EU Rapemeal Prices
27/01/12 -- Rapemeal prices on the continent continue to rise.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | 187.00 | +6.00 |
| Mar12 | 184.00 | +3.00 |
| Apr12 | 180.00 | +3.00 |
| May/Jul12 | 174.00 | +3.00 |
| Aug/Oct12 | 161.00 | +1.00 |
| Nov12/Jan13 | 166.00 | +2.00 |
| Feb/Apr13 | 167.00 | +1.00 |
The Sort Of Thing That Really Irritates Me
27/01/12 -- Media reports, one firm in particular is especially guilty of this, that ALWAYS include the same piece of blindingly obvious information that everybody already knows.
They must employ freelance journo's in these far-flung places who write any old tosh just to see if they can get it past the editor and send another invoice in. Kerching, kerching.
Breaking News: Chicago Board Of Trade To Close
The Chicago Board of Trade, a large trading centre in Chicago, Illinois will close at the normal time today, just like it normally does. Dealers say that it will then remain closed for two days in honour of it being the weekend. Normal trade will resume Sunday night, just like normal. I am thanking you very much. Copyright.
Get a grip, you know who you are, just read your own reports.
The Moring Vibe And Some Food For Thought
27/01/12 -- The overnight grains are mixed with wheat a couple of cents lower, beans a couple higher and corn up 3-4 cents.
Egypt rejected a cargo of Kazakh wheat yesterday on the grounds of it containing "unauthorised seeds" and promptly switched another three cargoes bought as Kazakh origin to Russian instead.
It also announced that it only needs to buy another half a million tonnes to see it through to the end of the 2011/12 marketing year.
Demand for wheat is strong, that's what they keep telling us. Yesterday's US export sales were in line with expectations after all. Except "sales" aren't shipments, some could be optional origin for a kick off. Others may never get shipped at all, at least not in this marketing year.
The US carried over more than 2 MMT of outstanding "sales" from last season into this. Meanwhile yesterday's actual shipments fell short of the average level required to hit the USDA's 25 MMT target for the current season. That's the fourteenth week in the past sixteen that this has been the case. How strong a trend do you want?
Meanwhile, yesterday's news that Brussels only issued export licences for 218 TMT of soft wheat in the past week tells a similar story. Thirty weeks into the marketing year the EU has exported only 7.9 MMT, which puts us in line to have shifted a measly 13.7 MMT by the end of the 2011/12 season.
Bear in mind that the bulk of that has gone out early in the season. If we were to continue to ship at the January average from here on in then we'd finish the current season shifting little more than 11.5 MMT.
OK, these are the numbers for soft wheat, not all wheat products that the USDA report on. The fact remains though that soft wheat exports are currently 36% down on last year, and slowing. If we finish up exporting 36% less "all wheat" in 2011/12 then we'll export 14.62 MMT this season, far less than the 17 MMT that the USDA currently have on the world balance sheet.
Incidentally I was speaking to a group of local farmers last night, and happened to mention in my presentation that world wheat stocks were forecast to be at, or near, a record high at the end of 2011/12.
At the ending questions and answers session one farmer asked how accurate are all these stocks figures that we have thrown at us. A very good question. My fellow speaker rightly replied that the USDA is about the best option that is available to us on a global scale so, rightly or wrongly, we kind of have to go with their numbers most of the time.
I said that I'd had it put to me not that long ago, based on the fact that UK exports last season were way ahead of early forecasts and using the stocks numbers that we had at the time, that the UK should have run out of wheat before harvest came along. Indeed somebody allegedly got their fingers badly singed on the back of making the assumption that there wasn't enough domestic wheat to go round using the information available.
Thing is, there was enough wheat. At 200+ quid or whatever, wheat was suddenly and magically "found" all over the place. Could it be that it was not unusual for cereal growers to officially and routinely underestimate the size of their crops I asked, to silence and wry smiles all around the room.
Answers on a postcard please to the usual address...
Chicago Close - Thursday
26/01/12 -- Soybeans: Mar 12 Soybeans closed at USD12.22 3/4, up 9 1/4 cents; Nov 12 Soybeans closed at USD12.21 3/4, up 8 cents; Mar 12 Soybean Meal closed at USD323.60, up USD2.50; Mar 12 Soybean Oil closed at 51.94, up 55 points. Weekly export sales were 466,300 MT for 2011/12 and 126,000 MT for 2012/13, below trade estimates for combined sales of 700-850 TMT. Undeterred funds bought 5,000 contracts on the day. Production numbers in South America keep declining with Brazil's Parana state lowering their soybean crop estimate to 11.67 MMT from 12.7 MMT.
Corn: Mar 12 Corn closed at USD6.34 1/2, unchanged; Dec 12 Corn closed at USD5.66, up 3 cents. Funds were buyers for the sixth session in a row, coming in for an estimated 10,000 contracts overnight and a further 3,000 in the day session. Corn prices have risen for each of those six sessions. Weekly export sales were 958,100 MT for 2011/12 and 82,500 MT for 2012/13, above expectations of 650-850 TMT. There's decent rains in the forecast for Argentina Tuesday through to Thursday next week, but the market seems to think that the damage has already been done.
Wheat: Mar 12 CBOT Wheat closed at USD6.53 1/2, up 12 1/4 cents; Mar 12 KCBT Wheat closed at USD7.09, up 12 cents; Mar 12 MGEX Wheat closed at USD8.27 1/4, up 14 1/2 cents. Wheat led, with funds buying an estimated 2,000 Chicago contracts on the day. Export sales of 604,700 MT for 2011/12 and 14,000 MT for 2012/13 were in line with trade ideas of 500-700 TMT. Egypt were reported to have rejected one of four consignments of Kazakh wheat on the grounds of it containing "unauthorised seeds" and had the remaining three cargoes swapped to Russian origin.
EU Wheat Prices Continue To Rise
26/01/12 -- EU grains finished mostly higher again with Mar 12 London wheat GBP1.25/tonne higher at GBP164.50/tonne and Mar 12 Paris wheat rising EUR1.25/tonne to EUR209.25/tonne. New crop London wheat was unchanged.
There wasn't a lot of fresh news, but the bulls have the bit firmly between their teeth at the moment. Bears are running for cover with the market now almost GBP25.00/tonne higher than it was six weeks ago. Nobody saw this sudden sharp correction coming.
The HGCA made some minor tweaks to the final 2011 production estimates, reducing UK wheat production very slightly to 15.26 MMT, still 3% higher than in 2010 despite the spring and early summer drought.
Human and industrial usage was also revised only fractionally lower to 6.9 MMT, despite Ensus showing few signs of springing back into life.
Brussels issued soft wheat export licences for 218 TMT this past week, the best total of 2012 so far but a long way from where you would expect things to be at this time of year.
The marketing year-to-date total now stands at 7.9 MMT, versus 12.3 MMT at the same time in 2010/11. So despite a slightly larger crop in 2011/12 EU-27 soft wheat exports are actually 36% lower than they were a year ago.
EU Rapemeal Prices
26/01/12 -- Rapemeal prices on the continent are on the rise again today, in line with last night's gains in Chicago soymeal.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb12 | 181.00 | +1.00 |
| Mar12 | 181.00 | +2.00 |
| Apr12 | 177.00 | +2.00 |
| May/Jul12 | 171.00 | +3.00 |
| Aug/Oct12 | 160.00 | +4.00 |
| Nov12/Jan13 | 164.00 | +3.00 |
| Feb/Apr13 | 166.00 | +4.00 |
The Morning Vibe
26/01/12 -- The overnight grains are higher in follow through trade and in response to a sharply weaker US dollar. Comments from the Fed last night that US interest rates would remain very low until the end of 2014 sent the dollar tumbling. The pound currently stands close to it's best levels since November at 1.5700 against the greenback, to where it has steadily risen from a low of 1.5230 a fortnight ago.
Fund money is coming back in for CBOT corn in particular, they bought an estimated 8,000 contracts last night. That's the fifth session in a row they've been net buyers adding what's thought to be 47,000 lots to their building net long.
Greece say that they hope to have a deal sorted by the weekend on private debt. Yawn. If it can sort something out it wants to know can the IMF/EU/ECB have the money in it's account by Monday morning.
The UK may or may not be in a recession, and that's official. Unofficially, we are.
Fresh news is thin on the ground as you can see. Short term we seem to be going up, although I for one am far from convinced about the longevity of such a move. Sellers have spotted this trend and don't want to sell. Buyers don't like the look of these levels and generally don't want to buy, at least not unless they have to.
It will be interesting to see what volume of export licences were granted by Brussels for the latest week ended Tuesday when they come out later today. The first three weeks of 2012 have been very uninspiring at 107,000 MT; 167,000 MT and 175,000 MT. That hardly paints a picture of rampant demand for EU wheat.
Year-to-date EU soft wheat exports total 7.7 MMT so far, a 36% decrease on where we were this time last year despite a larger crop this time round.
Chicago Closing Comments - Wednesday
25/01/12 -- Soybeans: Mar 12 Soybeans closed at USD12.13 1/2, down 6 1/2 cents; May 12 Soybeans closed at USD12.22 3/4, down 6 cents; Mar 12 Soybean Meal closed at USD321.10, down USD2.40; Mar 12 Soybean Oil closed at 51.39, up 4 points. Decent overnight rain in Argentina had funds selling an estimated 4,000 soybean contracts on the day. Opinion is still divided on how much bean damage has already taken place. Local analyst Cropcast came out with one of the most pessimistic crop estimates yet, putting the soybean crop there at 45 MMT - 5.5 MMT lower than the USDA.
Corn: Mar 12 Corn closed at USD6.34 1/2, up 4 1/4 cents; May 12 Corn closed at USD6.40 1/4, up 5 cents. Corn rose on ideas that whilst Argentine rains may help beans they have arrived too late for corn. Funds bought an estimated 8,000 contracts on the day, adding to their recent purchases and increased long position. The weak dollar was also supportive following an announcement by the Fed that very low interest rates will continue to be the norm for at least the next couple of years. The gap between old crop and new crop continues to widen. Rising prices now will only encourage more corn acres in the spring. Estimates for tomorrow’s weekly export sales report range from 650 to 850 thousand MT.
Wheat: Mar 12 CBOT Wheat closed at USD6.41 1/4, up 7 3/4 cents; Mar 12 KCBT Wheat closed at USD6.97, up 11 cents; Mar 12 MGEX Wheat closed at USD8.12 3/4, up 9 cents. Funds were said to have been buyers of around 2,000 Chicago wheat contracts on the day, although that would still leave them holding a hefty short position. It is that short that is supporting the market. Estimates for tomorrow’s weekly export sales range from 500 to 700 thousand MT. Sales are on target, it's shipments that aren't and I'd expect them to fall short of the 474 TMT required to hit the USDA's 2011/12 target of 25 MMT once again tomorrow. They've done that in 13 of the last 15 weeks.
EU Wheat Mixed, Is The Bull Run Faltering?
25/01/12 -- EU grains finish mixed with Jan 12 London wheat down GBP0.25/tonne to GBP163.25/tonne and Mar 12 Paris wheat rising EUR2.25/tonne to EUR208.00/tonne.
It was a strange sort of a day with May 12 London wheat posting a GBP5.50/tonne trading range, closing at GBP164.25/tonne despite hitting GBP168.50/tonne early doors. How anybody allowed themselves to get stiffed at the latter price is unclear.
London wheat is now up over GBP23.00/tonne from the lows of just six weeks ago, a serious rise that you would think must have been generated by an equally serious change in circumstances.
All that we have to go on though is a decline in Argentine corn production, that is more than made up for by a rise in output elsewhere around the globe, according to the USDA and IGC. The world wheat crop has also got bigger since then, according to the same two sources.
The only other bull story is perhaps yesterday's suggestion that Russia "might" introduce some form of restriction on grain exports before too long. This particular "news" is far from new, it's been know since at least October that they wanted to cap grain exports at around 24-25 MMT.
I estimate that they will have exported 19.5-20.0 MMT by the end of this month. Their exports have probably slowed to around 1.5 MMT in January and are likely to remain at that level going forwards, so they will probably get through to the end of April before they hit their self-imposed target.
Is Russia potentially being out of the market for a couple of months May/Jun really a big serious issue? I don't think so. A blessing Kazakhstan might think.
At home, feed manufacturers in the UK are unseasonably quiet, and well bought too. Almost to a man they are only looking to make sales, not to buy any more raw materials. There were apparently plenty of export offers of UK and Baltic wheat for all positions today but not a single bid in the market.
Meanwhile, we have world wheat plantings for the 2012 harvest projected at 225 million hectares - the largest since 1998. The US all wheat area is forecast at 57.9 million acres, an increase of 3.5 million from last year. Canadian sowings are seen up 12% and world ending stocks for 2011/12 and 2012/13 are seen as the highest in history by many.
Oh, and American farmers are expected to sow the largest corn crop since the war this spring.
And we haven't even mentioned the European debt crisis yet.
Early Call On Chicago
25/01/12 -- The overnight grains were mixed with beans 1 3/4 down to 1 1/2 up, corn was 3 1/2 up to 1 3/4 down and wheat mostly around 2-4 cents firmer. Crude is down half a dollar or so.
Argentina got more rain overnight but will now have to wait until next week for it's next shot of moisture. Cropcast have come out with a pretty pessimistic number putting the soybean crop at 45 MMT.
The rally that started a week ago has seen corn put on 40 cents, wheat 44 cents and beans 34 1/2 cents, so maybe there's a bit of consolidation due?
When all said and done, based on the average of all the analysts listed below, are things really all that bad? A record and within half a million tonnes of record corn crop for Brazil and Argentina. Plus a second and joint second record soybean crop.
The Russian "news" isn't anything more than a reminder of what we knew already, that they are likely to slow down on exports now we are into 2012.
Portugal’s borrowing costs have risen to fresh euro-era highs today. Greece is still trying to play hardball despite only holding "Jack high" in it's hand. European leaders meet for a summit on Monday without a deal on the table once again. The UK is heading for, or indeed may already be in, another recession.
But don't let those things worry you right now, the only way is up. "The market needs to find a price level that will encourage farmers to sell," I read with a wry smile. How about dropping like a stone when Europe goes tits up, that might encourage a few sellers out of the woodwork!
Early calls for this afternoon's CBOT session: corn up 2-4 cents, wheat up 3-5 cents, beans flat to 2 cents lower.
