Nogger's Blog

30/01/15 -- Soycomplex: Beans and meal closed lower on the day, and lower for the week and the month. "Fund selling and Brazilian producer selling swamped the market," said Benson Quinn. Safras e Mercado trimmed their estimate on Brazilian soybean production this year by 0.88 MMT to 95.02 MMT. That's 0.5 MMT below the USDA's current estimate, although still easily a record and 8.3 MMT more (or the best part of 10% higher) than last year. The trade chose to concentrate on the latter element rather than the reduction itself. With every day that passes we also get closer to this huge crop being a reality, rather than a forecast. "The value of the Real to the US dollar neared 2.7:1 today which, with the Brazilian producing selling his beans at US dollar values but being paid in local currency, is the best exchange rate for the Brazilian producer in several years," Benson Quinn noted. Funds were estimated as being net sellers of around 7,000 lots on the day, and are thought to now likely be holding close to a record short position. Allendale forecast Nov 15 bean futures falling close to $8/bushel - a level not seen on a front month since late 2008. About the only bullish thing in the market right now is the seasonal tendency for beans to put in a first half of the year bottom around now. This has happened in 3 of the last 4 years. Mar 15 Soybeans closed at $9.61, down 7 1/4 cents; May 15 Soybeans closed at $9.67 3/4, down 7 cents; Mar 15 Soybean Meal closed at $329.90, down $8.00; Mar 15 Soybean Oil closed at 30.00, up 46 points. For the week that puts Mar 15 beans down 11 3/4 cents, with meal down $1.60 and oil losing 160 points. For the month, on a front month basis, beans were down 41 1/2 cents, with meal shedding $26.60 and oil losing 195 points.

Corn: The corn market closed around 1-2 cents easier on the day. It too was also lower for the week and the month. Safras e Mercado cut 1 MMT off it's Brazilian corn production forecast to 74.7 MMT. The USDA are a bit higher than that at 75 MMT, and production last year was 79.3 MMT. The Brazilian weather outlook continues with the recent theme. "Temperatures next week would continue hot in Mato Grosso and the tropics at large, while cooler temperatures would prevail in South Brazil. This would perpetuate the pattern of the past 4 weeks," said Martell Crop Projections. Allendale, in contrast to their prediction on soybeans, said that although an early summer lull could take corn prices down to around $3.50/bushel, the Dec 15 lot could hit more than $4.50/bushel on a summer rally. They see US corn plantings this year falling to a 5-year low of 88.35 million acres, down from 90.6 million last year and below the recent US Congressional Budget Office estimate of 89 million. Informa currently estimate corn plantings a bit higher than Allendale to at 88.6 million acres. Current low prices and the higher cost of inputs associated with corn will ultimately mean that fewer acres will get planted, Allendale seem to think. The USDA will stage it's regular Outlook Forum around 3 weeks from now, which will give us their first tentative forecast for US plantings this spring. For the record, last year's Forum projection was for 2014 US corn plantings of 92 million acres, so they ultimately proved to be around 1.4 million too high versus what finally did make it into the ground. Mar 15 Corn closed at $3.70, down 1 1/2 cents; May 15 Corn closed at $3.78 1/2, down 1 1/2 cents. For the week Mar 15 corn was 16 3/4 cents lower, and for the moth of January it was 25 3/4 cents lower.

Wheat: The wheat market closed lower across the three exchanges. That's a sentence that I seem to have used rather a lot this month. It will not surprise anybody then that wheat was also lower for the week and the month in all three locations. The strong dollar and weak euro remain a thorn in the side for US wheat export hopes, even if yesterday's weekly export sales total of 544,392 MT was the highest for 17 weeks. Chicago wheat fell below $5/bushel at one point, but did manage to close above that level at the close of play. It seems likely that a probe below that level again next week is on the cards though. The US weather forecast is calling for decent rains in the Southern Plains over the weekend and snow for Midwest winter wheat. Both are seen as being beneficial. Monthly crop ratings are scheduled to be updated in various key states on Monday night. In other news, several vessels loaded with Russian wheat bound for Egypt are said to be stuck at Black Sea ports waiting for clearance to leave, just 24 hours before the new export duty kicks in. Russia dropped their interest rates 2 percentage points to 15% today, further weakening the rouble which fell to a new low of 72 against the U dollar. Credit Suisse predicted that the rouble will decline to 82 versus the US dollar within the next three month. That would continue to batter the Russian economy, and could have implications for spring plantings and the ability of Russian farmers to purchase inputs. South Korea's KFA cancelled a tender for 30,000 MT of optional origin feed wheat. Egypt's GASC are widely expected to be back in the market for wheat next week. India are expected to announce a decision on whether or not they are to attempt to offload 0.5-1.0 MMT of their surplus wheat stocks next week. They are now only a couple of months away from beginning their 2015 harvest. Mar 15 CBOT Wheat closed at $5.02 3/4, down 5 cents; Mar 15 KCBT Wheat closed at $5.40 1/4, down 3 3/4 cents; Mar 15 MGEX Wheat closed at $5.56 3/4, down 2 1/2 cents. For the week Chicago wheat was down 27 1/4 cents, with Kansas losing 23 3/4 cents and Minneapolis falling 19 1/4 cents. For the month they were down 78 1/2 cents, 76 3/4 cents and 54 1/4 cents respectively.