Chicago Grains End With Little Change In Lifeless Trade

17/09/14 -- Soycomplex: Beans closed with small gains in a low volume and narrow trading range session. The USDA announced 620,000 MT of US beans sold to China for 2014/15 delivery. This was almost certainly part of the 4.8 MMT "showcase" deal announced yesterday following a Chinese delegation visit to the US, so we can expect more big sales announcements in the coming days. China’s Ministry of Commerce estimated the country's September soybean imports at 4.98 MMT. Benson Quinn said that "stellar" yields continue to be being reported from early US harvest activity. Lanworth increased their forecast for US soybean yields this year from 46.7 bu/acre to a new record 47.0 bu/acre. They also increased production from 3.852 billion bushels to 3.873 billion. The USDA are currently at 46.6 bu/acre and with production at 3.913 billion bushels (Lanworth are using a smaller harvested area estimate). Dr Cordonnier said that Brazilian farmers are slow to sell their crops due to the weakening Real. One Real was worth $1.55 back in 2011, today the exchange rate is around $2.33, and expected to climb to £2.50 next year, he said. Bloomberg reported that this year's US corn and soybean harvest of around a record 18.3 billion bushels combined will meet with some forced spot selling as the entire US on farm storage capacity is only an estimated 13 billion bushels. Trade expectations for tomorrow's weekly export sales report are anywhere from 850 TMT to 1.6 MMT. Nov 14 Soybeans closed at $9.82 1/2, up 1 3/4 cents; Jan 15 Soybeans closed at $9.90 3/4, up 1 1/2 cents; Oct 14 Soybean Meal closed at $336.40, down $1.90; Oct 14 Soybean Oil closed at 33.39, up 58 points.

Corn: The corn market closed a cent or two lower on early harvest pressure. US weather forecasts offer no threat. "Well above average temperatures expected in the northern plains will help the development of the crop in our trade territory through the next 10 days. Temps through rest of the corn belt are expected to be normal to slightly below, which should allow for good progress on the row crop harvest," said Benson Quinn. Lanworth increased their US 2014 corn yield estimate from 173.7 bu/acre to 174.5 bu/acre. They however cut their production estimate from 14.649 to 14.569 billion bushels on the back of a decrease in harvested area, although still comfortably a record volume. The USDA are currently at 171.7 bu/acre and 14.395 billion bushels. Iran bought 300,000 MT of what was probably Black Sea origin corn for Sep-Oct shipment. South Korea's NOFI are tendering for up to 210,000 MT of optional origin corn for Jan-Feb shipment. The US Energy Dept said that weekly US ethanol production rose to 931,000 barrels/day last week. Russia said that it's 2014 corn harvest was 18.5% done at 2.5 MMT. Ukraine's is only 8% complete so far at 1.5 MMT. Reuters reported that there had been no progress made with Chinese officials with regards to resolving the MIR 162 dispute that is now threatening to bring US DDGS exports to the region to a grinding halt as well as those of corn. Trade estimates for tomorrow's weekly export sales report are in the region of 500-700 TMT. Dec 14 Corn closed at $3.41 3/4, down 2 cents; Mar 15 Corn closed at $3.54, down 1 1/2 cents.

Wheat: The wheat market closed mixed, but without much change. Lanworth estimated US all-wheat production at 2.034 billion bushels, slightly higher that the USDA's current estimate of 2.030 billion. "Though the US is out of the game on GASC business, it is interesting to watch how the other global origination points react to these tenders. The French bombed yesterday’s tender and the Russians took notice as evidenced by cheaper offers on paper. This could result in the next leg down in global values," said Benson Quinn Commodities. "Despite a wet summer, drought has not been eradicated in the 3 main hard red winter wheat states Kansas, Oklahoma and Texas. The US drought monitor still shows pockets of 'exceptional' drought. Kansas producers report subsoil moisture at 16% very short, 31% short, 52% adequate and 1% surplus, the leading US wheat state," noted Martell Crop Projections. Turkey bought 200,000 MT of milling wheat in a tender, probably Russian origin. Iran bought 150,000 MT of feed barley for Sep-Oct shipment, probably Black Sea material. Tunisia are tendering for 92,000 MT of optional origin wheat and 75,000 MT of optional origin barley for Nov-Dec shipment. Algeria bought 50,000 MT of optional origin durum wheat for Jan shipment. Talk suggests that Australia's 2014/15 wheat exports may fall to 18 MMT, a five year low and 1 MMT below the current USDA estimate, as global competition hots up. Trade ideas for tomorrow's weekly export sales report are around 350-550 TMT. Dec 14 CBOT Wheat closed at $4.99 1/4, up 3 cents; Dec 14 KCBT Wheat closed at $5.82 1/4, down 1 cent; Dec 14 MGEX Wheat closed at $5.63, down 2 1/2 cents.

EU Grains Mixed, But Mostly A Little Higher

17/09/14 -- EU grains closed mixed, but mostly posted modest gains, hoping (but not with a huge degree of confidence) that the worst may finally be over, and ideas that the bulk of the harvest pressure is over and that EU grains are finally winning some good export business.

The day ended with Nov 14 London wheat up GBP1.15/tonne at GBP113.75/tonne, and Nov 14 Paris wheat closed EUR0.50/tonne lower to EUR161.50/tonne. Nov 14 Paris corn was up EUR1.25/tonne to EUR140.25/tonne and Nov 14 Paris rapeseed was EUR1.75/tonne higher at EUR325.75/tonne.

For London wheat there may well have been an element of profit-taking or short-covering ahead of tomorrow's Scottish independence referendum. A "yes" vote would potentially send the pound into a tailspin.

France managed a clean sweep in yesterday's Egyptian tender. Algeria bought 50 TMT of optional origin durum wheat for Jan shipment overnight. Tunisia are in the market for 92 TMT of optional origin wheat and 75 TMT of optional origin barley, both for Nov-Dec shipment. Turkey bought 200 TMT of milling wheat of unspecified origin for Sep/Oct shipment.

Russian wheat was also comfortably out-priced in yesterday's Egyptian tender.

Their harvest currently stands at 87.3 MMT off 71.2% of plan, with wheat accounting for 52.5 MMT of that total, along with 19.4 MMT of barley and 2.5 MMT of the early corn harvest (currently 18.5% complete).

Ukraine's harvest meanwhile is now 69% complete at 37.6 MMT, including 1.49 MMT of their early corn harvest (which is 8% complete). They've also harvested 4.5 MMT of sunflowers (52% done) and 810 TMT of soybeans (24% done).

APK Inform said that Ukraine had exported a record 300 TMT of rapeseed in July, although they still expect 2014/15 total shipments to decline 19% to 1.8 MMT (out of a total production this year of 2.0 MMT). As mentioned yesterday with their barley shipments, this would appear to indicate that the bulk of their export efforts have all been concentrated into the front end of the marketing campaign, as is frequently their style.

They've also already shipped more than 4 MMT of the USDA's forecast full season exports of 10 MMT of wheat this year, with September expected to be their busiest month yet this season. This situation is likely to be replicated once the full weight of the Ukraine 2014 corn harvest hits in October/November.

The Farmers' Weekly said that the UK winter OSR area could fall by as much as 15% this year (for the 2015 harvest), to less than 700k ha for the first time since 2010. This is due to a combination of low prices and the new EU ban on neonicotinoids leading to a sharp rise in pest damage. This is probably something that will also be replicated across Europe.

What, if anything, will be planted in it's place? There's not a lot of excitement around wheat prices going forward, even if Nov 15 is at a GBP13/tonne premium in London and with Dec 15 EUR14/tonne higher than the front end in Paris tonight. There may be some who will see this as an opportunity to tackle their blackgrass problem and go for the fallow option, at least until the spring.

French milling wheat FOB Rouen is said to be offered in the market at EUR161/tonne (less than GBP128/tonne) for 76kg/hl, 220 hagberg and 11% protein material. New crop corn is EUR136/tonne (under GBP108/tonne) FOB Bordeaux/La Pallice. New crop Ukraine corn is now down to $170/tonne FOB the Black Sea (around GBP104.50/tonne).

Chicago Market Closing Comments

16/09/14 -- Soycomplex: Beans closed lower, despite there being some bullish news about. A worrying sign. The FSA reported prevented soybean plantings of 841,000 acres, up from 827,000 in August. A Chinese delegation to the US signed an agreement to buy 4.8 MMT of US beans in a "showcase" deal. Nov 14 beans tried to break through the $10/bushel mark on the news, but failed. Reuters actually reported that Chinese crush margins are poor and that bean imports could fall. That would be very bad news for the entire complex, with the world set to produce a record crop to cater for China's oft quoted "insatiable" desire for soybeans. As has been mentioned before, the market is extremely sensitive to any mention of Chinese soybean imports slowing up, as they are forecast to account for 66% of world bean trade in 2014/15. The Chinese government sold less than 70 TMT of the 330 TMT of soybeans that they had up for auction today. Dr Cordonnier estimated 2014 US soybean yields at a record 46.7 bu/acre versus a previous estimate of 45.5 bu/acre. He also estimated Brazil's 2014/15 soybean crop at a record 95 MMT. Nov 14 Soybeans closed at $9.80 3/4, down 8 3/4 cents; Jan 15 Soybeans closed at $9.89 1/4, down 8 1/4 cents; Oct 14 Soybean Meal closed at $338.30, down $0.50; Oct 14 Soybean Oil closed at 32.81, down 46 points.

Corn: The corn market managed small gains. The FSA reported corn prevented plantings of 1.58 million acres versus 1.54 million in August. A Bloomberg report said that Chinese regulators were discussing changing inspection requirements for shipments of US corn byproducts. They were a big buyer of US DDGS in the first half of the year, but recently threw those imports into question by saying that all future shipments would carry a zero tolerance attitude towards the MIR 162 corn variety. Cargill said that it will be closing a corn mill in Memphis in Jan 2015 due to underutilization. Dr Cordonnier increased his estimate for US 2014 US corn yields to a record 173.0 bu/acre, up 3 bu/acre from his previous forecast. Reports from the field continue to suggest much better than expected early yields. Last weekend's frost threat appears to have done little damage, and the weather forecasts for the week ahead are conducive for good progress to be made with the 2014 harvest. The US Energy Dept are out with their weekly ethanol production data tomorrow. Reuters reported that the EU-28 corn crop could top 70 MMT for the first time ever this year. Dec 14 Corn closed at $3.43 3/4, up 3/4 cent; Mar 15 Corn closed at $3.55 1/2, up 1/2 cent.

Wheat: The wheat market closed lower across the three exchanges. Egypt's GASC bought three cargoes (180 TMT) of French wheat at the knock down price of $247.49/tonne C&F. US wheat wasn't even offered. The feeling is that the French badly needed the business, given that it looks unlikely that it will export anything like it's normal volume to traditional top buyer Algeria this season. The silo system in Rouen is said to be groaning under the volume of wheat it has in store, exacerbated by sluggish exports. Ukraine said that it had exported 7 MMT of grains so far this season, including just over 4 MMT of wheat and 2.5 MMT of barley - the latter figure being the USDA's forecast for the entire season as they maintain their stance of being very aggressive early season sellers. The FSA reported US wheat prevented plantings of 1.376 million acres, up slightly on 1.36 million in August. However it then immediately cast a cloud over it's numbers by saying that due to budgetary constraints and lack of personnel, not all the paperwork was in place yet. The wheat market continues to remain under pressure, weighed down by a record world crop and an impending all time high corn crop too. Dec CBOT wheat made a new contract low of $4.91 today. Dec 14 CBOT Wheat finally closed at $4.96 1/4, down 4 1/2 cents; Dec 14 KCBT Wheat closed at $5.83 1/4, down 3 cents; Dec 14 MGEX Wheat closed at $5.65 1/2, down 3 cents.

EU Grains Stage Modest Rebound

16/09/14 -- EU grains closed firmer in what looks like profit-taking and a technical rebound following the recent rout which has sent prices slumping to 4-year lows. Nevertheless, prices eased back in afternoon trade, closing well off the intra-day highs.

The day ended with Nov 14 London wheat up GBP0.60/tonne to GBP112.60/tonne, Nov 14 Paris wheat was EUR0.50/tonne higher at EUR162.00/tonne, Nov 14 Paris corn was also up EUR0.50/tonne EUR139.00/tonne and Nov 14 Paris rapeseed too was up EUR0.50/tonne at EUR324.00/tonne.

There may have been a bit of short-covering in London wheat ahead of Thursday's upcoming vote on Scottish independence, which some say could wipe 10-15% off the value of sterling should the "yes" vote claim victory.

If it doesn't, and that's the way the bookies overwhelmingly see it, then the pound could put in a little rally, although probably nothing like one of that magnitude.

Sterling was already under pressure today before the ONS said that inflation fell from 1.6% to 1.5% in August. That remains well below the Bank of England's 2% target, seemingly putting them under little pressure to think about an interest rate rise just yet.

The Russian harvest now stands at 86.7 MMT off 70.5% of the planned area (versus 71.7 MMT this time a year ago), with wheat accounting for 52.5 MMT of that total and barley a further 19.3 MMT. The 2014 Russian corn harvest is now 18% complete at 2.4 MMT, they added. Average Russian grain yields are up almost 19% versus a year ago.

SovEcon yesterday raised their forecast for the 2014/15 Russian grain crop to a very healthy 104-106 MMT, pegging exports at 31 MMT. They estimate the wheat crop at 60 MMT, with exports at 23 MMT - both numbers are a little higher than the USDA's forecasts of 59 MMT and 22.5 MMT last week.

APK Inform estimated domestic feed grain consumption in Ukraine at 17.8 MMT in 2014/15, a 4.1% rise on a year ago. They see barley consumption in feed at 3.85 MMT, up 8.6% and corn feeding at 7.35 MMT, a 2.1% rise.

It is noted that Ukraine have already exported 2.5 MMT of barley since the beginning of the 2014/15 season on Jul 1, which is the same as the figure that the USDA are currently using for the entire season. They have production down at 9 MMT this year, and total domestic barley consumption at 5.6 MMT, which suggests that they've once again massively concentrated their sales into the first quarter of the new season for cashflow reasons.

Will they do likewise with their corn crop, the harvesting of which is just getting going? Europe is already expecting a possible record corn crop of its own, which some forecasters are estimating at in excess of 70 MMT, according to a report on Reuters today.

Kazakhstan's 2014 grain harvest stands at 44.6% complete, producing a crop of 7.17 MMT to date, with yields down more than 9%.

In an interesting development for the French market, Senalia, the main silo operator in the port of Rouen, apparently said late last week that it was suspending wheat intake for "an indefinite period" due to low exports and the rapid rate at which its silos are filling up.

Senalia operate one of only two silos in the port that are approved delivery points for the Paris wheat contract. What would happen if both were full when the November contract is in delivery? Shorts would physically be unable to get a booking to deliver wheat against their sales, which is not the way that the futures market was designed to operate.

Late in the day Egypt's GASC bought three cargoes of French wheat at what looks like a very aggressive, some would say desperate looking, average price of $247.49/tonne cost and freight - the equivalent of just over GBP152/tonne.

Fancy A Bet?

16/09/14 -- On the Jock Referendum. According to the news it's too close to call, on a knife edge, could go either way and as finely balanced as Kylie's pert little bum cheeks.

Or is it? The bookies (rarely at the head of the stupid queue asking for a glass hammer or a left-handed screwdriver) don't seem to think so. No sireeee, far from it.

Take a look at the latest betting on which way the vote will go here at oddschecker.

For those of you who only ever frequent the bookies on Grand National day let me explain. The chances of a "yes" vote winning this particular two horse race are around 3/1 against (also know as the outsider or rag) ie. if you put a pound on "yes" and you're right you win three pounds, plus you get your pound back. That's English pounds we're talking by the way, we don't accept that stupid Jock money down here, this is England.

The chances on a "no" vote winning are around 1/4 (this is what we call the screaming red hot favourite) so your hard earned English pound wins you 25 English pennies if that's correct.

In other words, the bookies seem to think that the vote is about as finely balanced as having having to chose between Kylie and Ann Widdecombe who you'd most like to play Where Shall We Hide Mr Sausage Next with.

Which makes recent sterling weakness look rather false does it not? Don't forget that the pound fell 3 cents against the dollar and 2 euro cents against the single currency last Monday alone, when it was reported that the "yes" vote had the lead in the polls for the first time.

And if the pound is undervalued and in for a correction, what does that mean for London wheat? Blimey, I never thought I'd be sat here thinking that GBP113/tonne was a selling opportunity!

Chicago Corn And Beans Modestly Higher, Wheat Down Again

15/09/14 -- Soycomplex: Beans closed a little higher. Weekend frost damage in the Midwest was not thought likely to have been too severe, and there's no more in the forecast for the next couple of weeks. The USDA announced 118,000 MT of beans sold to China for 2014/15 shipment. The NOPA August crush came in at 110.6 million bushels versus trade expectations of 111.6 million and compared to the July crush of 119.6 million. Dr Cordonnier said that soybean planting in Brazil is likely to start today - the first day permitted by the government in an effort to combat the spread of Asian Rust. August rains mean that soil conditions are good to begin sowing fast maturing beans that could be ready to harvest by the end of the year, he said. This could mean that there's more new crop Brazilian beans on the market in January than normal, shortening the window of opportunity for the upcoming record US soybean crop. Safras forecast the 2014/15 Brazilian soybean crop at a new record 95.9 MMT, up 10.6% from last season and versus the USDA's 94 MMT estimate. South Korea bought 55,000 MT of South American soymeal at prices said to be around $20/tonne under US material. The Argentine government said that farmers there are still holding 21.5 MMT of 2013/14 soybeans back from the market. Weekly export inspections for US beans came in at just over 255 TMT. After the close crop condition ratings were left unchanged at a high 72%. The USDA said that 24% of the crop is dropping leaves, up from 12% a week ago but behind the 5-year average of 32% at this time. Nov 14 Soybeans closed at $9.89 1/2, up 4 1/4 cents; Jan 15 Soybeans closed at $9.97 1/2, up 5 cents; Oct 14 Soybean Meal closed at $338.80, up $0.30; Oct 14 Soybean Oil closed at 33.27, up 72 points.

Corn: The corn market closed around 4 cents higher on what looks like short-covering. There was some talk of the USDA dropping crop condition ratings later in the afternoon. They did not however, leaving their estimate at a historically high 74% good to excellent. Their other data all highlighted that crop development is behind schedule. In their first harvest progress report they said that nationally 4% of the crop has been harvested versus 9% for the 5-year average. They said that 27% of the crop is mature, up from 15% a week ago but behind 39% normally at this time. The crop is 82% dented versus 85% normally. In other news the USDA announced 120,000 MT of corn sold to Mexico for 2015/16 shipment. Dr Cordonnier said that Brazilian growers getting started with early fast maturing soybean plantings would allow them to also get their safrinha corn crop sown in a timely manner. Despite low prices, Brazil's 2014/15 corn crop is still expected to be a large one at 77.8 MMT, according to Safras. China are still offering large volumes of its corn surplus up for auction on a weekly basis. Last week they sold 943 TMT out of a 5 MMT offering. Oil World said that the US exported 7.2 MMT of DDGS between Jan-July, up 48% from a year ago. They said that exports in July alone were a record 1.17 MMT, with China taking around half of that volume. That would have been prior to them stating that they will not now accept DDGS shipments from the US containing traces of MIR 162 corn, so these volumes could drop off sharply in the second half of the year. Certainly some of the volume earmarked for China has now been redirected to Europe. Dec 14 Corn closed at $3.43, up 4 1/2 cents; Mar 15 Corn closed at $3.55, up 4 cents.

Wheat: The wheat market closed lower, unable to buy a rally, even with the corn market firmer. SovEcon raised their forecast for the Russian 2014/15 grain crop from 98 MMT to a rather large 104-106 MMT in clean weight, the second largest of the post Soviet era. Wheat production was increased from 58 MMT to 60 MMT. The Russian Ministry said that 68.5% of the grain harvest was now in, producing a bunker weight crop in excess of 85 MMT so far, which makes this new target look achievable. Rabobank estimated Australia’s 2014/15 wheat crop at 24.0 MMT. Traders say that crop development in Western Australia state is 2-3 weeks ahead of normal. The Argentine Ag Ministry said that 99% (4.476 million ha) of the planned 4.516 million ha of winter wheat in the country had now been planted. That's up sharply from plantings of only around 3.7 million ha a year ago. Wetness has been the problem getting this year's Argentine crop planted, so a forecast dry spell for the next 10 days will be welcomed. Saudi Arabia bought 610 TMT of hard wheat of optional US, Canadian, South American, EU or Australian origin. Ukrainian grain stocks were 23.4 MMT as of September 1, up 15% from a year ago, according to the State Stats Service. The USDA said that the US spring wheat harvest had made some good progress in the past week, to 74% complete, up from 58% a week ago, although still lagging the 5-year average of 86%. They said that winter wheat plantings were 12% done, one point ahead of the 5-year average. Dec 14 CBOT Wheat closed at $5.00 3/4, down 1 3/4 cents; Dec 14 KCBT Wheat closed at $5.86 1/4, down 7 cents; Dec 14 MGEX Wheat closed at $5.68 1/2, down 9 1/2 cents.

EU Grains: Same Story, Different Day

15/09/14 -- EU grains closed mostly lower, and at fresh 4-year lows in the case of London and Paris wheat and Paris corn.

The day ended with Nov 14 London wheat down GBP0.45/tonne to GBP112.00/tonne, Nov 14 Paris wheat closed EUR1.25/tonne lower at EUR162.00/tonne, Nov 14 Paris corn was down EUR1.75/tonne to EUR138.50/tonne, whilst Nov 14 Paris rapeseed was EUR2.00/tonne higher at EUR323.50/tonne.

Russia's 2014 grain crop just keeps getting bigger. SovEcon today raised their forecast from 98 MMT to 104-106 MMT, the second largest of the post-Soviet era, beaten only by output in 2008. Wheat production this year was raised from 58 MMT to 60 MMT. Note that these are also clean weight estimates.

The Russian Ag Ministry said that the country had harvested 85.1 MMT of grains so far off 68.5% of the planned area. That compares with a harvest of only 69 MMT this time a year ago.

Wheat accounts for 52 MMT of this year's total so far (off 68.3% of plan), with barley adding a further 19.1 MMT off 82.5% of plan.

The 2014 Russian corn harvest meanwhile is now 15.6% complete at 2.1 MMT, they added.

The Russian Ministry said that Sep 1-10 grain exports were 975 TMT, including 805 TMT of wheat and 112 TMT of barley. That takes total exports so far this season (Jul 1 to Sep 10) to 8.75 MMT, including 7.69 MMT of wheat and 910 TMT of barley.

Ukraine's exports are also going well. APK Inform said that the country exported 770 TMT of grains last week, up from 540 TMT the previous week. That total included 404 TMT of wheat and 363 TMT of barley. Their new crop corn harvest is just starting to hit the market, with Agritel reporting offers for that FOB Odessa are now down to $172/tonne, which is only around GBP106/tonne sterling equivalent.

That could change though if the "yes" vote wins Thursday's Scottish referendum. Some analysts are saying that such an eventuality could send the pound reeling, sustaining losses of 10-15%, which would support London wheat and make imported corn and other grains considerably more expensive. It would also help with UK export ambitions.

A "no" vote on the other hand would have the opposite effect, although few are predicting a 10-15% upside for the pound should that happen.

With a seeming 50:50 chance that the vote could go either way, it may be worth UK arable growers sitting on their hands for a few more days, rather than biting the bullet at these loss making levels anyway.

In other news Saudi Arabia bought 610 TMT of hard wheat for Dec/Jan shipment over the weekend. Acceptable origins are European, North or South American and/or Australian.