Nogger's Blog

08/07/15 -- Soycomplex: Beans reversed overnight losses to close with small gains, although ending around the middle of the day's trading range. Early weakness was linked to Chinese stock markets continuing their heavy fall, but beans managed to shrug off that negative influence later in the day. The trade is now looking to Friday's upcoming USDA report to provide some direction from the recent volatility that we have seen. Oil World said that last year's US soybean production was probably overstated by around 2 MMT. Based on last week's lower than expected stocks report there was “a strong indication that the official estimate of the 2014 US soybean crop of 108 MMT has been overestimated,” they said. The USDA have a chance to correct their figure on Friday. It will also be interesting to see if they make any changes to US soybean yield and production potential this year given the recent run of very wet weather. Dr Cordonnier today cut his US yield estimate by 1.5 bu/acre to 43.5 bu/acre. The USDA were at 46 bu/acre last month. A Bloomberg survey came up with an average trade guess of 45.1 bu/acre, from within a range of guesses of 43.5-46.0 bu/acre. Production was estimated at an average 3.781 billion bushels in that survey, with a range of guesses of 3.58-3.885 billion, down from the USDA's 3.85 billion a month ago. Dr Cordonnier is again the lowest estimate in the ring at 3.58 billion. If Oil World are right about last year's crop being overstated then reduced carry-in means that US 2015/16 soybean ending stocks, pegged at 475 million bushels by the USDA in June, are also likely to be smaller. The average trade guess for those this time round is 380 million bushels, although the range of estimates is pretty cavernous at 193-460 million. Global ending stocks are seen at an average of 91.89 MMT, from a range of 89.4-94.8 MMT and down from the USDA's June figure of 93.22 MMT. Informa cut 1.1 MMT off their world rapeseed production estimate, taking that down to 65.8 MMT, a fall of 8.2% on a year ago. Canada's crop was estimated at 14.2 MMT versus 15.1 MMT previously and 15.6 MMT a year ago. Private forecasters say that Canadian production could actually end up much lower than this. The USDA reported 240,000 MT of new crop soybean sales to unknown under the daily reporting system. Jul 15 Soybeans closed at $10.06 1/4, up 4 1/4 cents; Nov 15 Soybeans closed at $9.88 1/4, up 2 1/2 cents; Jul 15 Soybean Meal closed at $350.80, up $0.90; Jul 15 Soybean Oil closed at 31.60, up 19 points.

Corn: The corn market closed with nominal gains of a cent or so, also recovering from lower overnight trade. The US Energy Dept reported weekly US ethanol production up 19,000 barrels/day on last week which was friendly. Stocks increased by 300,000 barrels to 19.8 million barrels. News on Reuters that Cargill are loading 50,000 MT of Brazilian corn bound for Wilmington in North Carolina, with others likely to follow, was not supportive however. Neither was the firm US dollar. Dr Cordonnier took 2 bu/acre off his 2015 US corn yield estimate, taking that down to 163 bu/acre. His 2015 US production estimate is 13.138 billion bushels versus the USDA's 13.630 billion and the 2014 crop of 14.216 billion. The average trade guess in a Bloomberg survey came up with yields at 165.2 bu/acre, from within a range of 163.0-166.8 billion, the USDA's current 166.8 bu/acre and last year's record 171.0 bu/acre. Production was forecast at an average of 13.414 billion bushels, with the range of guesses coming in at 13.14-13.60 billion. US 2014/15 ending stocks are seen at 1.549 billion bushels, with the range of guesses at 1.263-1.952 billion and the USDA's June forecast of 1.771 billion. World carryout this season is seen at an average of 192.31 MMT, with a range of estimates of 185.19-197.0 MMT and almost 3 MMT less than the USDA's June forecast of 195.19 MMT. Germany's DBV estimated corn production there this year to fall 7.2% to 4.77 MMT. There's talk that the recent heat/dryness in Europe is taking potential corn yields down. US weather is forecast to continue to be cooler than normal through to Friday across the corn belt. Rainfall should be widespread from Kansas to the southeast half of the corn belt, with slightly lower coverage in other areas. Once we get past Friday, there should still be widespread rainfall from the northern plains and corn belt. Safras e Mercado increased their forecast for Brazil's 2014/15 corn crop from 82.3 MMT to 85.6 MMT, which is way above what the USDA are saying. The Argentine Ag Ministry said that farmers there are 59% sold on their 2014/15 corn crop, which is 11 points more than this time a year ago. Jul 15 Corn closed at $4.16 1/4, up 1/2 cent; Dec 15 Corn closed at $4.34 1/4, up 1 1/4 cents.

Wheat: The wheat market closed lower, and much closer to the lows of the day than the highs, as "weak technicals, a strong dollar, and lack of global demand bears down on the complex," said Benson Quinn. There was some demand from Egypt's GASC, who were in the market for wheat, booking three cargoes, two of Russian origin and one of Ukraine origin, despite talk of Russian traders' disquiet over the new floating export duty on wheat. The price paid was reported at an average of $212.26/tonne C&F, slightly lower than the $212.47/tonne paid for Romanian wheat last week. US wheat was said to have offered at $260 FOB, and therefore stood no chance of competing. Friday's USDA report is expected to show a 2015 US all wheat crop of 2.145 billion bushels, with a range of estimates of 2.073-2.197 billion, and above the USDA's June estimate of 2.121 billion. US carryout is seen at 860 billion bushels, with a range of estimates of 695-947 million and up from the USDA's current 814 million forecast. World carryout is seen at an average of 200.33 MMT, from within a range of 192.4-204.41 MMT and 202.40 MMT from the USDA a month ago. The Argentine Ag Ministry said that growers there are 84% sold on their 2014/15 wheat crop versus 61% a year ago. Plantings for 2015/16 in Argentina are expected to be close to the lowest in the last 100 years, which may give US wheat a glimmer of opportunity to sell to Brazil in the second half of the season. Agritel cut 2 MMT off their EU soft wheat production estimate, taking that down to 138.5 MMT. ODA knocked 2.7 MMT off their forecast, revising that down to 137.3 MMT. Both cut their view on France to 37 MMT and 36.4 MMT respectively. Germany's DBV estimated the 2015 winter wheat crop there at 25.12 MMT, down 8.3% on a year ago. Winter barley production was forecast 10.3% down at 8.52 MMT, with the German spring barley crop seen 7.9% lower at 1.9 MMT. Tunisia tendered for 142,000 MT of soft wheat, 50,000 MT of durum and 50,000 MT of feed barley, all of optional origin. Reuters reported that the recent Algerian wheat purchase, originally said to have been for 500,000 MT, was in the end for 700-725,000 MT. The purchase was mostly French wheat, possibly including some German origin material, and mostly for September shipment, with maybe a bit of October. Jul 15 CBOT Wheat closed at $5.72 1/4, down 7 1/4 cents; Jul 15 KCBT Wheat closed at $5.68 1/4, down 2 1/2 cents; Jul 15 MGEX Wheat closed at $6.08, down 1 3/4 cents.