Nogger's Blog

06/08/15 -- Soycomplex: Beans closed lower as weekly export sales from the USDA came in below par. Net cancellations of 447,300 MT were a marketing-year low on old crop. Decreases were reported for China (500,000 MT, including 300,000 MT switched to 2015/16) and unknown destinations (43,300 MT). Net sales of just over 1 MMT on new crop weren't too bad though, and were mainly split between unknown destinations (489,500 MT) and China (426,000 MT). Exports of 210,700 MT were up 64 percent from the previous week, taking the total volume shipped out so far this season to 48.68 MMT versus a USDA target for 2014/15 of 48.3 MMT. There's also an additional 1.96 MMT of so far unexecuted sales. The USDA also announced that China had bought 132,000 MT of US beans for 2015/16 delivery under the daily reporting system. The Brazilian real hit a record low versus the USD today, which is seen as bearish for beans. Oil World said that Brazil's July soybean exports were up almost 40% year-on-year at 8.44 MMT. Argentina's exports were 22% higher at 1.55 MMT. US exports were also up, but at that point in the season they were nothing like those coming out of South America at 0.83 MMT. Oil World have the global soybean crop in 2015/16 at 312.7 MMT, down 1.8%. They see the world rapeseed crop falling 7.4% to 63.8 MMT. MDA CropCast raised their forecast for this year's US soybean crop by 54 million bushels to 3.717 billion. They have Argentina at 57 MMT next year and Brazil at a new record 98.3 MMT. Informa estimated Brazil’s 2015/16 soybean crop at 97.5 MMT versus a previous estimate of 97.0 MMT. A Bloomberg survey estimated the 2015 US soybean crop at an average 3.742 billion bushels versus the USDA's July forecast of 3.885 billion and 3.969 billion last year. That had average yields at 44.8 bu/acre, versus 46.0 bu/acre from the USDA last time and the record 47.8 bu/acre hit last year. Ending stocks for 2015/16 were projected at 322 million bushels, from within a range of 210-510 million and versus 425 million previously. The trade is thus looking for lower yields and a revised downwards acreage estimate from the USDA next Wednesday, but I expect any reductions to be smaller than the trade is anticipating, and hence new crop ending stocks could be higher than expected. Aug 15 Soybeans closed at $9.85 1/2, down 6 1/4 cents; Nov 15 Soybeans closed at $9.43 1/4, down 10 cents; Aug 15 Soybean Meal closed at $350.10, down $5.00; Aug 15 Soybean Oil closed at 29.66, up 3 points.

Corn: The corn market closed around 3 cents lower. The weekly export sales report showed net reductions of 2,700 MT on old crop, a marketing-year low. New crop didn't perform much better at 277,000 MT. Trade expectations had been for sales of 250,000-450,000 MT on old crop, and 300,000-500,000 MT on new crop. Actual shipments just about topped 1 MMT, which is around where they've mostly been for quite some time now. On sorghum there were net old crop sales of 56,800 MT along with new crop sales of 223,000 MT and actual shipments for the last week of July of 283,300 MT. All those went to either China or unknown. Debate about the size of this year's US corn harvest revolves largely around one place this summer: Illinois, said Reuters. To indicate just how diverse various analyst forecasts for the state are take a look at these trade forecasts: Allendale estimate the state's corn yield at 168 bu/acre; Lanworth are at 171 bu/acre; FCStone are at 174 bu/acre; Informa are at 180 bu/acre. MDA CropCast cut their forecast for the world 2015/16 corn crop by 1 MMT to 947.6 MMT. They increased US output by 118 million bushels to 13.562 billion, and cut Europe by 1.8 MMT. They also took 2.3 MMT off output in Argentina next year, lowering their crop to 22.7 MMT. There's been much talk of late that both Argentine and Brazilian growers will switch more acres away from corn and into beans next season. The Brazilian real hitting a new low versus the US dollar today will make the cost of growing more input-demanding corn higher compared to soybeans. A Bloomberg survey estimates the 2015 US corn crop at 13.332 billion bushels, from within a range of 13.098-13.660 billion, versus 13.530 billion from the USDA in July and down 6.2% on the record 14.216 produced in 2014. Yields are pegged at an average 164.7 bu/acre, from within a range of 161.5-167.5 bu/acre, 166.8 bu/acre a month ago and the record 171.0 bu/acre achieved last year. US 2015/16 ending stocks are seen at 1.449 billion bushels, down 150 million on last time. Informa estimated the EU 2015/16 corn production at 64.6 MMT versus a previous estimate of 65.8 MMT. They upped Ukraine to 26.5 MMT versus a previous estimate of 26.0 MMT. As with beans, the trade is inclined to think that the USDA is going to cut acres and yields, and thus lower ending stocks next week. I wouldn't be surprised again if any reductions are not of the magnitude that the trade is expecting. I'm not saying that the trade won't ultimately be proved correct, but that they may have to wait for subsequent reports to be vindicated. The USDA are frequently behind the pace when it comes to either increased, or decreased, yield potential. This time last year, for all the talk then of 170+ bu/acre yields (which we now know was correct talk) the USDA only raised potential from 165.3 bu/acre in July to 167.4 bu/acre in Aug. Sep 15 Corn closed at $3.69 3/4, down 3 cents; Dec 15 Corn closed at $3.80 1/2, down 2 3/4 cents.

Wheat: The wheat market closed mostly higher, but off the intra-day highs. It was wheat's weekly export sales that stole the limelight today, it must be a very long time since that was the case. The USDA reported all wheat sales of 838,500 MT, which was not only a marketing-year high, it was the largest total since October 2013, excluding carrover sales in the first week of 2014/15. The biggest taker was unknown destinations (394,600 MT), which unfortunately tells us very little. Trade expectations had been for sales of 400-600 TMT. Exports of 314,500 MT though were less than stellar, being down 14 percent from the previous week and 16 percent below the prior-4 week average. It remains to be seen if the US can continue to build on these sales, or whether this was simply a one-off. I'm inclined to believe that it's likely to be the latter. Intriguingly, the wheat market started to move higher around half an hour before the numbers were released. Did somebody catch a sneaky preview? Regardless, the way the market closed seems to indicate that any rally in US wheat prices is currently being seen as an opportunity to sell. There's stiff competition for US wheat around the globe: Australia, Europe, Russia etc. PentAgNidera increased their forecast for the Australian wheat crop this year from 22-23 MMT to "exceeding 24 MMT" thanks to beneficial El Nino-defying rains. The French harvest should be more or less wrapped up by the weekend, with record production now on the cards judged on various private estimates this week. Reuters reported that Egypt had done a barter deal with Ukraine to supply it with cotton in exchange for wheat. Russia won another clean sweep in yesterday's GASC tender, for which they were inundated with cheap offers despite cutting the maximum moisture requirement to 13%. Ukraine said that their early grains harvest is now 92% complete on 9.4 million ha producing a crop of 33.2 MMT to date, with yields almost identical to a year ago. Wheat accounts for 24.3 MMT of that total. They expect to export a record 36 MMT of grains this season. The Russian grain harvest is 30.3% complete, producing a crop of 45 MMT to date, including 36.1 MMT of wheat. The USDA's FAS in Rabat said that good and timely rains would lift the 2015 Moroccan cereal crop by 69% to a bumper 11.5 MMT, of which 5.6 MMT will be wheat, 2.4 MMT durum and 3.5 MMT barley. That will cut the country's import needs by 20% to 3.1 MMT, including 2.8 MMT of wheat, they added. Japan bought 168,353 MT of wheat from the US, Canada, and Australia for Sept-Oct shipment in their regular weekly tender. Saudi Arabia are in the market for 495,000 MT of optional origin hard wheat for Sept-Nov shipment. Jordan seeks 100,000 MTs of optional origin feed barley for Dec-Jan shipment. Trade estimates have the US all wheat crop around 10 million bushels higher than last month at 2.159 billion in next Wednesday's USDA report. Ending stocks are seen at 869 million bu versus 842 million previously. Sep 15 CBOT Wheat closed at $5.07, up 5 cents; Sep 15 KCBT Wheat closed at $4.89 1/2, unchanged; Sep 15 MGEX Wheat closed at $5.18 1/2, up 3 cents.