Nogger's Blog

07/08/15 -- Soycomplex: Beans closed with strong gains, jumping back up above the $10/bushel mark on front month Aug 15. Strong processor demand and the fact that the US has now already exported more soybeans than the most recent USDA forecast for the entire season is supporting the old crop. Ideas that the USDA will cut US 2015 plantings by more than a million acres on Wednesday (according to a Reuters survey), due to early season wetness, is supporting the new crop. The trade is also looking for 2015 yields to be cut from the 46 bu/acre estimated a month ago to something in the 44-45 bu/acre region. A Bloomberg survey this week estimated the 2015 US soybean crop at an average 3.742 billion bushels versus the USDA's July forecast of 3.885 billion and down 5.7% on 3.969 billion last year. Linn Group today estimated the US 2015 soybean crop at 3.633 billion bushels using a yield figure of 43.9 bu/acre. A combination of increased 2014/15 exports (and therefore lower carry-in stocks) and lower 2015 production is seen cutting 2015/16 ending stocks to 322 million bushels versus 425 million previously, according to the Bloomberg survey. A Dow Jones survey came up with an even lower 305 million bushel new crop carryout figure. The trade seems to have forgotten, or be ignoring, the fact that such dramatic wholesale changes aren't typically the USDA's style - at least not in their August report. August is regarded as the key yield-determining month so soybeans, so they may judge that it is too early yet to start downgrading this year's crop. For sure, old crop exports should be increased, and some downwards revision in plantings is also envisaged, but considering that the USDA only re-surveyed a relatively small area of the corn belt a more than million acre reduction seems unlikely. In tender news, South Korea's KFA bought 55,000 MT of South American soymeal for Jan shipment. Tonight's commitment of traders report shows managed money cutting their net soybean long to a little over 50k contracts for the week through to Tuesday night. Aug 15 Soybeans closed at $10.09, up 23 1/2 cents; Nov 15 Soybeans closed at $9.63 1/4, up 20 cents; Aug 15 Soybean Meal closed at $352.60, up $2.50; Aug 15 Soybean Oil closed at 30.03, up 40 points. For the week that puts front month beans 28 1/4 cents higher, with meal down $2.00 and oil 5 points higher.

Corn: The market closed about 3 cents higher. French corn condition ratings fell again this week and the crop there is now rated 58% good to very good versus 85% a year ago. "Plummeting corn prospects are directly linked to intensifying drought. Dry conditions in June were followed by an extremely dry July in Europe’s leading corn country. Moisture stress has continued in August, coinciding with the sensitive pollution period. Severe weather stress would cause irreversible damage to the corn yield, shrinking the kernel count. Severe vegetative stress in France is confirmed by remote satellite imagery," said Martell Crop Projections. French corn is now unusually running at a premium to milling wheat, and is also now substantially more expensive than US material, which should give US exporters a chance of picking up some extra business. There's trade talk developing that the corn crop in Ukraine is also now coming under stress. The country may see temperatures as high as 35C (95F) in next 7-10 days, which could hurt yields, according to a report on Bloomberg. "Very small precipitation is expected during this spell of hot weather and that could impact final grain filling for corn, sunflower and soybeans," said Agritel. UkrAgroConsult currently have the 2015 Ukraine corn crop estimated at 24 MMT versus 25.9 MMT a year ago. The Buenos Aires Grains Exchange said that the 2015 Argentine corn harvest is 84.5% complete, producing a crop of 22.5 MMT so far. They stood by their final production estimate of 26 MMT. As with soybeans, the trade is expecting lower production and yield estimates from the USDA next week. Linn Group today estimated the US 2015 corn crop at 13.009 billion bushels, with yields at 160.4 bu/acre. A Bloomberg survey this week estimated the 2015 US corn crop somewhat higher at 13.332 billion bushels, although that's still down versus 13.530 billion from the USDA in July and 6.2% below the record 14.216 produced in 2014. Yields were pegged at an average 164.7 bu/acre versus 166.8 bu/acre a month ago. South Korea's KFA were said to have bought 65,000 MT of optional origin corn for March shipment. The weekly commitment of traders report showed that managed money cut their net long position in corn by 79k contracts in the week through to Tuesday night. They are now net long 164k lots. Sep 15 Corn closed at $3.72 3/4, up 3 cents; Dec 15 Corn closed at $3.83 3/4, up 3 1/4 cents. For the week Sep 15 was up 1 3/4 cents and Dec 15 gained 2 1/2 cents.

Wheat: The market closed around 3-6 cents higher across the three exchanges. Chicago wheat posted double digit gains for the week, but the Kansas and Minneapolis markets only made token advances. The Buenos Aires Grains Exchange said that Argentine wheat planting is complete on 3.7 million hectares, which is 16% lower than the area sown a year ago. They said that around 50% of the crop is tillering. They already note that dryness in northern areas is cutting yield potential. Ideas that increased feed wheat production in the Black Sea area this year might mean that some quality buyers are forced to cast the net a little wider later in the season lend some mild support. Saudi Arabia are tendering for 495,000 MT of hard wheat, with the results expected to be announced over the weekend. "India will import less wheat this year than forecast previously as a tax on shipments from overseas drives up costs for bread and pizza makers," a Bloomberg report said. They are to impose an import duty of 10 percent on wheat which will last until March 31 next year, they said. A poor quality 2015 harvest led to a spate of foreign imports, particularly of Australian wheat, in recent months. French customs data shows that they exported 19.3 MMT of soft wheat in 2014/15, up 1.5% on a year ago and the best sales total since 2010/11. There was a big increase in French sales to Egypt, which were up three-fold. Bangladesh are reported to have rejected a cargo of French wheat because the grain did not match tender specifications. There's some suggestion that the cargo may have been re-directed to India, which is why the Indian government hastily rushed through their new import duty. Next week's USDA report isn't expected to throw up too many shocks for wheat. Production in Europe may be revised upwards from last month's 147.9 MMT in light of recent harvest results and the suggestion that the French crop could hit an all-time high this year. Ukraine's crop was estimated at 24 MMT last month. The Ukraine Ag Ministry there now say that they've harvested 24.3 MMT off 92% of the planned area, although that is a bunker weight tonnage. Russia's 2015 wheat crop was revised 2 MMT higher in July to 57 MMT, but another million could feasibly be added to that this time round. Although private estimates for wheat production in southern hemisphere Argentina and Australia are lower than the USDA's 11.5 MMT and 26 MMT respectively, it may be too soon in the growing season to expect those to be revised downwards just yet. Managed money flipped to a small net short of 14k lots in Chicago wheat for the week through to Tuesday night. Sep 15 CBOT Wheat closed at $5.10 1/2, up 3 1/2 cents; Sep 15 KCBT Wheat closed at $4.93, up 3 1/2 cents; Sep 15 MGEX Wheat closed at $5.25, up 6 1/2 cents. For the week, Chicago wheat put on 11 1/4 cents, Kansas added only 3/4 of a cent and Minneapolis gained 1 1/2 cents.