Nogger's Blog

25/06/15 -- Soycomplex: Beans and meal closed with strong gains, with beans closing above $10/bu on a front month for the first time since Mar 3. Weekly export sales refuse to die on old crop, coming in at 118,800 MT, along with a further 202,500 MT on the new crop. Shipments for the week to Jun 18 were 150,000 MT taking total exports so far this season to almost 47.4 MMT. A further 3.1 MMT of outstanding sales takes total net commitments for 2014/15 to 50.5 MMT, which is 101.5% of the USDA target for the season. Heavy overnight rain, and the forecast for more to come sparked some short-covering. "Standing water from flooding threatens Midwest soybeans, especially, planted later than corn and smaller in size. The worst conditions were in Missouri, Illinois, Indiana and Ohio, as of June 21st , where widespread flooding has developed. Missouri soybeans were the worst of the lot only 34% good-excellent, while Illinois soybeans were the best with 60% good-excellent," said Martell Crop Projections. MDA CropCast cut 72 million bushels off last week's US soybean production forecast, taking that down to 3.751 billion bushels, a 5.4% decline on a year ago. The IGC released their first soybean estimates for 2015/16, pegging the global soybean crop at 316 MMT versus the USDA's 317.6 MMT estimate. "Global soybean plantings could expand slightly in 2015/16 but, with average yields potentially retreating, production is likely to fall. Nevertheless, owing to large carry-in stocks, global supplies are anticipated to remain comfortable and, with processing and consumption expected to grow more moderately, world ending are set to rise to a fresh peak," the IGC said. Looming rapeseed/canola tightness was noted: "Despite anticipated demand rationing, world rapeseed/canola ending stocks are set to fall by more than one-quarter year on year, to 4.0 MMT," they added. They have this year's Argentine soybean crop at 61 MMT, falling a little to 57 MMT next season. Brazil's output is seen rising from 96 MMT to 98 MMT next season. This year's US crop was pegged at 104.8 MMT, a carbon copy of the USDA's current prediction. China's imports were seen at 73.5 MMT this season, rising to a new record 78 MMT in the next. The Argentine Ag Ministry said that farmers there have 48% of their 2014/15 soybeans sold versus 41% a year ago. Jul 15 Soybeans closed at $10.00 1/4, up 18 1/2 cents; Nov 15 Soybeans closed at $9.77 3/4, up 21 3/4 cents; Jul 15 Soybean Meal closed at $336.70, up $8.70; Jul 15 Soybean Oil closed at 33.36, up 9 points.

Corn: The corn market closed around 10-12 cents firmer. Midwest wetness prompted some short-covering. Export sales were fair at 496,800 MT for delivery in 2014/15 and 297,500 MT for 2015/16. China took one cargo of the old crop. Shipments themselves of 1.1 MMT were in line with what's required to meet the USDA's target for the season. China also accounted for one cargo of those this week. Strong storms that were said to have hit southern Iowa last night then dropped down into some of the more saturated areas of Missouri, dumping up to 7” of rain on the region, said Arlan Suderman of Water Street Solutions. "Corn has weathered the extreme wetness better than soybeans, planted earlier, and therefore taller and less susceptible to drowning. US corn was 71% good-excellent June 21st, significantly better than 60% good-excellent in US soybeans. This would be the 3rd time in 6 years of June flooding in Midwest crops. How did corn respond to previous June excessive wetness? The US corn yield did not suffer as much as anticipated, the 2010 national corn yield finishing right on the trend line – average – while the 2014 yield was significantly above trend," noted Gail Martell of Martell Crop Projections. Could it be that the market is over-reacting here, and forgetting the old adage that "rain makes grain"? This year's El Nino has been likened to the previous "record" event of 1997/98. US corn yields that season were virtually unchanged from the previous year, falling less than a half percent, and soybean yields actually finished higher, up 3.6%. MDA CropCast cut their US corn production estimate by 51 million bushels to 13.7509 billion, a fall of 4.3% on last year's record crop. They also trimmed 1.53 MMT off Ukraine's crop, taking that down to 24.7 MMT. The IGC estimated the global 2015/16 corn crop at 961 MMT, up 10 MMT from last month, although 3.6% down on last year's record. They estimated world ending stocks 6 MMT higher than a month ago at 187 MMT. Argentina's crop this season was placed at 30 MMT, falling to 28 MMT next season. Brazil's crop was estimated at 80 MMT, dropping back to 78 MMT next season. This year's US crop was forecast at 332 MMT, considerably less than the USDA's current 346 MMT estimate. Taiwan are tendering for 40-65,000 MT of US, Brazilian, Argentine or South African corn. Indonesia are said to be in the market for 50,000 MT of Brazilian material. The Argentine Ag Ministry said that farmers there have 53% of their 2014/15 corn sold versus 44% a year ago. Jul 15 Corn closed at $3.76 1/2, up 10 cents; Dec 15 Corn closed at $3.92 1/4, up 11 3/4 cents. Mar 16 corn closed above $4 for the first time since April 23.

Wheat: The wheat market closed with robust double digit gains on all three exchanges. Weekly export sales of 434,300 MT actually managed to beat modest trade expectations for sales of 200-400,000 MT. Exports this week came in at 388,300 MT. The US appears to be getting all of Canada's rainfall as well as their own. "In western Canada, a large ridge of high pressure would be in control blocking rainfall and perpetuating drought in spring wheat. The forecast is very dry in the prairie provinces, providing a sharp contrast from the very wet conditions anticipated in Midwest," said Martell Crop Projections. Today's gains came despite the IGC adding 10 MMT to last month's forecast for the global 2015/16 wheat crop, taking that up to 715 MMT, a modest 0.8% drop on a year ago. World ending stocks in 2015/16 were raised 6 MMT to 200 MMT. The USDA currently have the world 2015/16 wheat crop at 721.5 MMT, and global carryout at 202.4 MMT. The IGC's numbers included an optimistic looking 27 MMT wheat crop in Australia this year, production of 150 MMT in Europe, a 3 MMT hike in Russian output to 55 MMT and a 1 MMT increase for Ukraine taking their crop up to 21 MMT. They cut their outlook on the US all wheat crop by 0.8 MMT to 58.2 MMT. MDA CropCast estimated the world wheat crop at 710.6 MMT this year. They were unchanged on the US all wheat crop at 2.186 billion bushels. The National Bank of Australia said that El Nino could cut wheat production there this year to 20 MMT or less, which is far below the estimates currently in the market place from the likes of ABARES, the USDA and the IGC. That would potentially be Australia's smallest wheat crop since 2007/08 if their prediction comes true. Europe is set to kick off July with some very warm temperatures, which could cause a few yield losses in Spain, France, Germany, Poland and even the UK. Temperatures at home here in the UK are forecast to hit 30C and maybe even higher, peaking around Wednesday/Thursday next week. These should be accompanied by some heavy thunderstorms though. The preliminary results of a Bloomberg survey found traders/analysts forecasting and average EU soft wheat crop of 140.8 MMT this year. The French soft wheat crop was estimated at an average of 37.6 MMT and the German all wheat crop at 25.8 MMT. A previous survey had soft wheat production in Europe at 140.1 MMT, with France at 38.1 MMT and the German all wheat crop at 25.8 MMT. The Argentine Ag Ministry said that farmers there have 82% of their 2014/15 wheat sold versus 58% a year ago. Japan tendered for 114,510 MT of wheat, buying 87,380 MT of it from the US, with the rest being of Canadian origin. Jul 15 CBOT Wheat closed at $5.32, up 14 cents; Jul 15 KCBT Wheat closed at $5.35 1/4, up 10 3/4 cents; Jul 15 MGEX Wheat closed at $5.74 1/2, up 10 3/4 cents.