Nogger's Blog

09/09/15 -- Soycomplex: Beans closed lower in what I guess you could call "Turnaround Tuesday" style - even if technically this was a Wednesday it was still only the second trading day of the week. The trade is still debating the varied nature of this summer's US weather, and trying to come up with an average yield. "The best weather for a productive soy yield is heavy August rainfall, as this promotes larger seed development. Normally there are 3 beans per pod, but with above normal rainfall there may be 4 beans. Soybean growing conditions in August were mixed, wet in Iowa, Nebraska and South Dakota, but dry in Illinois and the eastern Midwest. Serious drought in central Illinois is apt to take a heavy toll on the soybean yield. This is the largest US soybean state. Iowa is at the other end of the spectrum experiencing ultra wet weather. Six to 10 inches of rainfall developed in August, which is 4-6 times normal in the northwest half of the state," said Martell Crop Projections. Dr Cordonnier estimated the 2015 US soybean yield at 46.0 bu/acre, unchanged from his previous estimate. The USDA were at 46.9 bu/acre in August. China’s Ministry of Commerce estimated the nation's Sept soybean imports at 5.07 MMT, down from the 7.78 MMT of beans imported in Aug. Oil World said that the world's top 5 soybean exporting nations shipped out 8 MMT of beans last month, up from 6.16 MMT a year previously. Brazil was the top exporter with 5.16 MMT versus 4.12 MMT a year ago. In second place was Argentina with 1.32 MMT (up from 1.17 MMT) and third was the US at 1.0 MMT (versus 0.46 MMT). Sep 15 Soybeans closed at $8.82 3/4, down 8 cents; Nov 15 Soybeans closed at $8.72 1/4, down 7 cents; Sep 15 Soybean Meal closed at $312.50, up $0.50; Sep 15 Soybean Oil closed at 26.60, down 25 points.

Corn: The corn market closed around a cent or so higher. The trade seems to think that the USDA's current 168.8 bu/acre US corn yield estimate is at least a couple of bushels too high. Dr Cordonnier today placed his estimate unchanged from previously at 165 bu/acre. Arlan Suderman of Water Street Solutions said "a state-by-state breakdown continues to suggest to me that the real yield will eventually come in at 161.0 bu/acre. My export target is less aggressive than USDA, but a yield of 161 bu/acre still results in ending stocks falling to 1.1 billion bushels, or a 30-day supply. The USDA had these at 1.713 billion last month. Fund money was net long around 77k corn contracts as of last Tuesday, and appears to think that Friday's WASDE report will be friendly for corn. "US corn conditions September 6th matched the previous week with 68% good-excellent, 22% fair and 10% poor-very poor. This was rather astonishing, since hot, windy weather was present, increasing evaporation and sapping field moisture. On the positive side, the extra heat units have pushed corn development closer to maturity. Twenty percent of corn was ripe and therefore safe from frost," said Martell Crop Projections. Early Russian corn yields are coming in at 5.09 MT/ha, slightly above where the USDA expects them to average. The harvest there is 8.5% done producing a crop of 1.2 MMT so far. Final production estimates vary, with IKAR at 12.5-13.0 MMT, Rusagrotrans at 11.4 MMT and the USDA at 13.5 MMT, Production last year was around 11.3-11.4 MMT depending on who's estimate you run with. IMEA estimated Mato Grosso’s safrinha corn crop at 21.21 MMT versus a previous estimate of 20.95 MMT, and up 20% from a year ago. The Rosario Grain Exchange forecast an 800,000 ha, or a 24%, drop in Argentine corn for grain plantings to 2.5 million ha this year. Sep 15 Corn closed at $3.56 1/2, up 1 1/2 cents; Dec 15 Corn closed at $3.69, up 3/4 of a cent.

Wheat: The wheat market closed mixed. South Korea's MFG bought 60,000 MT of optional origin feed wheat for Jan-Feb shipment. Taiwan bought 56,000 MT of US wheat for Nov shipment. The USDA last night reported the 2015 US spring wheat harvest at 94% complete, well ahead of the 76% average for this time. Winter wheat planting is now underway, with Colorado already 13% done (versus 5% complete normally) and 3% of the crop in the ground nationally, which is in line with the 5-year average for this time. The Rosario Grain Exchange said that winter wheat planting in Argentina is finished, placing the final area at 3.36 million ha. That's a 28% decline on a year ago. It is also well below the 3.7 million estimate currently being used by the USDA and Buenos Aires Grain Exchange. The Rosario Exchange also estimated that heavy rains and flooding has wiped out around 90,000 ha of the 3.36 million that did get sown, further reducing production potential this year. That would take the 2015/16 Argentine wheat harvested area to the lowest in 100 years. This could provide US wheat with a vital window of opportunity to sell some of it's wheat surplus to Brazil in 2015/16. Brazil are the world's 4th largest wheat importer after Egypt, Indonesia and Algeria. They are also of course much closer to the US than the other three, offering a freight advantage over EU/Black Sea wheat. A significant shortfall in production in Argentina this year would potentially leave Brazil forced into cast the net outside of the Mercosur trade bloc, much as it did in 2013/14 when Argentina's crop was hit by adverse weather, coming in at only 10.5 MMT. Some private analysts are now forecasting production of only 8-9 MMT this year. Brazil's CONAB are due to update the market on Friday with their latest crop production estimates. They had the Brazilian wheat crop at 7 MMT last time. The USDA currently forecast Brazilian wheat consumption at 11.5 MMT and imports at 6.5 MMT. Sep 15 CBOT Wheat closed at $4.62, down 3 1/4 cents; Sep 15 KCBT Wheat closed at $4.48 1/4, down 3 3/4 cents; Sep 15 MGEX Wheat closed at $4.88 1/4, up 2 1/4 cents.