March 29, 2013

US soy rises prior to USDA reports

Prior to today's USDA reports, US soy rose to two-week highs on old crop and three-week highs on new crop.

Old crop sales remember are already at 97% of the USDA target for the season. Lanworth Inc. estimated the Argentine soy crop at 50.5 million tonnes and the Brazilian bean crop at 81.1 million tonnes, both were unchanged from their previous estimates.

Agroconsult estimated the Brazilian crop considerably higher at 84.4 million tonnes versus a previous figure of 84.2 million tonnes. Harvesting in Mato Grosso is almost over with slightly disappointing yields, although these are expected to improve as the harvest progresses further south. The range of estimates for tomorrow's March 1st stocks report is 905-984 million bushels, with the average guess of 935 million. Soy planting intentions are expected to be between 77.0-79.7 million acres, with an average guess of 78.4 million.

Funds were judged to have been net buyers of around 2-3,000 soy contracts on the day. May 13 soy closed at US$14.53 3/4, up US$0.06; July 13 soy closed at US$14.31, up US$0.045; May 13 soymeal closed at US$423.10, up US$2.90; May 13 soyoil closed at US$50.82, unchanged.

The market shrugged off disappointing ethanol production numbers to press on to highs not seen since early February. The weekly ethanol grind was down 4,000 barrels/day (bpd) from last week to 805,000 bpd, the 10th week in a row that it's failed to reach the USDA goal for demand of 4.5 billion bushels from the sector.

Instead the market is concentrating on adverse weather conditions in the US, delaying planting and possibly even causing some damage to early planted corn in the south. South Korea's NOFI passed on a tender to import corn, buying feed wheat instead due to price. POET said that they will use an undisclosed percentage of sorghum to partially replace corn at its largest ethanol production facility in SD. Lanworth Inc estimated the Argentine corn crop at 25.5 million tonnes and the Brazilian crop at 76.4 million tonnes, both unchanged from their previous estimates.

They peg the Ukraine corn crop at 26.4 million tonnes, up 26% from a year ago. The Chinese crop is estimated at 216 million tonnes, up 4% from a year ago. Argentine corn offers are said to be around US$40/tonne cheaper than US corn FOB the Gulf of Mexico. That may mean another disappointing weekly export sales report tomorrow, for which trade guesses for corn are 200,000-400,000 tonnes. The range of estimates for tomorrow's March 1st stocks report is 4.916–5.248 billion bushels, with the average guess at 5.03 billion. Corn planting intentions are expected to be between 95.7-98.5 million acres, with an average guess of 97.3 million. Fund buying was estimated at 4-6,000 contracts. May 13 corn closed at US$7.35 1/4, up US$0.05; July 13 corn closed at US$7.16, up US$0.0375.

Short covering saw wheat close higher on all three exchanges. Three successive nights of sub-zero temperatures may have caused some damage to wheat on the Plains is the talk. Iraq bought 350,000 tonnes of Australian wheat in a tender that closed at the weekend it was revealed. South Korea bought 33,000 tonnes of Australian wheat for June shipment.

The USDA's Canberra office pegged Australian wheat production in 2013-14 at 24.0 million tonnes, up 8.5% from 22.1 million tonnes in 2012-13. They have exports next season at 20.0 million tonnes, but noted that exports this season may not reach the USDA's target of 19.0 million tonnes due to logistical problems at the ports, projecting instead a figure of 18.0 million tonnes. Lanworth Inc. estimated the Russian wheat crop this year at 50.4 million tonnes, up by a third on production in 2012 and an increase on their previous forecast of 49.8 million tonnes. The Ukraine 2013-14 wheat crop was estimated at 23.3 million tonnes, up 48% on last year but unchanged from their previous estimate.

Jordan rejected offers on tenders to import 100,000 tonnes each of wheat and barley due to price. Japan seeks 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley in a tender for July shipment. The US all wheat planted area is expected to be between 55.6-57.3 million acres, with an average guess of 56.4 million. Funds were estimated to have bought around 2,000 Chicago wheat contracts on the day. May 13 CBOT wheat closed at US$7.36 3/4, up US$0.0525; May 13 KCBT wheat closed at US$7.74, up US$0.055; May 13 MGEX wheat closed at US$8.13, up US$0.025.