Nogger's Blog

15/04/14 -- Soycomplex: Beans closed above $15/bu on a front month for the first time since last July after the March NOPA crush came in well above expectations. The trade was anticipating a crush number of around 146 million bushels. What it got was a figure of 153.84 billion, which under current "excited" market conditions was enough to spark another feeding frenzy amongst the fund community, who ended up as net buyers of an estimated 10-12,000 soybean contracts on the day. The crush number again implies that US 2013/14 soybean ending stocks are likely to be far tighter than the USDA currently project. Certainly though this will stimulate imports, and encourage US farmers to not waiver from their intention to plant a record large crop this year. The market views potential demand reductions out of China as more of a problem for South American beans than it is for US beans. There are some suggestions that Chinese buyers could ultimately default on 30 or more cargoes of existing soybean purchases due to negative crush margins and difficulties in obtaining Letters of Credit. The Philippines bought 120,000 MT of US or South American soymeal for Aug/Sep shipment today. Dr Cordonnier estimated the 2013/14 Brazilian soybean crop at 86.5 MMT, unchanged from his previous estimate. He estimated the 2013/14 Argentine bean crop at 53.5 MMT, down from a previous estimate of 54.0 MMT. May 14 Soybeans closed at $15.01 1/2, up 25 1/4 cents; Jul 14 Soybeans closed at $14.87 1/4, up 23 3/4 cents; May 14 Soybean Meal closed at $487.40, up $8.30; May 14 Soybean Oil closed at 42.76, up 50 points.

Corn: The corn market ended narrowly mixed on a general lack of news. The Ukraine situation continues to add a bit of support to the market, with corn planting there only just getting going. There's the probability that lack of credit will mean Ukraine growers are forced to cut back on their planting intentions and also on inputs. Agritel yesterday estimated Ukraine’s 2014 corn crop at 23.3 MMT versus a previous estimate of 26.8 MMT, and down 18% from a year ago. Remember though that this will still be their second largest corn crop in history. Dr Cordonnier estimated the 2013/14 Brazilian corn crop at 70.0 MMT, unchanged from previous estimate, although he did note that there was potential for this the be raised at some time in the future. Growing conditions for Brazil's second corn crop are said to be favourable. He estimated the 2013/14 Argentine corn crop at 23.5 MMT, also unchanged from his previous estimate. The Ukraine state stats service said that the country's April 1st grain stocks were 12.3 MMT, up 14% from a year ago. The US Energy Dept will release their usual weekly ethanol production and stocks report tomorrow. Last week's production of 896k barrels/day was well below the circa 938k barrels/day required to hit the USDA's target for the season. Planting of US corn in the Midwest remains delayed by cold weather, although it's too early to suggest that this will mean a drop in yields later this year. May 14 Corn closed at $5.03 3/4, up 3/4 cent; Jul 14 Corn closed at $5.09 1/2, up 1/4 cent.

Wheat: The wheat market jumped back above the $7/bu mark in Chicago on heavy spec buying as the problems in Ukraine intensified. Funds were estimated as finishing up as net buyers of around 6,000 Chicago wheat contracts on the day. This would almost certainly take their long holding back above the levels of a fortnight ago, which was their largest net long in CBOT wheat since Nov 2012. Talk of crop damage to US winter wheat after a hard freeze overnight also got the market excited, although some analysts said that less than 1% of the crop was likely to be at risk. "For wheat that was very advanced with jointing there would be serious damage. However, due to persistently cold weather this spring, freeze damage is not likely to be severe in Kansas, where crop development is significantly delayed," said Martell Crop Projections. "Oklahoma wheat jointing was further advanced with 4% of wheat flowering-heading. A hard freeze would have killed pollen leading to a blank grain head with no kernels. Just a small percentage of the crop would have been affected. Texas wheat was 28% heading suggesting serious freeze damage in wheat. However, we don’t know exactly where wheat was heading. The panhandle is the main wheat region in Texas and also the coldest with mid-upper 20s F overnight. North Central Texas wheat growing areas were less cold with 32 F (freezing) at the minimum. There leaf burn may have developed but no lasting freeze damage. Temperatures tonight are expected to remain above freezing, though mid 30s F are still possible in western Kansas on the High Plains. Moderating temperatures are predicted the balance of the week," they added. May 14 CBOT Wheat closed at $7.01 1/2, up 22 3/4 cents; May 14 KCBT Wheat closed at $7.65 3/4, up 23 3/4 cents; May 14 MGEX Wheat closed at $7.38 1/2, up 21 1/4 cents.