08/10/10 - Soybeans
November soybeans closed at USD11.35, up 70 cents; October soybean meal closed at USD317, up USD25.00; October soybean oil closed at 46.22, up 243 points. A very bullish USDA report, particularly for corn, set the tone, with soybeans opening limit up and staying that way. The USDA pegged the 2010 US soybean crop at 3.408 billion bu on yield of 44.4 bpa. That's down from 3.483 billion and 44.7 bpa last month, but still the largest US crop in history! The bull surprise in the pack for soybeans was them slashing their ending stocks estimate to 265 million from 350 million last month.
December corn closed at USD5.28 1/4, up the 30 cent limit; March corn closed at USD5.37 1/2, also up 30 cents. The USDA slashed it's 2010 US corn yield estimate to 155.8 bushels/acre, 6.7 bpa lower than last month and 4.2 bpa below the average trade guess. That cut production to 12.664 billion bushels from 13.160 billion last months and 147 million bushels below the lowest trade estimate. Ending stocks came in at 902 million bushels, 95 million less than the lowest trade estimate. The EPA decision on whether to move towards E15 (15% inclusion of ethanol in gasoline) is expected to be announced in a week.
December CBOT wheat closed at USD7.19 1/4, up 60 cents; December KCBT wheat closed at USD7.58 1/2, up 59 cents; December MGEX wheat closed at USD7.64 1/2, up 58 cents. Spillover strength from corn propelled wheat to close at or near daily trading limits. The average trade guess for ending stocks was 873 million bushels. USDA came in at 853 million, 49 million lower than last month. They also cut world wheat production by 1.6 MMT, including a 300,000 MT reduction for Canada tp 22.2 MMT, whilst world consumption was raised by more than 2 MMT.
08/10/10 -- A bullish crop report from the USDA set the EU grains markets on fire Friday afternoon. Nov London wheat closed GBP9.70 higher at GBP167.00/tonne and Nov Paris wheat rose EUR15.75 to EUR223.75/tonne.
Other EU grains also closed sharply higher with Nov Paris corn up EUR13.25/tonne and Nov Paris rapeseed EUR10.75/tonne higher.
The USDA stunned the trade for the second week running. Last week they pegged Sept 1st corn stocks 300 million bushels higher than the trade was expecting. This week they pegged 2010 corn yields at 155.8 bushels/acre, 6.7bpa lower than last month's estimate and 4.2bpa lower than the trade was expecting.
That slashed US corn production this year by more than 12.5 MMT from last months estimate to 321.6 MMT and cuts US ending stocks to just 22.9 MMT. That represents 57.8 days of supply, the second tightest of the past 35 years.
US wheat ending stocks were also estimated lower this month at 23.2 MMT.
Lost in amongst all the data they actually raised EU-27 wheat production for 2010/11 by half a million tonnes to 135.63 MMT. World wheat output this season was reduced slightly to 641.4 MMT, 6% down on last year. World ending stocks were forecast at 174.7 MMT, down 3 MMT from last month and 22 MMT below last year.
Even so, those ending stocks are still 50 MMT higher than in the so-called "food crisis" year of 2007/08. That's 40% more wheat than when we visited the dizzy heights of GBP200/tonne, yet there will be plenty now who will be expecting us to go there again after this report, ably assisted by fund money of course.
It is interesting that a mere 22 MMT (just 3% of world production) marks the difference between last year's "burdensome" stocks and this year's new "food crisis" is it not? It is also interesting to note that this season's ending stocks approaching 175 MMT are still forecast to be almost 10 MMT higher than they were in 2008/09 when wheat prices completely collapsed.
The difference between now and then of course is that the funds have got their appetites back.
08/10/10 -- No surprises to see another USDA report littered with surprises. This time they've come up with a corn production number of 12.664 billion bushels, down sharply from from 13.160 billion last months and 147 million bushels below the lowest trade estimate.
Yields were pegged at 155.8bpa, well under the lowest trade estimate of 158.2bpa and 4.2bpa below the average expectation. Corn ending stocks dropped to 902 million bu, down from 1.708 million last year and also lower than the lowest trade estimate within a range of 997 million to 1.392 billion. That represents 57.8 days of supply, the second tightest of the past 35 years.
They also gave us a soybean crop of 3.408 billion bu on yield of 44.4bpa. That's down from 3.483 billion and 44.7bpa last month, but pretty close to trade expectations. The big surprise for beans though was ending stocks down to 265 million from 350 million last month, again lower than the lowest trade estimate.
Wheat stocks were pegged at 853 million bushels, down from 902 million last month and a bit lower than the average trade guess of 873 million.
Early reaction is calling for corn up the 30 cents limit this afternoon with beans called 20-30c higher and wheat up 10-15 cents.
Here we go again then, Nov London wheat currently GBP7/tonne higher with Paris wheat up around EUR10/tonne.
08/10/10 -- Drought in Western Australia is seen cutting the state's percentage of the national wheat crop from a "normal" share of around 35-40% to less than 20% this season.
Rabobank say that this year's Australian wheat crop will total 22-23 MMT, that's 2-3 MMT lower than some other recent estimates, although still an increase on last season.
If it wasn't for the drought in WA - where they peg output at "around 4 MMT" - then we'd have been looking at a potentially record national crop of 26-27 MMT this year.
Wheat production is NSW is seen at a record 8.7 MMT, say Rabobank. That's an increase of over 70% on last season.
07/10/10 -- Soybeans
November soybeans ended 3 cents higher at USD10.65; December soymeal ended USD0.40 higher at USD296.20; December soyoil settled 0.34 cents higher at 44.12. Export sales of 947,400 MT were down from the previous week, but in line with estimates for sales of 750-950,000 MT. The market is particularly cautious ahead of tomorrow's USDA report given last week's surprises. Soybean production and ending stocks are expected to see small reductions.
December corn settled up 9 3/4 cents at USD4.98 1/4; Export sales were disappointing at a combined 632,500 MT against estimations for sales of 750-850,000 MT. In tomorrow's USDA report ending stocks for corn are seen at 1.172 billion (USDA 1.116 billion last month). Some reports suggest that the USDA may raise planted acres to compensate for lower yields, leaving production relatively unchanged. Mexico and South Korea purchased 822,960 MT and 110,000 MT respectively of US corn today.
CBOT December wheat closed up 1 cent at USD6.59 1/4; KCBT Dec wheat rose 2 cents to USD6.99 1/2; MGEX Dec wheat rose 1 1/4 cents to USD7.06 1/2. All exchanges finished well off early highs ahead of tomorrow's USDA report. Export sales were above the average trade estimates (450-650,000 MT) at 808,400 MT. Ending stocks for wheat tomorrow are seen at 873 million (USDA last month: 902 million). Reports coming out of Western Australia are also a worry, where the wheat crop is seen at less than half last year.
07/10/10 -- Nov London wheat closed GBP2.25 higher at GBP157.30/tonne, with Nov Paris wheat up EUR4.00 at EUR208.00/tonne.
The pound broke through 1.60 against the dollar for the first time since late January, but stayed there only briefly before slipping back below 1.59 by the close.
The euro remains strong, setting a five month high of over 88 pence against the pound after the Halifax said British house prices plunged a record 3.6 percent in September.
Strength in Chicago grains added support ahead of another raft of key data from the USDA tomorrow.
Ukraine finally bit the bullet and said it would impose export quotas until at least the end of the year.
Brussels issued export licences for 480,000 MT of soft wheat this past week, bringing the cumulative total so far this marketing year to 6.8 MMT compared with 5.1 MMT this time last year. Barley exports are running at 1.5 MMT versus 289,000 MT twelve months ago.
UK exports are also continuing at a strong pace, with some already questioning how much wheat is going to be left for sale come the spring.
07/10/10 -- The overnights closed mostly steady with wheat around 6-7c firmer, corn up 3-5c and beans 8-10c higher.
Crude oil is around half a dollar higher and the USD is weak.
The market is positioning itself ahead of tomorrow's crucial USDA data and nervous of another surprise. There seems to be some talk that although dropping corn yields is a given, they may actually find some extra acres to leave production above 13 billion bushels. Soybean output is also expected to fall.
Ending stocks for corn are seen at 1.172 billion (USDA 1.116 billion last month), with beans coming in at 337 million (350 million) and wheat at 873 million (902 million).
Today's weekly export sales were neutral for corn and beans and friendly for wheat.
Dryness in Brazil is still a concern, although soybean plantings are expected to be record.
Reports coming out of Western Australia are also a worry, where the wheat crop is seen at less than half last year.
Early calls for this afternoon's CBOT session: corn up 3-5c; wheat up 5-7c; beans up 8-10c.
07/10/10 -- The USDA today reported the following export sales for the period September 24-30, 2010:
Net sales 808,400 MT for the 2010/11 marketing year were primarily for Egypt (147,500 MT), Nigeria (113,600 MT), Thailand (95,500 MT), the Philippines (86,500 MT), Saudi Arabia (52,300 MT), and Brazil (41,000 MT). That beat forecasts for sales of 450-650,000 MT. Exports of 878,200 MT were up 12 percent from the previous week and 9 percent from the prior 4-week average. The primary destinations were Egypt (153,600 MT), Nigeria (111,700 MT), South Korea (89,000 MT), Japan (64,000 MT), Saudi Arabia (52,300 MT), and South Africa (45,400 MT).
Net sales of 607,100 MT for 2010/11 and 25,400 MT for delivery in 2011/12 fell short of estimations for sales of 750-850,000 MT. The main buyers were Syria (171,900 MT), Japan (166,400 MT), Venezuela (85,000 MT), Indonesia (67,400 MT), South Korea (57,700 MT), and Mexico (33,200 MT). Exports of 978,600 MT were up 4 percent from the previous week. The primary destinations were Japan (364,500 MT), Mexico (128,300 MT), Syria (103,700 MT), Indonesia (63,500 MT), South Korea (57,800 MT), and Israel (57,200 MT).
Net sales of 947,400 MT were down 46 percent from the previous week, but in line with estimates for sales of 750-950,000 MT. The main buyer as usual was China (624,300 MT) followed by Mexico (75,800 MT). Exports of 654,400 MT were up 26 percent from the previous week. The destinations were primarily to China (335,900 MT), Mexico (151,800 MT), Taiwan (57,000 MT), Syria (30,100 MT), and Morocco (27,300 MT).
07/10/10 -- Incoming text message this morning:
"Hello everyone - this is the no for my new iPhone 3G - please retain"
Ha, ha. I've got an iPhone 3G and I just wanted to let the world know. Except I forgot to tell you who I am.
So what use is that to anybody then? In the unlikely event that I want to get in touch with a muppet then I'll send you a text back. You muppet.
Talking of muppets, who decided to host the Commonwealth Games in India?
I hear this morning that an assortment of British and Australian swimmers/divers at the Games have gone down with "Delhi Belly". I thought I spotted one of our lot was white when she dove into the pool, yet strangely brown when she got out of it again. Cheers.
November soybeans ended 9 3/4 cents lower at USD10.62; December soymeal closed USD3.50 lower at USD295.80; December soyoil settled 0.04 cents lower at 43.78. The market is nervous ahead of Friday's USDA report. Analysts are predicting the final yield at 44.9bpa and a 3.475 billion bushel crop. That's up on last month's USDA figures of 3.359 with a yield of 44.7bpa.
December corn ended 2 1/2 cents lower at USD4.88 1/2 a bushel; March corn ended 2 1/2 cents lower at USD4.99 1/4 a bushel. Private exporters reported that South Korea bought 116,000 MT of US corn. Ahead of Friday's USDA report the range of trade guesses are 158.2-162.1bpa with an average of 160.1bpa. The USDA said 162.5bpa last month. Lanworth Inc today placed yields at 158.3bpa, with a crop of 12.953 billion bushels, compared with 13.16 billion projected by the USDA last month.
CBOT Dec wheat ended down 5 1/4 cents at USD6.58 1/4 a bushel; KCBT Dec wheat fell 3 1/2 cents to USD6.97 1/2 a bushel; MGEX Dec wheat closed 6 3/4 cents lower at USD7.05 1/4. Warmer and drier than normal temperatures are holding back US winter wheat plantings. Kansas, the main grower of HRW, was 45% planted as of Sunday, behind their five year average by 8 points. It remains too dry in Western Australia, where the nation's wheat belt received less than 50% of normal rainfall in September, say QT Weather.
Nov London wheat closed GBP0.80/tonne higher at GBP155.05/tonne, with Nov Paris wheat down EUR1.50/tonne to EUR204.00/tonne.
Another strong showing from the euro was enough to weigh on Paris wheat after America came in looking a bit "so-so" in afternoon trade. The pound slipped perilously close to falling below 1.14 against the single currency for the first time since May 21st.
The euro also rose to it's best levels against the dollar since late January, whilst the pound was under pressure on ideas that more QE is on the cards. That was sufficient to ensure that London and Paris wheat move in opposite directions for now.
It is worth noting that open interest in Paris wheat continues to decline, falling to 103,000 last night, although that is still more than 5 MMT.
Private firms continue to estimate this season's US corn crop at well below last month's USDA estimate. Chicago-based analysts The Linn Group yesterday pegged this year's corn yield at 158.2 bushels/acre. Lanworth Inc today concurred, placing corn yields at 158.3 bushels/acre, with a crop of 12.953 billion bushels, compared with 13.16 billion projected by the USDA last month.
The USDA themselves are out with a revised estimate on Friday, given last week's shock for corn the trade remains cautious ahead of this report.
Russian winter grain plantings are tailing off as temperatures drop, whilst reports of acute drought in Western Australia paint a bleak picture of wheat prospects there.
November soybeans closed at USD10.71 3/4, up 17 3/4 cents; October soybean meal closed at USD294.90, up USD6.90; October soybean oil closed at 43.47, up 37 points. Private exporters announced the sale of 225,000 MT of soybeans to China for 2010/11 delivery. A rebound from recent heavy losses was probably the underlying theme. Although "twenty percent of US soybeans were gathered in the week ending October 3, according to USDA, pushing the US soybean harvest to 37% complete, one of the fastest on record," say Martell Crop Projections.
December corn closed at USD4.91, up 19 1/2 cents; March Corn closed at USD5.01 3/4, up 18 3/4 cents. The US Grains Council touring China’s corn growing areas are now estimating China’s corn production at 158 MMT, a lot less than the USDA's current estimate. Corn has rebounded sharply from an approach towards the USD4.50 resistance level. The USDA reported yesterday that US corn harvesting advanced just 10% to 37% complete as of Sunday.
December CBOT wheat closed at USD6.63 1/2, up 16 1/4 cents; December KCBT wheat closed at USD7.01, up 18 cents; December MGEX wheat closed at USD7.12, up 16 1/4 cents. Iraq issued a tender for 100,000 MT of wheat. Statistics Canada say that their wheat crop will come in at 22.2 MMT, 17% down on last season. The market seems to have regained some confidence ahead of Friday's USDA report.
EU wheat futures regained some of their recent lost ground today as US grains surged on ideas that the latest price correction had been overdone.
Nov London wheat closed GBP5.20/tonne higher at GBP154.25/tonne, and Nov Paris wheat gained EUR6.25/tonne to EUR205.50/tonne.
Defra pegged the UK wheat harvest for 2010 at 14.8 MMT, 5% up on last year. Barley production will come in at 5.2 MMT, a 23% decrease on last season, they said. Bumper rapeseed yields boosted UK rapeseed production to a record 2.24 MMT, they added.
The results were largely in line with other trade estimates.
Statistics Canada released an updated forecast for their wheat crop yesterday, placing output at 22.2 MMT, 17% down on last season. Rapeseed production was pegged at 10.4 MMT, 12% down on last year. Recent weather has improved harvest progress although it still lags normal.
Russian planting is well behind schedule, and now that freezing temperatures have arrived winter grain sowings may well end up 4-6 million hectares behind last season.
Egypt buying French wheat, in combination with Canadian, over the weekend lends support, although the bulls are cautious of another bear surprise from thE USDA on Friday.
November soybeans ended 3 cents lower at USD10.54; December soymeal ended USD2.40 higher at USD292.30; December soyoil settled 38 points lower at 43.45. The market recovered somewhat from heavy losses late last week as current levels flushed out some buying interest. A public holiday in China this week however means that interest from that quarter could be limited this side of the weekend. A firmer dollar added a bit of pressure.
December corn ended 5 3/4 cents higher at USD4.71 1/2; March corn closed 4 3/4 cents higher at USD4.83. Futures rebounded from recent heavy losses, encouraged by corn's inability to take out the key USD4.50/bushel level. The market is still coming to terms with Friday's surprisingly bearish stocks data from the USDA however, and looks set to remain cautious ahead of more data from the same quarter due this Friday.
CBOT December wheat ended down 7 3/4 cents at USD6.47 1/4; KCBT December wheat fell 6 1/4 cents to USD6.83; December MGEX wheat fell 10 1/4 cents to USD6.95 3/4. Egypt passed on US wheat in a weekend tender, picking up 240,000 MT of French and Canadian wheat instead. Improved weather conditions in the Canadian Prairies this past week saw harvesting advance from 34% complete to 56% done. Russia seems to have moved from summer to winter very quickly with a weekend freeze in the Volga and upper Black Sea wheat growing areas.
EU grains extended declines from Friday with Nov London wheat ending GBP3.20 lower at GBP149.05/tonne and Nov Paris wheat closing down EUR4.00 at EUR199.25/tonne.
That was the first London close sub-GBP150/tonne since late August and the first Paris close beneath EUR200/tonne since the end of July.
Chicago corn closed limit down Friday after the USDA released a "questionable" stocks report pegging US Sept 1st corn inventories at much higher levels than anticipated.
US wheat and soybeans were also sharply lower Friday, which carried through into early trade today, which put further pressure on EU grains.
Egypt bought a mixture of French and Canadian wheat in a weekend tender, passing on US origin, which provided some support for Paris wheat.
Bargain hunting, and an element of rebound in the Chicago markets this afternoon dragged EU grains off their lows by the close.
Paris corn finished the day with losses of around EUR4/tonne, with Paris rapeseed generally EUR2.50-3.50/tonne easier.
The overnight grains were a sea of red again this morning, with beans ending 10-12c lower, wheat down 8-10 and corn down around 9c.
The hangover from last week's USDA report continues, with some of last week's late arriving bulls already looking at losses of around 65c on corn from recent highs.
The USDA WASDE report is due on Friday, what surprises will they throw at the market next? Under these kind of conditions maybe one or two spec longs might fancy liquidating a bit more length.
US weather conditions are beneficial.
"A Sunday morning freeze ended the growing season in the North-Central United States with temperatures in the upper 20s-low 30s F. Corn was virtually all ripe and thus safe from damage Freezing temperatures occurred as far south as Nebraska affecting most of Iowa, Wisconsin, South Dakota and Minnesota," say Martell Crop Projections.
"Nearly ripe corn would actually benefit from a freeze, agronomists say, due to the rapid drying that occurs afterward. The best scenario for fast crop drying is when warm temperatures develop right after a hard freeze. As luck would have it, very warm temperatures are predicted later this week in the freeze affected states. The outlook calls for Upper Midwest highs with abundant sunshine and breezy conditions. Perfect for crop drying and harvesting," they add.
Early calls for this afternoon's CBOT session: beans down 10-12c, wheat and corn 8-10c lower.