09/11/12 -- Soycomplex: Nov 12 Soybeans closed at USD14.52, down 47 1/4 cents; Jan 13 Soybeans closed at USD14.51 1/4, down 44 1/2 cents; Dec 12 Soybean Meal closed at USD449.70, down USD13.20; Dec 12 Soybean Oil closed at 47.70, down 100 points. On the week that put Nov 12 beans 75 cents lower, with Dec 12 meal down USD26.20 and Dec 12 oil down 156 points. Funds sold an estimated 8,000 soybean contracts on the day as the market collapsed following a bearish USDA report. The USDA raised US soybean yields from 37.8 bu/acre last month to 39.3 bu/acre this time round. That added 111 million bushels to the US soybean crop this month, giving a 2012 harvest of 2.971 billion bushels versus 2.86 billion in October, and somewhat better than the 2.892 billion that the trade was expecting. That represents a fall of "only" 4% on last season's output. Ending stocks were increased 10 million to 140 million bushels, although that's still a very tight number. US exports were raised again from 34.4 MMT to 36.6 MMT, reflecting the recent frenetic pace of US shipments. China's import requirements were increased 2 MMT to 63 MMT. The USDA didn't make any alterations to South American production for 2012/13, leaving Brazil at 81 MMT and Argentina at 55 MMT. World ending stocks were increased 2.5 MMT to 60 MMT, which is 4 MMT more than last season. The bare numbers don't hide the fact that all of this is totally dependent on Mother Nature not throwing another spanner into the South American works this year. Neither does it hide the fact that none of these new stocks are available outside of the US for a good while yet. The Rosario Grains Exchange said Argentina has planted only 10.8% of their soybean crop versus 25% a year ago.
Corn: Dec 12 Corn closed at USD7.38 3/4, down 2 1/2 cents; Mar 13 Corn closed at USD7.42, down 1 1/4 cents. For the week that puts corn virtually unchanged. Fund selling was estimated at 4,000 corn contracts on the day. The USDA raised US corn production slightly from 10.706 billion bushels last month to 10.725 billion this time round, contrary to a trade expectation of a reduction to 10.629 billion. Yields were increased from 122 bu/acre to 122.3 bu/acre. Harvested acres were left unchanged, although many feel that these will have to be reduced somewhere down the line that probably won't come until January. US corn exports and ethanol usage were left unchanged. The USDA are for now ignoring the possibility of lower corn production in South America in 2013, leaving their Brazilian and Argentine estimates unchanged at 70 MMT and 28 MMT respectively. Brazil's corn exports were raised 2 MMT to 21 MMT. Europe's corn crop was cut 1 MMT to 54.65 MMT and Mexico's was reduced 800 TMT to 20.7 MMT. In separate news, Japan was said to have bought 500,000 MT of US corn overnight due to shipping delays on material coming out of Brazil. There's talk of 900 TMT of Brazilian corn sold to Japan for Jul/Sep shipment getting carried over into the Oct/Dec period. The Rosario Grains Exchange said Argentina has planted 44% of its corn crop versus 58% a year ago. They cut their production forecast to 26-27 MMT from their previous estimate of 28.0 MMT.
Wheat: Dec 12 CBOT Wheat closed at USD8.86 1/2, down 16 cents; Dec 12 KCBT Wheat closed at USD9.22 1/4, up 16 cents; Dec 12 MGEX Wheat closed at USD9.50 1/2, down 8 1/4 cents. For the week that places Chicago wheat 22 cents higher, with Kansas up 13 1/2 cents and Minneapolis 10 1/4 cents higher. Fund selling in Chicago wheat was estimated at 6,000 contracts on the day. The USDA reflected the recent world wheat trade by cutting their forecast for US exports by 1 MMT to 30.5 MMT, whilst Ukraine, Russia and Europe all saw their foreign sales increase by 1-2 MMT. India is also seen grabbing a larger market share of world wheat exports in 2012/13, whilst Australia's is forecast to contract. US ending stocks were increased 50 million bushels from last month to 754 million. World wheat ending stocks, which were expected to fall from 173 MMT to 171.5 MMT, were in fact increased to 174.2 MMT. Wheat production in Russia, Ukraine and Kazakhstan was left unchanged, and Europe's output was even raised slightly from last month thanks to increased output in Poland. The Ukrainian Grain Association estimated November grain exports at 3.0 MMT versus 2.9 MMT in October. They've already exported a record volume of grains in the Jul/Oct period. ABS said Australia exported a record 23.4 MMT of wheat in 2011/12.
09/11/12 -- EU wheat closed mixed, with Nov 12 London wheat down GBP0.50/tonne to GBP220.75/tonne, May 13 up GBP0.50/tonne to GBP227.00/tonne and new crop Nov 13 down GBP0.55/tonne to GBP194.20/tonne.
For the week overall Nov 12 London wheat posted impressive gains of GBP8.75/tonne, with May 13 up GBP8.65/tonne and Nov 13 rising GBP5.70/tonne.
Nov 12 Paris wheat closed the day EUR2.25/tonne former at EUR280.50/tonne for a net gain of EUR11.25/tonne on the week.
The USDA cut the world wheat crop from 653 MMT to 651.4 MMT but also trimmed consumption by a bit more than that - down almost 3 MMT putting 2012/13 ending stocks 1.2 MMT higher than last month at 174.2 MMT. At the end of the day however, world wheat consumption is seen outstripping production by 24 MMT this season.
In amongst all their data was a reduction in their estimate for the UK wheat crop - down 0.5 MMT to 13.5 MMT. Production in France (38.24 MMT) and Germany (22.43 MMT) was also trimmed somewhat, although that was more than compensated for by a 0.75 MMT increase in Poland making the overall EU-27 wheat crop 0.35 MMT higher than stated last month at 131.82 MMT.
Production in China was left unchanged at 118 MMT, despite their attaché in Beijing estimating production this year at only 108.0 MMT earlier this week, although China's import requirement was raised 1 MMT to 2.5 MMT.
Argentina's wheat crop was left unchanged at 11.5 MMT, around 1.0-1.5 MMT above other trade estimates. The Rosario Grains Exchange said 12% of Argentina’s wheat crop has been harvested and estimated production there at only 10.12 MMT.
Australia's wheat crop was cut 2 MMT to 21 MMT, which is in line with the average trade guess although some are forecasting a sub-20 MMT crop Down Under this year.
In world wheat trade, Russia's exports were raised 1 MMT to 10 MMT, with Ukraine's upped 2 MMT to 6 MMT. Europe's exports are seen 1 MMT higher this month at 17.5 MMT, whilst India's were raised a similar amount to 7 MMT. Australia's export potential was cut 1.5 MMT to 19 MMT and America's trimmed 1 MMT to 30.5 MMT.
Other significant data saw Europe's corn crop cut 1 MMT to 54.65 MMT, whilst corn consumption here was raised 1.5 MMT to 63 MMT.
Now we have the USDA report out of the way the trade may start to refocus on European wheat planting progress, or rather the lack of it, next week as attention already turns to production potential for the 2013 harvest. There's already talk of much more spring barley getting planted next year as some growers abandon hope of ever getting their planned winter wheat in.
America and Russia also have issues with their poorly established wheat heading into winter dormancy, although lack of moisture rather than too much of it is their problem.
08/11/12 -- Soycomplex: Nov 12 Soybeans closed at USD14.99 1/4, down 9 1/2 cents; Jan 13 Soybeans closed at USD14.95 3/4, down 11 1/4 cents; Dec 12 Soybean Meal closed at USD462.90, down USD6.60; Dec 12 Soybean Oil closed at 48.77, up 15 points. Weekly export sales for soybeans fell short of expectations of 400-700 TMT at only 186,400 MT for 2012/13 along with 5,000 MT for 2013/14 delivery. A large Chinese cancellation of 274,800 MT was partly responsible. Weekly shipments on the other hand were the highest in two year at 1.75 MMT. This was the sixth week of shipments in excess of 1 MMT, with 1.3 MMT of this week's total heading for China. With commitments for 2012/13 already running at 75% of the USDA's target, it will be interesting to see if they raise that bar a bit higher tomorrow. China only sold 65,495 MT of the 400 TMT of government-owned soybeans offered at auction today. Brazil's CONAB estimated the 2012/13 soybean crop there at 80.09–82.99 MMT versus previous estimate of 80.0-82.8 MMT. MDA CropCast place the crop there at 80.33 MMT. They also placed the US soybean crop at 2.67 billion bushels against 2.86 billion from the USDA last month, tomorrow's average trade guess is a little higher at 2.892 billion.
Corn: Dec 12 Corn closed at USD7.41 1/4, down 3 cents; Mar 13 Corn closed at USD7.43 1/4, down 2 3/4 cents. Weekly export sales were poor again at 157,600 MT for 2012/13 and 51,800 MT for 2013/14. The USDA did also report the sale of 152,400 MT to Japan under the daily reporting system. MDA CropCast placed the US corn crop at 10.293 billion bushels versus 10.7 billion from the USDA in October and the average trade guess for tomorrow of 10.629 billion. CONAB estimated Brazil's 2012/13 corn crop at 71.55–72.85 MMT versus their previous estimate of 71.9-73.2 MMT. MDA CropCast say 70.4 MMT, versus 70 MMT from the USDA in October. The former place the Argentine corn crop at 26.28 MMT against 28 MMT from the USDA. The trade estimates US 2012/13 corn ending stocks at 635 million bushels, from within a range of estimates of 487–750 million and versus the October report estimate of 619 million and 988 million in 2011/12.
Wheat: Dec 12 CBOT Wheat closed at USD9.02 1/2, up 8 1/2 cents; Dec 12 KCBT Wheat closed at USD9.37, up 5 1/2 cents; Dec 12 MGEX Wheat closed at USD9.58 3/4, down 1 cent. Weekly export sales for wheat came in at 209,400 MT of old crop and 11,500 MT of new crop against trade ideas of 200-400 TMT. A Reuters survey estimates the Australian wheat crop at 20.47 MMT compared to the ABARES estimate of 22.5 MMT and the 2011/12 crop of 29.5 MMT. Exports are seen falling sharply to 16.85 MMT, down 25% from ABARE’s estimate and 27% below exports of 23.04 MMT in 2011/12. Wheat ending stocks in 2012/13 will more than halve to 3.47 MMT vs. 7.2 MMT in 2011/12. The FAO pegged the world wheat crop at 661 MMT this year, 5.5% down on a year ago. CONAB cut their Brazilian wheat production estimate to 4.46 MMT versus a previous estimate of 5.0 MMT and compared to 5.7 MMT a year ago. The Russian Ag Minister revised his grain export forecast upwards from 10-12 MMT to "in excess of 12 MMT" according to the InterFax News Agency. They've already shipped in excess of 10 MMT of that total.
Nov 12 London wheat ended GBP0.50/tonne higher at GBP221.25/tonne, with benchmark May 13 finally finishing only GBP0.15/tonne firmer at GBP226.50/tonne, having earlier hit a record GBP229.00/tonne. New crop Nov 13 also pushed on towards the GBP200/tonne mark, ending the day GBP1.25/tonne firmer at GBP194.75/tonne.
Across the Channel, Nov 12 Paris wheat ended EUR2.25/tonne higher at EUR278.25/tonne and Nov 13 also posted net gains of EUR2.25/tonne to end the day at EUR248.25/tonne.
FranceAgriMer trimmed their forecast for 2012/13 soft wheat production there from 36.0 MMT last month to 35.8 MMT, with yields cut from 7.39 MT/ha to 7.35 MT/ha.
A Bloomberg report suggested that 20-25% of Russian winter grains are already at risk of being lost, having so far failed to emerge ahead of dormancy due to the ongoing drought that slashed this season’s cereal production. The worst affected areas are the in Krasnodar, Rostov and Stavropol region, normally Russia’s top producing districts.
Meanwhile US wheat too is at risk, entering winter dormancy poorly established, whilst plantings in the UK, France, Germany and Poland are also late and much of what has been sown is in far from ideal condition.
MDA CropCast left their Argentine and Australian wheat production estimates unchanged from last week at 10.64 MMT and 20.62 MMT respectively. Both are considerably lower than the USDA’s figures of 11.5 MMT and 23.0 MMT which are up for revision on tomorrow.
A Reuters survey of ten analysts placed the Australian wheat crop slightly lower at 20.47 MMT, over 30% down on last year.
CONAB cut their forecast for Brazil's wheat production this year to just 4.46 MMT versus a previous estimate of 5.0 MMT and 23% down on last year.
The USDA is expected to trim 2012/13 world wheat ending stocks from 173 MMT to around 171 MMT in tomorrow's report.
Both the BOE and the ECB left interest rates unchanged at home and in the eurozone.
07/11/12 -- Soycomplex:
Nov 12 Soybeans closed at USD15.08 3/4, down 8 cents; Jan 13 Soybeans closed at USD15.07, down 8 1/2 cents; Dec 12 Soybean Meal closed at USD469.500, down USD3.20; Dec 12 Soybean Oil closed at 48.62, down 6 points. Fund selling in beans was estimated at 3,000 soybean contracts on the day ahead of what the trade is expecting, at least for beans, to be a mildly bearish WASDE report on Friday. Ahead of that we have the weekly export sales report tomorrow, with the trade expecting soybean sales of 400-700 TMT versus 760 TMT last week. China will also auction 400 TMT of soybeans from reserves tomorrow. China’s Sinograin said that China’s bean imports will grow by 3-4 MMT a year for the next 5 years. They also said that the country had imported 44.3 MMT of beans between January 1st – September 30th, up 18% from a year ago. The USDA are expected to reaffirm record South American production of soybeans in 2013 on Friday. Last month's report pegged Brazilian output of 81 MMT, Argentina at 55 MMT and Paraguay at 8.1 MMT. Given the very strong pace of US soybean exports since the start of the new season it will be interesting to see if the USDA raise their forecast on export potential for 2012/13. Last month this was increased by a hefty 5.7 MMT. CONAB come out tomorrow with their latest Brazilian crop estimates. Last month they placed soybean production at 80.1-82.8 MMT.
Corn: Dec 12 Corn closed at USD7.44 1/4, up 3 1/4 cents; Mar 13 Corn closed at USD7.46, up 3 cents. Funds were said to have been net buyers of around 6,000 corn contracts on the day. US ethanol production was up marginally on the week to 827,000 barrels/day - the highest in seven weeks. Imports however are also up, and more US refineries are closing. A Bloomberg survey says that US producers are losing about 36 cents on each gallon of ethanol they produce versus a 24 cent profit a year ago. The trade will be looking to see if the USDA make any adjustments to demand from the ethanol sector on Friday. They will also be scrutinising the USDA's export projections, as these are also lagging. Tomorrow's weekly export sales report for corn is only expected to be a modest 100-300 TMT. Maizar estimated Argentina’s 2012/13 corn crop at 26-27 MMT versus a previous estimate of 28.0 MMT, but still a record and a good deal more optimistic than Michael Cordonnier's 22.5 MMT forecast released earlier this week. They also placed Argentina’s 2012/13 corn exports at a record 16.4 MMT. CONAB will also issue a revised 2012/13 Brazilian corn production estimate tomorrow, previously they put the corn crop there at 71.9-73.2 MMT. Michael Cordonnier goes 72 MMT. In the US the earliest corn harvest on record is wrapping up. "Dry weather has now returned to the eastern Midwest, which is allowing late harvesting of corn and soybeans to improve," say MDA CropCast.
Wheat: Dec 12 CBOT Wheat closed at USD8.94, up 17 cents; Dec 12 KCBT Wheat closed at USD9.31 1/2, up 12 cents; Dec 12 MGEX Wheat closed at USD9.59 3/4, up 11 3/4 cents. Fund buying in Chicago wheat was estimated at around 5,000 contracts on the day. Wheat is shaping up like being the leader of the sector going forward, with European wheat setting contract highs every day this week so far. US winter wheat is heading into dormancy in its worst state since records began. European winter wheat is struggling to get planted under adverse weather conditions. Winter wheat conditions in Argentina and southern Brazil, where the harvest is underway, have been badly affected by excessive rain. Russia's wheat harvest is 99% complete and is lower than 40 MMT. A crop of 41 MMT sparked the export ban in 2010. ANZ estimated Australia’s 2012/13 wheat crop at 20.0 MMT versus 29.5 MMT a year ago, whilst NAB go for 20.6 MMT. Both are well below the USDA's 23 MMT October estimate. Rabobank estimated China’s 2012/13 wheat imports at 3.6 MMT (an 8 year high) and more than double the USDA's forecast of 1.5 MMT. They have already imported more than 1 MMT in Q1 of the season. Trade estimates for tomorrow's weekly export sales report are 200-400 TMT versus 363 TMT last week. "Southern Russia, the main winter wheat area, has grown very dry from a stable, warm ridge of high pressure. Russia wheat producers have the same issues with severe drought as their counterparts in the US Great Plains. Fields are dry through a very deep layer, due to drought persisting summer into the fall," say Martell Crop Projections.
Nov 13 London wheat also hit a fresh contract high of GBP193.50/tonne, and that's where it ended the day, for a net gain of GBP1.25/tonne.
In the past month front month London wheat is up 11%, versus a Paris wheat increase of 6.6% and a Chicago wheat improvement of only 4.1% as of 7pm London time.
The poor quality and yield of this season's harvest means that UK wheat imports will need to reach 2 MMT this year, according to ODA, which is a bit higher than the HGCA's recent 1.7 MMT estimate although in line with other trade forecasts. That would be more than double last season's UK wheat imports.
The trade is now looking ahead to Friday's USDA WASDE report. For wheat there are potential production reductions for Australia (23 MMT in October), Argentina (11.5 MMT) and China (118 MMT).
As far as exports go the trade considers that Australia's figure may be too high (20.5 MMT) along with that of Argentina (7.3 MMT). On the other hand Ukraine's may be too low at only 4 MMT.
There are reports that the Ukraine Ministry may have agreed to increase the permitted 5.5 MMT of wheat exports this season by a further 0.5 MMT. What we do know for sure is that they have exported a record 9.2 MMT of grains so far this season.
In total they expect to export 20 MMT of grains in 2012/13, a reduction of only 8%. Yet the grain harvest there is expected to finish down 19% on last year at 46 MMT, say the Ministry.
This year's harvest has produced 15 MMT of wheat, versus 22.2 MMT last year, along with 16.5 MMT of corn so far, off 81% of the planned corn area. Winter planting is now complete, the Ministry add.
Russia's grain harvest is said to be 98.5% complete at 72.9 MMT, with the wheat harvest 99% done at 39.6 MMT in bunker weight versus 56.2 MMT in clean weight a year ago. Winter grain plantings in Russia are said to be 93% done.
Lebanon bought 50 TMT of wheat in a tender yesterday, shared 50:50 between Ukraine and Russia, proving that neither are quite out of the market just yet. That however is surely only a matter of time.
07/11/12 -- The overnight electronic market is modestly higher following news that Obama has been re-elected. The general vibe seems to be that this means the Fed's free and easy monetary policy is likely to continue a while yet.
The next big news of the week comes Friday with the USDA's November WASDE report, which frequently provides us with fireworks. Will they be bullish or bearish ones this year? The smart money seems to be on the former at the moment.
Before that we have the weekly export sales (and shipments) data tomorrow. Monday's export inspections report indicates that there has been little let up in the very strong pace of US soybean exports, so we can expect that trend to continue for the rest of the year by the looks of things.
US corn sales and shipments have been poor, as too has been domestic demand from the ethanol sector. Yesterday's news that New Energy Corp. in South Bend, Indiana was to cease ethanol production until margin improve followed hot on the heels of a similar announcement last week from Valero concerning plants in Albion, Nebraska and Linden, Indiana.
US wheat sales have been so, so thus far, although many are expecting a significant improvement by the time we are into 2013.
Worth looking out for on Friday will be the USDA's assessment of the Chinese wheat crop after their attaché in Beijing estimatedproduction this year at only 108.0 MMT versus 117.9 MMT in 2011/12 and 10 MMT less than the USDA themselves said last month.
China's wheat import requirements were only placed at 1.5 MMT last month, yet they've shipped more than 1 MMT in during the first three months of 2012/13 already.
The Chinese think tank CNGOIC forecast rapeseed production there down 9% this year to 12.2 MMT.
Kazakhstan's harvest is over, producing a grain crop of 14.72 MMT in bunker weight versus 29.7 MMT in 2011. That suggests a clean weight crop of around 12.5 MMT, less than half of last year's output of 27 MMT. Agritel suggest that even this is too high and that 11.0-11.5 MMT may be closer to the truth. Yields averaged less than a tonne/hectare, down 45% on 2011, say the Ministry. Exports are seen at 7 MMT in 2012/13 as opposed to 12 MMT in 2011/12, they estimate. Again, Agritel think that even this may be optimistic.
Oil World are now talking down soybean production in both Argentina (too wet) and Brazil (too dry in northern & central areas). Brazil's wheat crop, being harvested now, which is mainly grown in the southern states of Parana and Rio Grande do Sul is being downgraded due to too much rain I hear. CONAB are out tomorrow with their latest Brazilian production forecasts.
Respected analyst Michael Cordonnier has cut his Argentine corn production estimate to 22.5 MMT, well below the USDA's 28 MMT forecast last month, will they at least partially concur on Friday?
UK wheat imports will reach 2 MMT this year, according to ODA I read this morning, which is a bit higher than the HGCA's recent 1.7 MMT estimate although in line with other trade estimates.
Most active May 13 London wheat has already taken out yesterday's all-time high and currently trades GBP0.75/tonne higher at GBP225.50/tonne. New crop Nov 13 wheat is also GBP0.75/tonne higher in early trade, matching yesterday's contract high of GBP193.00/tonne.
06/11/12 -- Soycomplex: Nov 12 Soybeans closed at USD15.16 3/4, up 12 1/2 cents;
Jan 13 Soybeans closed at USD15.15 1/2, up 12 1/4 cents; Dec 12 Soybean Meal closed at USD467.30, up USD2.80; Dec 12 Soybean Oil closed at 48.68, up 36 points. Beans rebounded back from the USD15/bu level, with funds buying an estimated 4,000 soybean contracts on the day. A bearish slant for beans in Friday's upcoming USDA report may have already been factored in. Ahead of that Linn Group were the latest to issue their production estimates, pegging US soybean production at 2.930 billion bushels with yields at 38.7 bu/acre. The USDA's October estimate was 2.86 billion and yields of 37.8 bu/acre. The average trade guess for Friday is 2.892 billion and 38.2 bu/acre respectively. Celeres left their Brazilian soybean estimate unchanged at 79 MMT, which is 2 MMT less than the USDA. They say that only 27% of the crop has been planted so far against 48% this time a year ago. China will auction off another 400 TMT of soybeans on Thursday in an effort to contain domestic price rises.
Corn: Dec 12 Corn closed at USD7.41, up 5 1/2 cents; Mar 13 Corn closed at USD7.43, up 5 cents. Corn also staged a mini rebound, aided by funds coming on for a net 3,000 contracts on the day. An Indiana ethanol plant announced it was closing temporarily, the latest in a series of shutdowns due to poor margins. It will be interesting to see if the USDA make any alterations to demand from this sector in Friday's report. Exports too are running well behind schedule. The trade is looking for a corn crop of 10.629 billion bushels on Friday, with yields at 122.1 bu/acre versus 10.706 billion and 122 bu/acre last month. Linn Group estimated corn production at 10,478 million bushels with a yield of 122 bu/acre. The Argentine Ag Ministry said that the corn crop there is only 43% planted compared to 62% this time a year ago. Benson Quinn report "Cordonnier is said to have reduced his estimate for Argentine corn production down 3.5 MMT to 22.5 MMT." That would mean Argentina will not be having a record corn crop after all this year, production in 2010/11 was 25.5 MMT according to USDA estimates.
Wheat: Dec 12 CBOT Wheat closed at USD8.77, up 11 cents; Dec 12 KCBT Wheat closed at USD9.19 1/2, up 10 1/2 cents; Dec 12 MGEX Wheat closed at USD9.48, up 8 cents. Funds were said to have been net buyers of around 3,000 CBOT wheat contracts on the day. Jordan passed on a tender for 100 TMT of optional origin wheat for Feb/April shipment. India said it is to release a further 100 TMT of wheat from it's surplus stocks for sale in a tender. Ukraine said that 88.5% if winter grains there have emerged, far better than the 68% at this time a year ago. Crop conditions are also significantly improved versus 2011 at 91.2% good/fair versus only 62% last year at this time. Harvesting there is now 94% complete, with yields down from 3.58 MT/ha to 3.03 MT/ha. Trade estimates for Friday's US wheat ending stocks are 666 million bushels, versus the October estimate of 654 million and 743 million in 2011/12. World wheat ending stocks are seen 2 MMT lower than last month at 171 MT. US winter wheat conditions are the worst on record heading into dormancy, with little respite in the weather forecasts.
06/11/12 -- EU wheat closed higher once more, with Nov 12 London wheat pressing on to a fresh contract closing high of GBP217.25/tonne up GBP2.25/tonne on the day. New crop Nov 13 closed GBP1.25/tonne firmer at a contract high GBP192.25/tonne.
London wheat continues to push on to historic all-time highs on concerns over old crop quality and diminishing new crop prospects.
May 13 set another record high trading price for any London wheat month ever of GBP225.00/tonne, whilst new crop Nov 13 homed in on GBP200.00/tonne hitting a lifetime contract high of GBP193.00/tonne.
Black Sea tightness appeared to be confirmed by a J P Morgan forecast featured in the FT that said Russia/Ukraine would only ship 1.7 MMT of wheat between them in the Dec/Jun period, an astonishingly low volume and 85% lower than in the same period in 2011/12.
To underline Black Sea constriction, Kazakhstan's Ministry said that they have only harvested 14.72 MMT of grains on bunker weight this year, down more than 50% on 29.7 MMT on last year.
Grain exports this year from the frequently drought-plagued country will only total 7 MMT, down nearly 42% on last season's 12 MMT, according to the local Grain Union.
US winter wheat conditions, already at their worst in more than 27 years continue to deteriorate.
"The (Monday) USDA crop progress report indicated worsening conditions in wheat. Nineteen percent of winter wheat rated poor-very poor, 42% fair, and 39% good-excellent. This is step down from a week ago when winter wheat was 15% was poor-very poor, 45% fair, and 40% good-excellent," say Martell Crop Projections.
"Kansas received no rain at all last week, the United States top wheat state. Drought worsened significantly in October. Growers reported topsoil moisture at 73% short-very short, 27% adequate and 0 percent surplus. That’s drier even than 2 years ago in another severe drought, when topsoil moisture was 67% short-very short, 33% adequate and 0% surplus early in November," they add.
05/11/12 -- Soycomplex: Nov 12 Soybeans closed at USD15.04 1/4, down 22 3/4 cents; Jan 13 Soybeans closed at USD15.03 1/4, down 23 1/2 cents; Dec 12 Soybean Meal closed at USD464.50, down USD5.80; Dec 12 Soybean Oil closed at 49.32, down 94 points. The market tumbled lower as funds sold an estimated 5,000 soybean contracts on the day, further lightening their length ahead of tomorrow's US Presidential Election. The trade is also nervous ahead of Friday's upcoming WASDE report from the USDA which is expected to increase US soybean production and 2012/13 ending stocks. Allendale released their estimated today pegging the crop at 2.869 billion bushels with ending stocks at 137 million bushels versus the USDA's 2.86 billion and 130 million last month. The average trade guess for Friday is 2.892 billion and 133 million respectively. Weekly export inspections were strong once again at 59.44 million bushels, with only 21.7 million needed to match the USDA's targeted total for the season. Brazil only exported 907 TMT of soybeans in October, 46% down on September and 36% lower than Oct 2011 as supplies there run out. MDA CropCast lowered their world oilseed production estimate by 340 TMT thanks to a corresponding cut to projected Brazilian output due to dryness in the north of the country. They now go for a Brazilian crop of 80.33 MMT in 2012/13, CONAB are out with their latest estimate on Thursday, the USDA said 81 MMT last month. After the close the USDA said that 93% of the US soybean crop was now harvested versus 86% normally.
Corn: Dec 12 Corn closed at USD7.35 1/2, down 4 cents; Mar 13 Corn closed at USD7.38, down 4 1/2 cents. Funds were said to have been net sellers of around 4,000 corn contracts on the day. Spec money is now said to have it's smallest corn long since mid-July. Weekly export inspections were 14.7 million bushels versus expectations of 16-21 million and the almost 23 million needed to hit USDA targets. Allendale estimated the US corn crop at 10.618 billion bushels versus 10.706 billion from the USDA last month. US 2012/13 ending stocks were placed at 736 million, significantly higher than the USDA's 619 million, reflecting the sluggish export pace and slumping demand from the ethanol sector. A Bloomberg survey places the average trade guess for US corn production in Friday's USDA report a little higher than Allendale at 10.670 billion bushels and with ending stocks somewhat lower at 634 million. The USDA attaché in Beijing estimated China’s 2012/13 corn crop at 198 MMT, slightly below the official USDA estimate of 200 MMT, but still their third record corn harvest in a row. Celeres estimated Brazil’s 2012/13 corn crop at 75.62 MMT versus a previous estimate of 76.45 MMT and only 70.0 MMT from the USDA. MDA CropCast lowered their Argentine corn production estimate by 370 TMT to 26.28 MMT due to excessive wetness. The USDA's October estimate was 28.0 MMT. After the close the USDA said that the US corn harvest was 95% complete, well ahead of 71% normally.
Wheat: Dec 12 CBOT Wheat closed at USD8.66, up 1 1/2 cents; Dec 12 KCBT Wheat closed at USD9.09, up 1/4 cent; Dec 12 MGEX Wheat closed at USD9.40, down 1/4 cent. Wheat export inspections fell short of the 15-20 million bushels expected at 14 million. The volume needed to hit the USDA 2012/13 target is over 24 million. The export pace is going to have to pick up significantly in the second half of the season to do that, but it's not impossible given the world supply situation. Allendale pegged US 2012/13 wheat ending stocks at 699 million bushels versus 654 million from the USDA last month. The average trade guess for Friday's report according to Bloomberg is 658 million. On a global level Allendale pegged world wheat inventories at the end of 2012/13 2.1 MMT lower than the USDA at 170.9 MMT, reflecting increased demand at the expense of corn. The state of the US winter wheat crop remains a serious concern. Last week's first crop condition ratings of the season were the worst on record, and tonight they declined even further - with good/excellent down one point to 39% and poor/very poor raised four points from 15% to 19%. Rains in Southern Brazil are said to have hurt wheat quality there, a situation that is likely to be replicated across the border in Argentina where harvesting is only around 10% complete so far.
Front month Nov 12 London wheat closed GBP3.00/tonne higher at GBP215.00/tonne, whilst Nov 13 also pressed on, GBP2.50/tonne firmer at GBP191.00/tonne - both lifetime contract closing highs.
Nov 12 and Jan 13 Paris wheat also set fresh contract highs today, along with new crop Nov 13. Nov 12 closed EUR1.75/tonne firmer at EUR271.00/tonne, finally breaking above the EUR270.00/tonne mark which has proven a stubborn level to breach.
There is a growing feeling that European wheat will be next to fill the void left by the disappearance of Black Sea wheat from the world market, and that supplies here may not last that much longer with strong demand foreseen in Q1 of 2013.
Argentina's wheat crop is shrinking, both in terms of yield and quality, and is forecast at around three quarters sold already despite that fact that the harvest there is only around 10% complete.
Australia's output is also on the decline, with MDA CropCast estimating production at 20.6 MMT, a near 30% drop on last year. Exports are likely to fall by a similar percentage according to a recent Bloomberg survey.
That leaves the US as the main world wheat supplier come Q2 of 2013 (and possibly sooner). Here the winter crop is already under stress due to lack of moisture and there is little relief from that in sight, ahead of winter dormancy.
"Drought has worsened in the Great Plains winter wheat zone in recent weeks, the 35-day rainfall map showing acute dryness in Texas, Oklahoma and southern Kansas, the 3 states that together produce 43% of US winter wheat," say Martell Crop Projections.
"High pressure is expected to produce unseasonable warm and dry weather the next 5 days in the Central and Southern Great Plains," they add.
"Dryness remains extensive across the central Plains, and the continued drier pattern there this week will allow significant dryness and stress on wheat establishment to continue," say MDA CropCast, who also warn that "poorly established wheat will be more vulnerable to freeze threats this winter."
EU prospects for 2013 are already looking a serious concern too, hence new crop Nov 13 London and Paris wheat both hitting contract highs today. Sowings are said to be well behind schedule for this time of year in all four of Europe's top producing nations: France, Germany, UK and Poland.
Elsewhere, the USDA attaché in Beijing estimated China’s 2012/13 wheat crop at 108.0 MMT versus 117.4 MMT in 2011/12. China's wheat imports have been on the rise recently, those for Jan-Sept were a 7-year high and Q1 2012/13 imports topped 1 MMT versus a USDA forecast for a full year requirement of only 1.5 MMT from abroad.
05/11/12 -- Whilst the US market is treading water/consolidating ahead of tomorrow's presidential elections, London wheat is pressing on to fresh highs.
May 13 currently trades GBP2.65/tonne higher at GBP222.00/tonne. That matches the highest price that London wheat has ever traded at, and a close there would comfortably be a record all-time high close for any London wheat month ever. Ongoing concerns about the fortunes of the 2013 crop also see Nov 13 push on to a lifetime contract high of it's own - currently up GBP2.50/tonne at GBP191.00/tonne.
Nov 12 and Jan 13 Paris wheat have also set contract highs this morning, along with new crop Nov 13.
Why? And where is it all going to end?
MDA CropCast cut their world wheat production forecast to 633.2 MMT on Friday, almost 20 MMT below the USDA's 653 MMT. That included a downwards correction for Argentina to 10.6 MMT on continued wetness there, versus the USDA's 11.5 MMT. They currently see Australian output at 20.6 MMT, 2.4 MMT below the USDA, although not the lowest number in the hat by any means. Some other private estimates are now below 20 MMT.
The trade has a clear idea that Russia and Ukraine are a spent force, despite the former winning 120 TMT of Egypt's wheat business for late December shipment last week. That may be the last we hear of them until July.
Ditto Ukraine, who didn't even tender. The confusion over whether they have issued an export ban or not isn't really relevant. Neither is how they dress it up, a de facto ban is in place one way or another. They are out of the wheat market until new crop.
In the case of Russia, the Ministry said on Friday that the grain harvest was 98.3% complete, producing 72.4 MMT in bunker weight. That ties in nicely with a SovEcon clean weight forecast of 69 MMT released earlier last week.
We must now consider that Russia has a domestic grain usage requirement of around 70 MMT per annum. Ministry data shows that they have already exported 10.3 MMT of grains so far this year and that according to the USDA carryin wheat stocks were 10.4 MMT, along with less than a million tonnes of barley and an unreported, but probably also less than a million tonnes, of corn.
So in round figures Russia have only produced as much as they will consume this season, and have more or less already exported their entire carryin stocks left over from 2011/12.
On the face of it, that leaves Russian grain stocks tighter than a tight thing that's been left out in the rain. I suspect at this point that an invitation for Kazakhstan to look at the wider long-term picture may be in the post. Not that they are over-blessed with a generous harvest themselves this year. Whatever they may have spare Russia will want for itself, possibly in exchange for some concessions regarding help with reaching export markets in future harvests and/or Russian help and investment with Kazakh storage/transport facilities.
So, it is certainly shaping up that the Black Sea are out of the market, leaving Europe (and predominately France) to temporarily try on Lance Armstrong's repossessed yellow jersey. Despite early season agressiveness from Russia and Ukraine though, EU exports have also been chugging along nicely at the start of 2012/13. With Matalan and TKMaxx out of the way that chugg could now be the Next to accelerate rather quickly.
Once they are out of the way, I say they as it's not like the UK are in the export market is it, then we are left with Argentina and Australia (Primark and Marks & Spencer - where we know production is now likely to be well down on last year) and/or the US and Canada.
Christ, there's only Harvey Nicks and Harrods left open and it's not even Christmas yet!
Whether she's right, and how the markets will react if she is, is unclear however. We've seen a pretty big sell-off in soybeans in particular this past couple of months on profit-taking, harvest pressure and risk-off in the run-up to this election.
Yet the fundamentals haven't changed a great deal. Record South American production is still expected in 2013, albeit maybe not quite as large as it may have been due to a combination of late planting, wetness in Argentina and dryness in Brazil.
The crops there however are still 4-6 months away from hitting the world market, which means there's still time for it all to go tits up, and in the meantime US soybeans have to feed the world.
Friday's USDA numbers show that US soybean export commitments are now at 75% of the USDA's full 2012/13 season projection. Last week's shipments of 1.7 MMT were the highest since Nov 2010 and the fifth week in a row that exports have topped 1 MMT. The US has now shipped 6 MMT of soybeans in the last four weeks.
It is noteworthy too that the current CBOT pricing structure on soybeans doesn't encourage US farmers to carry, wIth May 13 more than half a dollar cheaper than Nov 12, why would they?
It seems to me that soybean availability is shaping up to be exceptionally tight in Q1 of 2013. What the US hasn't shipped already by this time will almost certainly have been sold. Record production in South America, if they get it, will also bring with it another set of problems: logistics.
With that comes shipping delays (probably acute shipping delays), the inevitable dockers/truckers strikes, truck shortages, highway congestion, you name it. Argy truckers and farmers will be running out of tyres to burn on the roads leading to the ports. All that adds up to front-end tightness, with potentially some very large premiums being paid for readily available soybeans/soy products in Europe come the spring.
That's the way I see it anyway.