projections. Kazakhstan spring grain planting has stalled on heavy rain, with only 26% of the anticipated area planted versus 62% this time last year. France reported that their winter wheat crop is 80% headed which is 8 points behind this time last year. Crop conditions are very favourable at 91% good to very good, unchanged on last week and 16 points ahead of this time last year. "Funds were estimated sellers of 4,000 Chicago wheat on the day. Given the last day of the month that was probably the plan all along; however, this action was also spurred by new lows for the move," observed Benson Quinn. The spate of rapid fund short covering that we saw mid-month appears to have now given way to renewed selling. Sep 15 CBOT Wheat closed at $4.82 1/4, down 12 1/4 cents; Sep 15 KCBT Wheat closed at $5.07 3/4, down 12 1/4 cents; Sep 15 MGEX Wheat closed at $5.41 1/2, down 16 1/4 cents. For the week that puts Chicago wheat 33 cents lower, with the market in Kansas down by 38 3/4 cents and Minneapolis losing 27 1/4 cents. On a front month basis CBOT wheat still ended the month 15 1/4 cents higher that it began it, with KCBT up 14 1/2 cents and MGEX adding 21 1/4 cents.