Nogger's Blog

20/09/13 -- Soycomplex: Beans and meal closed sharply lower, with beans posting their first weekly loss in seven in what looks like a combination of harvest pressure and profit-taking. There's still the possibility that this week's Midwest rains may help yields a little too, along with the outlook for South American farmers to "go large" with their soybean plantings as soon as the weather permits. Indeed, it's not just in South America that soybean plantings are expected to increase for the 2014 harvest, Informa today released a preliminary report for US 2014 soybean plantings suggesting a record large area of 83.6 million acres and record production potential of 3.671 billion bushels. Big prices equal big plantings it would seem. Informa also raised their forecasts for US 2013 yields and production to 42.4 bu/acre and 3.224 billion bushels respectively. The USDA are currently 1.2 bu/acre and 75 billion bushels lower than those estimates based on conditions as at the first of the month. Anecdotal reports of early US soybean yields are generally better than expected. After this week's US rains have abated the forecast for the next 7 days is drier, which will allow harvest pace to pick up, and more importantly has no significant cold weather threats. Dryness in Argentina could see more of a shift from corn into beans than the market currently has factored in, which is also a bit bearish for now. Continued dryness beyond the middle of October could see the market begin to get a little excited though. The Argentine Ag Ministry released a 2013/14 soybean planting area estimated of 20.6 million hectares, up 3% from last year. Corn and sunflower plantings are seen in decline, with the latter now pegged at 1.7 million ha versus a previous estimate of 1.9 million and compared to 1.8 million a year ago. Brazilian farmers are also waiting for rain before they begin planting what is expected to be around 4-6% more soybeans than in 2012. If the weather co-operates then a record crop lies in store for 2014. Fund selling was estimated at around a net 8-9,000 lots on the day. Nov 13 Soybeans closed at USD13.15 1/4, down 24 1/4 cents; Jan 14 Soybeans closed at USD13.18, down 23 1/2 cents; Oct 13 Soybean Meal closed at USD413.40, down USD8.20; Oct 13 Soybean Oil closed at 42.09, down 62 points. For the week Nov 13 beans lost 66 1/4 cents, with meal down USD31.20 and oil down 25 points.

Corn: Corn closed lower on harvest pressure and fund selling. Informa raised their forecast for the 2013 US corn crop by 149 million bushels to 13.889 billion bushels, with yields at 157.6 bu/acre. The USDA are currently at 13.843 billion bushels and 155.3 bu/acre. Better than expected yields are being reported as the 2013 US corn harvest progresses. Some significant progress should be made with the harvest next week if the advertised dryness forecast is validated, potentially bringing additional harvest pressure. Looking further ahead, Informa gave us a preliminary forecast of 92.7 million acres for US corn plantings next year, which is down more than 3 million acres on their estimated for this year as USD4.50/bu corn turns heads to soybeans. The latest Commitment of Traders report shows fund money adding significantly to their short position in corn for the week through to Tuesday night - up by almost 40,000 lots to over 100,000 contracts. The Buenos Aires Grain Exchange said that the 2013/14 Argentine corn crop is 2.8% planted versus 5% this time last year. They estimated the 2013/14 Argentine corn area at 3.56 million hectares. The Russian and Ukraine corn harvests are stalled on rain, both are currently only around 10% complete. Quality could also be an issue once the crop is in too. FranceAgriMer cut French corn ratings in the good/very good category by one point to 55%. Funds were estimated to have been net sellers of around 7,000 corn contracts on the day. Dec 13 Corn closed at USD4.51, down 8 1/2 cents; Mar 14 Corn closed at USD4.63 3/4, down 8 1/4 cents. Dec 13 was down 8 cents on the week, it will be interesting to see if the USD4.50 level can hold next week.

Wheat: Wheat followed corn lower, effectively giving up all of yesterday's gains. Heavy rains on the Plains are seen as beneficial for winter wheat plantings. Western Argentina is seen dry for the next 5-7 days. The FAO cut their forecast for the 2013/14 Argentine wheat crop from 11 MMT to 9.5 MMT, although that's still up on last year's 8.2 MMT. The Argentine Ag Ministry have cut their wheat area estimate from 3.9 million ha to 3.4 million ha on dryness during planting. In May the Argentine Ag Secretary said "the area will be close to 4.5 million hectares, for sure" so he was only 25% out. Russia's wheat harvest stands at 45.2 MMT off 71.2% of the planned area, which is already well ahead of last year's entire production. Quality could be a problem this year though. European wheat exports are running well ahead of schedule, pinching business from the US. Nevertheless, cumulative US wheat export sales stand at 57.0% of the USDA forecast for 2013/14 marketing year versus a 5 year average of 46.8%. Talk of problems in South America potentially might mean that Brazil keeps importing more wheat from outside the Mercosur trade block. The Canadian harvest is progressing well, and they are on track for their largest crop since the early 1990's. Quality is said to be above average too. The latest Commitment of traders report shows fund money extending their Chicago wheat short position by almost 4,000 lots to nearly 51,000 contracts. Dec 13 CBOT Wheat closed at USD6.46 1/4, down 10 3/4 cents; Dec 13 KCBT Wheat closed at USD6.96 3/4, down 9 1/4 cents; Dec 13 MGEX Wheat closed at USD6.99 3/4, down 8 3/4 cents. For the week Chicago wheat was still up 4 3/4 cents, with Kansas rising 3/4 of a cent and Minneapolis down 6 cents on pressure from the Canadian harvest.