Nogger's Blog

28/03/13 -- Soycomplex: The USDA surprised the market with a Mar 1st soybean stocks estimate fractionally under 1 billion bushels versus the average trade guess of 935 million and above even the highest figure in the hat which was 984 million. Although that is still a relatively low number it was high enough to send soybeans crashing, especially with spillover weakness from corn. The market largely ignored a planting intentions estimate that fell short of market expectations at 1.3 million below the average trade guess, and right at the bottom end of the range of forecasts. Right now we don't know how the USDA came up with this stocks number, we will have to wait until next month's WASDE report to get clues to that. Cynics would say that by simply "inventing" more soybean stocks they have given themselves some room to increase their US export forecast for 2012/13 next month, and still manage to cling to what looks like a self-imposed minimum carryout at the end of the season of 125 million bushels. Weekly soybean export sales of 674,100 MT were in line with trade estimates of 5-800 TMT and were, thankfully for the USDA, mostly new crop. Soybean shipments plus outstanding sales for the current marketing year are 35.67 MMT, less than 1 MMT away from the USDA target for the entire season, with more than 5 months of 2012/13 still left to go. At least China will be happy with today's developments - they took virtually all of this week's new crop sales. In other news the Buenos Aires Grains Exchange estimated the Argentine soybean crop at 48.5 MMT, unchanged from their previous forecast and well below the USDA's 53.0 MMT. They said that the harvest is around 6% complete. Rains in the forecast for Brazil may slow harvesting in the south and further delay soybean loadings. May 13 Soybeans closed at USD14.04 3/4, down 49 cents; Jul 13 Soybeans closed at USD13.85 1/2, down 45 1/2 cents; May 13 Soybean Meal closed at USD404.60, down USD18.50; May 13 Soybean Oil closed at 50.11, down 71 points. For the week May 13 beans were down almost 36 cents, with meal down nearly USD15 and oil shedding 32 points.

Corn: If the soybean market was surprised then the corn market was stunned by a Mar 1st stocks estimate of 5.4 billion bushels versus trade guesses of around 5 billion. This too was above the highest trade estimate and immediately sent corn crashing the daily 40 cent limit down where it duly stayed. Funds were said to have maybe finished up dumping 40,000 of their recently acquired length in corn and synthetic trade suggests that the market could be another 20 cents lower when trading resumes Sunday night/Monday morning. Unlike soybeans, the USDA does appear to have some legitimate options open to it to back up this stocks number however. Lower demand from the ethanol sector for one, this week's data from the Energy Dept showed production below the level needed to hit the USDA's target for the season for the tenth week running. Exports could also be cut again, this week's sales of a combined 314,000 MT were in line with trade estimates but hardly impressive. Argentine corn was said to be almost USD50/tonne cheaper than US corn on an FOB basis earlier in the week. The USDA's planting intentions estimate of 97.3 million acres for corn was bang in line with the average trade guess and a post 1936 record, so that offered little support going forward. Using this estimate Reuters ran a report saying that the US could produce a record 14.6 billion bushels corn crop this year IF the USDA's baseline projected yield of 163.6 bu/acre could be achieved, and assuming normal abandonment levels. Although not too many would want to bet on 163.6 bu/acre this year right now. The Buenos Aires Grains Exchange said that the Argentine corn crop would come in at 25.0 MMT this year, unchanged from their previous estimate, and versus 26.5 MMT from the USDA. They said that 18.3% of the Argentine corn crop has been harvested versus 14.5% a week ago. May 13 Corn closed at USD6.95 1/4, down 40 cents; Jul 13 Corn closed at USD6.76, down 40 cents. May 13 was down 31 cents on the week.

Wheat: The wheat market crashed lower on spillover weakness from corn, although it too had it's own little bearish story with a Mar 1st stocks figure of 1.23 billion bushels. That was above the average trade estimate and right at the top end of the range of guesses. For plantings the USDA gave us an all wheat area of 56.4 million acres, which was bang on the average trade guess and in the middle of the range of suggestions of 55.6-57.3 million. Weekly export sales for wheat beat trade estimates of 3-600 TMT at a combined 828,600 MT. Recently rumoured business to Brazil (181,500 MT) was amongst the old crop sales, and China (172,000 MT) took a slug of the new crop. Old crop sales need to now average 321 TMT/week to hit the USDA projection for the 2012/13 season. This week's old crop sales of 580,300 MT easily beat that. On the tender front Tunisia is tendering for 42 TMT of optional origin durum wheat for May shipment. Iran bought 350 TMT of Australian wheat in a tender for 50 TMT over the weekend. Malaysia also bought Aussie wheat this week for June shipment. India are back in the market offering up 250 TMT for tender for April shipment. A cold snap in the US this week may have damaged some winter wheat crops but it is too early to tell. Arctic conditions across much of Europe may also have caused some damage on unprotected crops, meanwhile Spain is at risk from excessive wetness. Heavy snow in Ukraine will have brought fieldwork to a halt for the next couple of weeks. MDA CropCast upped their forecast for Australian wheat production in 2013/14 from 22.6 MMT to 23.3 MMT. May 13 CBOT Wheat closed at USD6.87 3/4, down 49 cents; May 13 KCBT Wheat closed at USD7.26 3/4, down 47 1/4 cents; May 13 MGEX Wheat closed at USD7.80 1/4, down 32 3/4 cents. For the week Chicago wheat fell 43 cents, Kansas wheat was down 34 1/4 cents, and Minneapolis lost 26 1/4 cents.