Nogger's Blog

18/09/15 -- Soycomplex: Beans closed at the lowest level in 6 years. Concerns about the Chinese economy remain. Shanghai stocks closed slightly higher on the day, but 3.2% lower for the week. A Chinese delegation are in the US next week, and are expected to buy several million tonnes of US soybeans in a showcase deal. That might provide the market with some support, but the outcome of 2015 US yields probably holds the key from here. Additionally South American growers will shortly begin planting what is expected to be another very large soybean area for their 2015/16 harvest. Safras e Mercado today estimated the 2015/16 Brazilian crop at 100.54 MMT, up from their July estimate of 99.8 MMT and more than 3.5 MMT above the USDA. Some other private estimates are higher than that. Soybeans are a much more attractive crop to grow in Brazil than full season corn at the moment. Argentine growers will be thinking the same thing, and who wants all those beans if Chinese demand starts to falter? Fund money added more than 6.5k contracts to their overall net short in beans in the week through to Tuesday night according to the latest Commitment of Traders report. They are now net short 25k lots. Stats Canada increased their forecast for the 2015 Canadian rapeseed crop by 1.1 MMT taking that up to 14.4 MMT, although that's still down 12.2% on a year ago. Egypt bought 25,000 MT of US soybean oil for 2015/16 shipment. Nov 15 Soybeans closed at $8.67 1/4, down 17 1/4 cents; Jan 16 Soybeans closed at $8.71 1/2, down 17 1/4 cents; Oct 15 Soybean Meal closed at $309.00, down $4.20; Oct 15 Soybean Oil closed at 26.05, down 62 points. For the week that puts nearby beans 7 cents lower, with meal down $1.90 and oil losing 60 points.

Corn: The corn market closed around a couple of cents easier. Safras estimated the Brazilian 2015/16 corn crop at 88.6 MMT, far higher than the USDA's 79.0 MMT forecast. Stats Canada estimate this year's Canadian corn crop at 12.7 MMT, up 12.5% on a year ago. FranceAgriMer dropped corn good to very good ratings there by one point on a week ago to 55%, down 31 points compared to this time last year. They said that nationally the harvest is only 1% done so far. There are reports that China may cut state corn prices by as much as 10% in 2015/16, although that would still leave the price they pay at well above global levels. The Ukraine Ag Ministry said that the corn production there could be as low as 23 MMT this year, with the crop hit by early season dryness and heat. Similar conditions have cut this year's EU corn crop significantly too. Russia said that it's 2015 corn harvest is 18.2% done on 508.5 million ha producing a crop of 2.6 MMT to date. Yields there are averaging 5.06 MT/ha versus 5.02 MT/ha a year ago. Crude oil closed more than $2/barrel lower at little more than $45/barrel. Goldman Sachs think that prices could fall to $20/barrel yet, which would have bearish potential for both corn and beans. On the US weather front "strong showers developed yesterday in the Upper Midwest and have swept eastward into Illinois, Indiana and Michigan this morning. The Southwest monsoon circulation has strengthened, once again, promoting scattered strong showers. The 7 day forecast is wet for Midwest corn and soybeans. Temperatures are expected to continue unseasonably warm in the heartland in the upcoming week, though temperatures would moderate in the Eastern Midwest," said Martell Crop Projections. Fund money was reported to have added more than 22.5k lots to it's net long position in corn for the week through to Tuesday night and are now long nearly 70k lots. Dec 15 Corn closed at $3.77 1/4, down 2 1/2 cents; Mar 16 Corn closed at $3.88 1/2, down 2 1/2 cents. For the week Dec 15 corn was 9 3/4 cents lower.

Wheat: The wheat market closed a bit higher on the day, but not much changed for the week. Egypt's GASC bough a mixture of Russian, Ukraine and French wheat. US wheat wasn't even offered. Stats Canada estimate the spring wheat crop there 400 TMT higher than previously at 18.4 MMT, although that's still down 13% on a year ago. Durum wheat production was called 300 TMT more than previously at 4.8 MMT, which is 7.7% lower than in 2014. Canadian barley production is pegged 1.5% down on last year at 7.0 MMT. Hungary said that it's 2015 wheat harvest was 5.28 MMT, and that yields there were the highest since 1991 at 5.14 MT/ha. There's trade talk of dryness being an issue in Russia and Ukraine with regards to plantings/germination of the winter wheat crop for the 2016 harvest. Russia's Ag Ministry said that winter grain plantings (mostly wheat) are 52.9% complete on 9 million ha (versus 9.3 million ha a year ago at this time). They also said that the 2015 Russian wheat harvest is 80.6% complete on 21.7 million ha producing a crop of 57.5 MMT to date. Average yields are said to be 8.9% lower than a year ago at 2.65 MT/ha. The Russian barley crop is 81.6% harvested at 16.6 MMT with yields down 5.8% at 2.29 MT/ha. The outcome of recent Russian proposals to alter the existing export tax on wheat are unknown as yet. Changes are expected but a removal of the tax completely is not. South Korea's KFA bought 25,000 MT of optional origin feed wheat for Feb shipment. South Korea's Daehan bought 51,000 MT of Australian wheat for Feb-March shipment. Fund money is reported to be sitting on a net short in Chicago wheat of almost 40k lots as of Tuesday night. Dec 15 CBOT Wheat closed at $4.86 3/4, up 5 1/4 cents; Dec 15 KCBT Wheat closed at $4.82 1/4, up 3 cents; Dec 15 MGEX Wheat closed at $5.11, up 3/4 cent. For the week that puts Chicago wheat up 1 3/4 cents, with Kansas wheat unchanged and the Minneapolis market down 1/2 a cent.