09/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.07, down 25 1/2 cents; Mar 12 Soybeans closed at USD11.16 1/2, down 25 3/4 cents; Dec 11 Soybean Meal closed at USD275.50, down USD7.20; Dec 11 Soybean Oil closed at 49.34, down 86 points.
On the week as a whole beans fell 28 3/4 cents, meal USD10.90 and oil 71 points. These were 14-month front month closing lows for beans and 18-month lows for meal.
The USDA raised US ending stocks to 230 million bushels, 35 million up on last month and 16 million more than the trade was expecting. The move came by virtue of a cut in the US crush of 10 million bushels and a reduction in exports of 25 million bushels. World ending stocks were pegged at 64.5 MMT, up 1 MMT on November's estimate.
Corn: Dec 11 Corn closed at USD5.85 1/2, down 4 1/2 cents; Mar 12 Corn closed at USD5.94 1/4, down 6 cents. Corn was a cent lower on the week.
The USDA pegged US ending stocks at 848 million bushels, 5 million up on last month whereas the trade was expecting a fall to 831 million. World ending stocks were raised from 121.6 MMT to 127.2 MMT, which is 5.3 MMT higher than the average trade forecast and 4 MMT above the highest trade estimate.
The EU-27 corn crop was raised 1 MMT to 63.9 MMT, whilst Chinese production was upped 7.25 MMT to a record 191.75 MMT.
Fund money was seen exiting around 9,000 contracts in a combination of both the day and night sessions as specs continue to pull out of corn. Rising open interest in the USD5.00/bu March corn put suggests that an increasing number of players are turning bearish on corn.
Wheat: Dec 11 CBOT Wheat closed at USD5.73 1/2, down 3 1/4 cents; Dec 11 KCBT Wheat closed at USD6.53 3/4, up 3 1/4 cents; Dec 11 MGEX Wheat closed at USD8.43, down 1 3/4 cents.
On the week Chicago was 38 3/4 cents lower, with Kansas down 22 1/4 cents and Minneapolis down 13 cents.
Chicago wheat closed at the lowest for a front month since July 2010 after a slew of bearish numbers from the USDA.
Argentina, Australia and Canada all had their production estimates raised placing world output 5.7 MMT higher than last month to a new record high 689 MMT.
World ending stocks were also raised far more than most of the trade expected, up nearly 6 MMT to 208.5 MMT - the highest in twelve years and less than 2 MMT away from being the highest ever.
Things would have looked even worse for wheat had the USDA not resisted the temptation to raise Russian and Kazakh production estimates in line with those from the FAO.
09/12/11 -- EU grains ended mostly lower with Jan 12 London wheat down GBP1.25/tonne to GBP142.25/tonne and Jan 12 Paris wheat falling EUR0.25/tonne to EUR179.50/tonne.
Once again there wasn't actually a great deal of movement on the week as a whole with London wheat finishing just GBP0.90/tonne lower and Paris wheat down EUR1.75/tonne.
It remains to be seen what the full repercussions are for the future of the EU-27 as we know it, and the UK's part within it, after David Cameron's surprise European treaty veto.
EU and US wheat continue to miss out in a series of high profile wheat tenders, with Brussels granting just 142,000 MT of soft wheat export licences this week. That's the second lowest weekly total of the season so far.
The USDA were out with a raft of data, raising the world wheat production estimate by 5.7 MMT to an all-time high of 689 MMT. That came mostly by virtue of increases of around 1 MMT each for China and Canada, 1.5 MMT for Argentina and 2.3 MMT for Australia.
They left EU-27 wheat production unchanged at 137.5 MMT, with Russian and Kazakh output also left the same as last month at 56 MMT and 21 MMT respectively. It should be noted that they are probably too low on the former and almost certainly too low on the latter. The FAO earlier this week pegged Russian output at 58 MMT and Kazakh production at 24 MMT.
World corn production was also seen 8.5 MMT higher at 867.5 MMT, with the EU-27 accounting for 1 MMT of that increase with a crop here of almost 64 MMT - the second highest on record.
On the international trade front the USDA acknowledged that US wheat exports would not reach their previous target of 26 MMT, revising that aim down to 24.5 MMT.
They left EU-27 wheat exports unchanged at 17 MMT, although we will need to speed up a little from the current rate to reach that goal - we've only exported 6.6 MMT so far and we're almost at the halfway point of 2011/12.
Australia is now seen emerging as the second largest wheat exporter in the world, breaching the 20 MMT mark for the first time in it's history shipping out 21.5 MMT in 2011/12 to get within 3 MMT of America as the world's largest wheat supplier.
World wheat ending stocks were hiked almost 6 MMT to 208.5 MMT, the highest this century and within 2 MMT of the largest in history.
The USDA data all looks rather bearish, especially when taken within context of the European debt problems. Under the circumstances wheat performed rather well to only end with nominal losses on the week. Will we get a delayed reaction to these numbers next week?
09/12/11 -- Brussels issued just 142,000 MT of soft wheat export licences this week, the lowest total in 22 weeks. In fact you have to go all the way back to the very first week of the 2011/12 marketing year back in July to find a more dismal performance.
That means that 23 weeks into the season we have approved 6.63 MMT for export, more than a third down on where we were this time in 2010/11.
Wheat imports during the current season meanwhile are 2.81 MMT, more than 150% up on last year.
09/12/11 -- You will be entirely unsurprised to hear that the 27 members of the EU couldn't all agree on the small print to treaty changes to unify their fiscal policy snugly under one big happy protective blanket.
Our very own super hero David Cameron was the most notable dissenter, along with Hungary, Sweden and the Czech Republic.
Exactly what the way forward is from here seems a little unclear. Sarkozy appears to be determined to press on and form a club within a club, saying that a new deal should be agreed by March, according to the BBC. Another three months in limbo then, will there be anything left to save by then I wonder?
Meanwhile there is also talk of the bailout fund being increased to EUR500 billion, as if that's an achievement. In reality that's only half of what they previously said it was going to be increased to, and nobody seems to be mentioning that more than half of this half a trillion euros has in fact already been allocated. That doesn't leave a lot left over for Italy does it?
So there we have it. As clear as mud.
Whilst all this is going on Moody's have downgraded the top three French banks BNP Paribas, Societe Generale, and Credit Agricole, and given all three a negative outlook.
Next up the USDA...
08/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.32 1/2, up 1 1/2 cents; Mar 12 Soybeans closed at USD11.42 1/4, up 1 1/4 cents; Dec 11 Soybean Meal closed at USD282.70, down USD1.00; Dec 11 Soybean Oil closed at 50.20, down 4 points. Beans posted marginal gains and meal and oil slight losses in thin trdae. Funds bought an estimated 3,000 bean contracts on the day. Weekly export sales for beans were better than expected at 770,400 MT, plus a small amount of the 2012/13 crop. Year to date sales however are still running around a third behind last year's pace. Conab reduced their Brazilian soybean crop estimate to MMT. Tomorrow is USDA report day, the trade is expecting US soybean ending stocks for 2011/12 to come in around 214 million bushels, a slight increase on November's 195 million.
Corn: Dec 11 Corn closed at USD5.90, up 7 3/4 cents; Mar 12 Corn closed at USD6.00 1/4, up 7 1/2 cents. Funds were said to have bought around 7,000 contracts on the day, even so that would put them down as net sellers of something in the region of 10,000 on the month so far. Weekly export sales from the USDA were above expectations at 695,500 MT plus a further 12,500 MT of 2012/13 crop. China was a featured buyer, taking 238,100 MT of the 2011/12 sales. Shipments were a marketing year high of 1,036,600 MT. The trade is expecting the USDA to slightly lower 2011/12 US corn ending stocks from 843 million bushels to around 831 million tomorrow. US demand for corn is strong whilst the last few weeks of the ethanol blenders' tax credit is in place.
Wheat: Dec 11 CBOT Wheat closed at USD5.76 3/4, down 6 1/4 cents; Dec 11 KCBT Wheat closed at USD6.50 1/2, down 1 3/4 cents; Dec 11 MGEX Wheat closed at USD8.44 3/4, down 2 cents. The USDA's weekly export sales came in at 427,200 MT for wheat (in line with expectations of 300-500 TMT). Tomorrows stocks report is forecast to show 2011/12 ending inventories at around 830 million bushels, little changed from last month's 828 million. There would appear to be potential to increase production numbers elsewhere after the FAO came out with a world wheat crop estimate some 11.5 MMT higher than the USDA at a record 694.8 MMT, 6.5 percent up from 2010. Iraq bought 400,000 MT of mixed origin milling wheat, none of which will come from the US.
08/12/11 -- EU grains finished mostly lower with Jan 12 London wheat down GBP1.40/tonne to GBP143.50/tonne and Jan 12 Paris wheat falling EUR0.25/tonne to EUR179.75/tonne.
The market didn't know what to do for the best ahead of a potentially very big day tomorrow. The BoE left interest rates and QE here on hold as anticipated.
The ECB lowered interest rates in the eurozone by a quarter to 1% in a move that was also widely expected. New chief "super" Mario Draghi said that the chance of a eurozone break-up was "quite far-fetched at this stage" - does that suggest that there may be a stage at which it won't be?
He also played down suggestions that the ECB was about to expand its bond purchasing programme, which kept the markets on edge ahead of tomorrow's conclusion to the two day summit in Brussels of EU leaders.
Also tomorrow we have the December WASDE report from the USDA. As a taster for what might come the FAO today pegged the world wheat crop this year at a record 694.8 MMT, 6.5% up on 2010, 10 MMT above the previous record set in 2009 and 11.5 MMT more than the USDA said in November.
In amongst that was an EU-27 wheat crop estimate of 139.2 MMT, up 2.4 MMT on last year and 1.7 MMT higher than the USDA currently estimate. There were also bigger numbers for both Russian and Kazakh wheat production than the USDA currently has factored in, by 2 MMT and 3 MMT respectively.
In other news the French Ministry pegged the soft wheat planted area there up 1% to 5.06 million hectares, the highest since 2008. The total winter grain area is forecast up 1.3% to 7.036 million hectares.
Iraq announced that US and EU origins had missed out after it bought 400,000 MT of Russian, Australian and Canadian wheat in a tender.
08/12/11 -- Amidst a tide of doom and gloom and downwards spiralling grain prices I'm here to hopefully offer a crumb of comfort to disgruntled cereal growers.
This info is given strictly on the basis that you didn't hear it from me though, as it may conflict with the "we've only got one bag left to sell, if you don't buy it now you won't get it" line that you may hear from some fertiliser suppliers.
Urea FOB Yuzhny on the Black Sea is down USD73/tonne in the past three weeks according to my sources. Incidentally also of note is that Jan shipment is a meaty USD45/tonne discount to Dec.
Of course if you've already bought then you're going to be even more disgruntled than if I'd kept that piece of information to myself aren't you? So for those in that position look into my eyes, not around the eyes, into the eyes, one, two, three your under...fertiliser prices have not come down, well done, give yourself a little pat on the back. Now, take all your clothes off and run round like a chicken. One, two, three you're back in the room.
08/12/11 -- The overnight grains closed with beans a couple of cents lower, corn down 2-3 cents and wheat 4-6 cents easier. Crude is half a dollar firmer and ethanol prices are lower.
Reports coming out of the US suggest that ethanol producers margins have been cut sharply this week, even whilst the tax credit still in place.
Weekly ethanol production was a record at 954,000 barrels/day last week, with stocks rising to 17.9 million gallons as producers take one last bite of the tax credit cherry.
The USDA pegged weekly wheat export sales in line with expectations and corn & beans better than anticipated in this afternoon's report. China was a featured buyer of corn as well as taking their usual lion's share of the beans.
Wheat shipments were better than of late, but still nevertheless fell short of the pace needed to hit the USDA's export target for the eighth week in nine.
That adds more weight to the case for them trimming their projected 2011/12 US wheat sales from the existing 26 MMT target.
The FAO came out with a record world wheat crop projection of 694.8 MMT, 10 MMT above the previous all time high set in 2009 and 11.5 MMT more than the USDA said in November.
In amongst that was a Russian crop of 58 MMT (USDA - 56 MMT), a Kazakh crop of 24 MMT (USDA - 21 MMT) and an EU-27 wheat harvest of 139.2 MMT (USDA - 137.5 MMT).
Conab cut their forecast for Brazilian soybean production next year to 71.3 MMT from its November estimate of 73.0 MMT and lower than the record 75.3 MMT produced in the 2011.
The reduction is partly due to a shift to increased corn plantings. They now peg the Brazilian corn crop at 60.32 MMT compared to a range of 58.43 to 59.46 last month and 57.51 MMT in 2010-11.
The market remains nervous ahead of the conclusion to the EU leaders summit and ahead of the USDA's WASDE report tomorrow.
Early calls for this afternoon's CBOT session: corn flat to 2 cents lower, beans down 1-3 cents, wheat down 4-6 cents.
08/12/11 -- The USDA's weekly export sales came in at 427,200 MT for wheat (in line with expectations of 300-500 TMT), 695,500 MT for corn (350-450 TMT) and 770,400 MT for beans (550-650 TMT).
There was also a small amount of new crop corn (12,500 MT) and beans (25,200 MT) sold.
Weekly shipments for wheat were better than in recent weeks at 430,300 MT, but even so that is still below the level required to meet the USDA's target for the current season. That's the eight time in the the last nine weeks that this has been the case.
Corn sales included 238,100 MT to China, who were also responsible once again for the vast majority of soybean sales (551,100 MT).
08/12/11 -- London wheat has been stuck in a narrow sideways range of GBP140-145/tonne for three weeks now, does that suggest a bottom is forming or are we merely having a pause for breath before continuing with a downward trend that's been in place since April?
For me it's the latter. What will it take to break it out of this range and send me rummaging under the desk for the box with the threes in it? Friday's USDA report might do it.
The FAO have just announced that they see global wheat production in 2011 at a record 694.8 MMT, 6.5 percent up from 2010, 10 MMT above the previous all time high set in 2009 and 11.5 MMT more than the USDA said last month.
"Although prospects at the outset of the season did not point to such a strong growth, the record harvest materialized largely thanks to the bumper crops in the major producing countries in Asia and the sharp recovery in some CIS countries after drought last year," the FAO say.
That gives the USDA plenty of potential to raise it's own world production estimate and increase 2011/12 ending stocks even further from the existing ten year high of 202.6 MMT.
Meanwhile prospects for 2012 are "generally favourable" and in the US "early indications point to a considerable increase in the wheat plantings for harvest in 2012," the FAO add.
"Plantings may also increase in the CIS countries where, weather permitting, farmers would be keen to continue benefiting from attractive prices and strong demand in the region," they say.
The fundamentals appear to be stacking up against wheat, so what about outside influences? We'll know more about them tomorrow when the much-lauded EU leaders summit in Brussels concludes.
Personally I'm bemused by the market's seeming optimism that some kind of cure-all master plan will emerge from this.
The Germans are now also hinting along these lines. Cameron is now saying he won't sign anything that's against British interests. Merkel is standing firm. Sarkozy is trying to look tough in his platform shoes, conscious that he has an election coming soon. And then there's all the rest of the crew with their own personal agendas. In short it's a bit like trying to organise 27 tomcats.
S&P's have got fed up and now put the entire 27 nation bloc en-masse on watch for a possible rating downgrade, having already placed 15 of the 17 individual nations (including France and Germany) that use the euro on watch earlier in the week. Ironically the only nation that now isn't on watch with S&P's is Greece who have already been placed in room 101.
UK farmers don't want to sell at these levels that's for sure, but that's about the only weapon that they've got in their armoury right now. Unfortunately Russian, Ukraine, Eastern European, Australian and Argentine farmers ARE prepared to trade at these levels. Kazakh farmers dream of trading at these levels. Even India will be a net exporter of wheat this year, and they'll be harvesting what's anticipated to be another bumper crop in little over three months from now.
Doesn't look too bullish does it? Throw in a possible eurozone meltdown and GBP140/tonne would look like mega bucks.
07/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.31, up 1 1/2 cents; Mar 12 Soybeans closed at USD11.41, up 1 1/2 cents; Dec 11 Soybean Meal closed at USD283.70, up USD1.50; Dec 11 Soybean Oil closed at 50.24, up 26 points. There was a lack of convincing direction in the market today. A drier forecast for South America is friendly for beans, but a resurgence of pessimism over European debt isn't. The USDA is expected to raise US ending stocks on Friday, but only slightly. Trade estimates for tomorrow's weekly export sales report from the USDA range from 550 to 650 MT.
Corn: Dec 11 Corn closed at USD5.82 1/4, down 3 cents; Mar 12 Corn closed at USD5.92 3/4, down 3 3/4 cents. Funds sold an estimated 5,000 contracts on the day, further decreasing their long. Ethanol prices are falling as US stocks rise due to strong production ahead of the removal of the blenders' tax credit at the turn of the year. Trade estimates for tomorrow's weekly export sales range from 350 to 450 thousand MT. The market remains nervous heading into the European leaders summit. The USDA is expected to trim US ending stocks for 2011/12 on Friday to around 831 million bushels.
Wheat: Dec 11 CBOT Wheat closed at USD5.83, down 15 3/4 cents; Dec 11 KCBT Wheat closed at USD6.52 1/4, down 14 3/4 cents; Dec 11 MGEX Wheat closed at USD8.46 3/4, down 7 1/2 cents. Friday's USDA report isn't expected to be too significant for wheat. World ending stocks are seen marginally higher than last month, although this could be one area where the USDA spring a surprise given the potential for improved production in Australia and decreased exports from the US. Weekly export sales tomorrow are expected to be in the region of 300 to 500 thousand MT. Shipments will be of interest as they have lagged recently.
07/12/11 -- EU grains ended mixed with Jan 12 London wheat up GBP1.90/tonne to GBP144.90/tonne, Jan 12 Paris wheat was EUR0.25/tonne higher to EUR180.00/tonne.
Some London wheat months were slightly lower as were many Paris positions. Exactly why front month Jan 12 London wheat managed to post enough gains to make it a GBP0.85/tonne premium to further forward March is difficult to explain.
It was a low volume day as the market sits and waits, or more like hopes, for some direction to come on Friday. They may be disappointed if the comments of one German official are to go by, he said that more time may be needed to finalise plans to save the eurozone than Friday's self-imposed deadline affords.
The pound rose above 1.17 against the euro to close to its highest levels since February.
Also on Friday we have the latest missive from the USDA detailing world production and stocks numbers. Trade opinion is that they will raise slightly their estimate for world wheat ending stocks for the 2011/12 season from what they already say is the highest level in a decade.
Tomorrow we will get the figures on the latest weekly EU export licences and also the numbers on USDA weekly export sales and shipments. The latter will be particularly of interest for wheat as shipments have slumped quite alarmingly of late.
US corn sales are also on the decline. If domestic demand over there also falls away sharply once the ethanol blenders' tax credit gets removed in a couple of weeks then things could get interesting.
07/12/11 -- The overnight markets ended mixed with wheat down 3-6 cents, corn down a fraction and beans up 3-4 cents. Crude oil is a little lower too.
A German official's comments that more time may be needed to iron out EU treaty changes and a plan to resolve the ongoing European debt crisis put the euro under pressure. The markets had, foolishly perhaps, been pinning their hopes on a blinding flash of inspiration to come out of this week's EU leaders' summit on Thursday and Friday.
Apart from that fresh news is thin on the ground ahead of the USDA's crop production and stocks numbers also on Friday.
US wheat remains pretty uncompetitive on the export stage, and tomorrow we will likely have another set of below par weekly shipment numbers to digest from the USDA.
Corn sales have also dipped lately in the face of fierce competition from Ukraine and Argentina and also feed wheat out of the Black Sea and Australia.
Brazil is meanwhile forecasting a record soybean crop with Argentina expecting a second highest crop of their own.
Late calls for this afternoon's CBOT session@ beans up 2-4 cents, coen down 1-2 cents, wheat down 4-6 cents.
07/12/11 -- Not much to get ones teeth into this morning as the trade waits for enlightenment on Friday with the conclusion of the EU leaders' summit and the issuing of Decembers WASDE and stocks numbers from the USDA.
The trade is expecting 2011/12 US soybean stocks to rise from the previously predicted 195 million bushels to 214 million this time round. Corn stocks are seen falling from 843 million to 831 million, with wheat inventories pretty flat at 830 million from 828 million.
On a global level soybean stocks are seen falling slightly from 63.56 MMT to 62.98 MMT, with corn and wheat stocks both up a little from 121.57 MMT to 121.87 MMT and from 202.6 MMT to 203.03 MMT respectively.
It will be interesting to see what production numbers they come out with for southern hemisphere crops like Australian wheat, and Argy & Brazilian corn and beans.
For UK and US wheat growers reading this who are unhappy with falling prices, spare a thought for your compatriots in landlocked Kazakhstan. They've just had a record wheat harvest but find themselves struggling to reach export homes far away as Russia and Ukraine busy themselves with shipping their own bumper harvests.
Stores, elevators, trucks and railcars are rammed with wheat with nowhere to take it. What price can a Kazakh farmer therefore expect to get for his ex farm wheat right now? Little more than EUR50/tonne is the answer, say Agritel. Ouch.
Elsewhere, as well as upping their wheat production estimate by more than 2 MMT from their last report in October StatsCanada also increased their 2011/12 rapeseed output forecast by more than a million tonnes to 14.16 MMT, 11% up on last season.
As the storm clouds gather over Europe, China has warned that export data due on Saturday will show a sharp slowdown in growth as demand from it's leading export home slumps.
Meanwhile, presumably keen not to be seen as the big wet that he undoubtedly is, our very own David Cameron has said that he'll be signing "bugger all" on Friday if France and Germany's proposals damage British interests. That's a bit like Ron Weasley offering Voldemort a fight behind the bike sheds.
06/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.29 1/2, up 3 1/4 cents; Mar 12 Soybeans closed at USD11.39 1/2, up 3 cents; Dec 11 Soybean Meal closed at USD282.20, up USD1.10; Dec 11 Soybean Oil closed at 49.98, down 9 points. As with European grains, the US markets remain in a state of flux, awaiting news from this side of the pond from the EU leaders' summit at the end of the week to determine direction. We also have the USDA out on Friday with their supply & demand numbers. US ending stocks are seen rising in 2011/12 to 214 million bushels from 195 million last month. Parts of Brazil are dry, but overall another large, and potentially record large, crop is in the pipeline.
Corn: Dec 11 Corn closed at USD5.85 1/4, up 5 cents; Mar 12 Corn closed at USD5.96 1/2, up 5 1/2 cents. The corn market is pondering the demand side of the equation as we head into 2012. Australia is harvesting what is expected to be a record wheat crop, much of which will only be feed grade, of which they already still have an abundance left over from last season. That will compete with US corn sales into Asia next year. Argentina are expecting a record corn crop, and are also flexing their export muscles. Meanwhile Japan is also seen buying record volumes from "Europe", which in this case probably means Ukraine who have also just brought in a record corn crop and who forecast plantings up 12% for 2012.
Wheat: Dec 11 CBOT Wheat closed unchanged at USD5.98 3/4; Dec 11 KCBT Wheat closed at USD6.67, up 1/2 cent; Dec 11 MGEX Wheat closed at USD8.54 1/4, up 6 cents. US wheat continues to miss export orders with Egypt buing 240,000 MT of Argentine/Russian wheat. Once again US wheat wasn't even offered. StatsCanada upped their wheat production estimate in one of America's biggest export rivals to 25.3 MMT, more than a million tonnes higher than the USDA and two million up on 2010/11. the trade was anticipating a number around 24.5 MMT. ABARES pegged Australia's 2011/12 wheat crop at an all-time record 28.3 MMT, which is 2.3 MMT more than the USDA. There isn't much change anticipated by the trade in Friday's USDA report as far as wheat is concerned, but I wonder if we may see world ending stocks for 2011/12 raised again from last month's 202.6 MMT.
06/12/11 -- EU grains ended narrowly mixed with Jan 12 London wheat unchanged at GBP143.00/tonne and Jan 12 Paris wheat also unchanged at EUR179.75/tonne.
The market is still waiting for European leaders to put some flesh on the bones of their plans to resolve the debt crisis, and seems to be prepared to give them the benefit of the doubt and wait to give them one last shot at them pulling a rabbit out of the hat on Friday.
Hence another low volume day with very little price movement. Whilst we are treading water waiting for news from these outside markets, the grain market fundamentals are starting to stack up against a push higher though.
Australia's ABARES today said that this season's wheat crop would be a record 28.3 MMT. September/October rains may have damaged quality in some cases, but they've certainly helped yields it would appear. Their estimate is 2.3 MMT more than the USDA projected last month.
There's talk now of record Australian wheat exports of 21.6 MMT in 2011/12 from a nation still carrying a huge inventory of leftover grain from last season. That would see them stand above Russia, the EU-27 and Canada as second only to the US in terms of global wheat sales.
StatsCanada were also out with revised production estimates today, pegging the wheat crop there at 25.26 MMT, more than a million tonnes higher than their previous forecast and that of the USDA, and more than two million up on 2010/11.
Egypt bought four cargoes of wheat on the export market today, with Russia only getting the nod for just the one and Argentina sharpening the pencil to pick up the vote for the other three despite an enormous freight disadvantage.
The Russian wheat was priced at around USD244.50 FOB, with the winning Argy wheat coming in at around USD220-221/tonne FOB - the equivalent of less than the price of UK feed wheat at the moment.
This is the first time Egypt has bought wheat from outside the Black Sea region this season. France yesterday forecast that it's sales to the world's largest wheat buyer would slump 92% in 2011/12.
The USDA are out with revised world and US production and stocks data on Friday, increases in both are what the market is anticipating.
05/12/11 -- It's all looking a bit shaky this morning after S&P's put fifteen of the seventeen countries that use the euro on watch for a credit downgrade. The "lucky" two being Cyprus who are already on watch and Greece who are already rated council house scum.
Merkel and Sarkozy say that they've agreed on proposals to change the governance of the eurozone. No worries there then, only another 15/17 to convince and they're home. And even if they can be convinced how long is it going to take, and who may have already fallen by then?
Widespread rumours suggest that there are all sorts of Plan B, C & D activities going on behind the scenes.
So the euro is back out of favour again this morning, and the overnight Globex market sees Dec corn 10 1/4 cents down to USD5.70/bushel, the lowest for a front month in almost a year.
Wheat is around 8-9 cents lower after ABARES announced that Australia's 2011/12 wheat crop will be an all-time record 28.3 MMT. Logistics is now the only barrier to Australia becoming the second largest wheat exporter in the world next year. Around a quarter of this season's crop could only be feed wheat, which could put a bit of pressure on US corn demand in 2012.
Japan is said to have bought 700,000 MT of EU corn (a very significant non-US volume by it's standards) for shipment in the first quarter of 2012 at substantial discounts to US origin material.
The potential failure of as much as 20% of Ukraine's winter crops means that spring plantings will be sharply higher in 2012, led by corn where the area sown is expected to increase by around 12% to more than 4 million hectares.
05/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.26 1/4, down 9 1/2 cents; Mar 12 Soybeans closed at USD11.36 1/2, down 9 3/4 cents; Dec 11 Soybean Meal closed at USD281.10, down USD5.30; Dec 11 Soybean Oil closed at 50.07, up 2 points. Weekly export inspections of 31.649 million bushels for beans were poor and continue to lag last season's pace by a considerable margin. Celeres increased their estimate for Brazilian output to a record 75.6 MMT, 1.6 MMT more than the USDA project. The USDA issue revised December WASDE numbers on Friday. Funds were said to have sold around 3,000 soybean contracts on the day.
Corn: Dec 11 Corn closed at USD5.80 1/4, down 6 1/4 cents; Mar 12 Corn closed at USD5.91, down 4 1/4 cents. European debt woes continue to weigh on the market, with S&P warning of possible downgrades for an assortment of EU countries in the months ahead. Funds were said to have sold around 5,000 contracts on the day. Weekly export inspections came in at 38.546 million bushels with 9.3 million of that going to China. Informa Economics appear to concur with last week's bumper Chinese corn production estimate, raising their own figure by 5.5 MMT to a record 190 MMT. They also increased their Brazilian estimate by 1 MMT to a record 63 MMT.
Wheat: Dec 11 CBOT Wheat closed at USD5.98 3/4, down 13 1/2 cents; Dec 11 KCBT Wheat closed at USD6.66 1/2, down 9 1/2 cents; Dec 11 MGEX Wheat closed at USD8.48 1/4, down 7 3/4 cents. Weekly export inspections of 14.497 million bushels bring the year to date total to 533.5 million, around 42 million behind last year. Saudi Arabia bought 330,000 MT of wheat of various origins over the weekend, spreading the business around to include EU, US, Canadian, Australian and Argentine production. Egypt issued a tender after the close, US wheat is unlikely to feature in that one though. Funds added an estimated 3,000 contracts to their hefty Chicago wheat short on the day.
05/12/11 -- EU grains finished mostly lower with Jan 12 London wheat down GBP0.15/tonne to GBP143.00/tonne and Jan 12 Paris wheat falling EUR1.50/tonne to EUR179.75/tonne.
All eyes are on Europe this week, as Merkel and Sarkozy meet in Paris today ahead of an EU summit on Friday. Following today's meeting the two main protagonists issued a joint statement saying that treaty changes to prevent a repetition of the Eurozone crisis "should" be in place by March.
Ideally, they'd like all EU-27 members to vote these changes through.
At the very least though those changes, which include outside checks on budget deficits and sanctions against those that breech them, will need to be ratified by all 17 member states that use the euro. How easy (and how long) to obtain that will prove to be is anybody's guess.
Meanwhile these alterations don't appear to contain anything to address the current debt problems.
Whilst all this is going on the grain markets are left in limbo, trading in a narrow range.
France Export Cereales say that the country is unlikely to export more than 200,000 MT of wheat to Egypt in the current marketing year - just 8% of what they sold the world's leading wheat buyer in 2010/11.
Vietnam is said to be buying Australian feed wheat at USD255/tonne including freight, around USD20-25/tonne cheaper than it was a month ago, from a nation awash with low grade wheat for the second year in a row.
Japan is buying Argentine corn and sorghum as Asian buyers turn away from more expensive US corn.
Ukraine's Ag Ministry has lowered it grain export forecast for the current season from 26-27 MMT to 23-24 MMT. Corn will constitute around half of that, according to the USDA. Some private analysts peg corn's share of the export market significantly higher than that.
05/12/11 -- Credit is due to James Nott for getting a dull Monday off to a bright start by emailing me this image this morning.
We've just had our first few flurries of snow here in North Yorkshire this morning, and the wind certainly has a bit of a chilling bite to it all of a sudden. Let's hope that's enough to get the last of the cows indoors! Whether it means we will see a bit of a pick-up in feed demand remains to be seen.
It's another big week for the euro with Sarkozy and Merkel meeting in Paris today ahead of the Dec 9th deadline that they gave us when the details of their cunning plan are to be revealed.
Hmmmmm, I remain unconvinced. I wonder what the markets would make of a "we need more time to finalise the cunningness of our secret plan" announcement? Whatever treaty changes they want to make will presumably need ratifying by at least the 17 countries that use the euro if not the entire 27 member states? And how long is that going to take?
Meanwhile, the Italian Welfare Minister apparently broke down in tears on national TV yesterday when outlining the severity of the pension reforms she is being forced to introduce to tackle the budget deficit.
Still, I suppose a politician in tears on the telly makes a change from seeing them kissing babies heads or getting eggs (or punches) thrown at them.
02/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.35 3/4, up 7 3/4 cents; Mar 12 Soybeans closed at USD11.46 1/4, up 7 3/4 cents; Dec 11 Soybean Meal closed at USD286.40, down USD0.80; Dec 11 Soybean Oil closed at 50.05, up 53 points. Beans ended the week 29 1/4 cents firmer, with meal up USD3.70 and oil rising 182 points. Crude oil was higher closing above USD100/barrel for the first time on the weekly chart in six months. Even so as we approach the end of 2011 front month soybeans are more than USD2.50/bu lower than where they ended 2010. South American weather has been fairly non-threatening so far although it's early days yet.
Corn: Dec 11 Corn closed at USD5.86 1/2, down 8 1/4 cents; Mar 12 Corn closed at USD5.95 1/4, down 6 1/4 cents. Corn was 4 cents higher on the week. Funds sold an estimated 7,000 contracts on the day. The latest commitment of traders data shows them continuing to reduce their net long position which now stands at the lowest in almost 18 months. China's National Bureau of Statistics pegs this year's corn crop there at 191.75 MMT, 8.2% up on last year. That's part of a total grain harvest of over 571 MMT, they say - the eight straight year of increases. Normally the market would take those numbers with a pinch of salt, they haven't however been as active in the corn market of late as their "insatiable" appetite would seemingly suggest with prices below USD6/bushel.
Wheat: Dec 11 CBOT Wheat closed at USD6.12 1/4, up 10 1/4 cents; Dec 11 KCBT Wheat closed at USD6.76, up 13 cents; Dec 11 MGEX Wheat closed at USD8.56, up 1 1/2 cents. On the week as a whole Chicago wheat was up 37 3/4 cents, with Kansas rising 32 1/2 cents and Minneapolis up 28 3/4 cents. Fund money reduced their net short position on Chicago wheat for the week through to Tuesday, but still hold a significant short. Higher prices will do little to improve US exports which have dropped off sharply in the second quarter of the current marketing year. Australia's wheat crop continues to take a quality hit from widespread harvest rains. China's wheat crop came in at just under 118 MMT this year, according to their National Bureau of Statistics.
02/12/11 -- EU grains ended mostly higher walthough Jan 12 London wheat was down GBP0.90/tonne to GBP143.15/tonne, Jan 12 Paris wheat was EUR2.00/tonne higher to EUR181.25/tonne.
There wasn't much change on the week as a whole with Jan 12 London wheat up GBP0.90/tonne and Jan 12 Paris wheat up a marginal EUR0.25/tonne.
The market seems to be treading water looking for direction, the week ahead may provide some with EU leaders supposedly set to put some flesh on the bones of their promised plan to save the world by December 9th. Ahead of that Merkel and Sarkozy meet on Monday.
Whilst this week's coordinated central bank action may improve liquidity it won't do anything to help solvency, and that is what this crisis is really all about.
There are some concerns starting to form over crop prospects in Ukraine, where dryness means that almost a quarter of autumn-planted grains still haven't emerged. "Ukraine rainfall has been less than 40% of normal in the 90 days ending mid November," according to Martell Crop Projections.
In contrast, analysts in Russia are indicating the potential for a bumper 100 MMT grain crop in 2012, which would be the second highest harvest in the post-Soviet era.
China's National Bureau of Statistics says that this season's corn harvest there is a huge 191.75 MMT, far higher than other estimates in the market (the USDA say 185.4 MMT). Their activity, or otherwise, on imports over the coming months will perhaps offer a few clues as to how accurate that number is likely to be.