21/02/14 -- EU grains closed mixed, as the trade continues to debate and ponder on crop production prospects around the world. How will winter wheat, in particular, emerge from dormancy and how will spring plantings go? They are perhaps the two main questions being asked.
Mar 14 London wheat closed GBP1.10/tonne firmer at GBP155.60/tonne, whilst new crop Nov 14 was GBP0.10/tonne lower at GBP148.90/tonne. Mar 14 Paris wheat closed EUR0.50/tonne lower at EUR198.25/tonne, Mar 14 Paris corn was EUR0.25/tonne lower at EUR174.00/tonne, whilst May 14 Paris rapeseed was EUR3.00/tonne higher at EUR393.00/tonne.
For the week, that puts old crop Mar 14 London wheat up GBP3.10/tonne, with new crop Nov 14 up GBP1.90/tonne. Mar 14 Paris wheat was down 25 euro cents on the week, with Mar 14 corn up EUR1.75/tonne and May 14 Paris rapeseed jumping EUR10.00/tonne.
FranceAgriMer cut their estimate for the French winter wheat crop rated good/very good from 75% last week to 74%. The proportion of winter barley rated good/very good was also trimmed by a point to 72%. French wheat and barley were both only rated as 66% good/very good this time a year ago however.
Crop development is also ahead of year ago levels, with FranceAgriMer saying that 90% of winter wheat is at the early tillering stage - ten points ahead of last year. Also, winter barley is 99% tillering versus 92% this time a year ago.
SovEcon said that this year's Russian grain crop was likely to be in the region of 86 MMT and not the 95 MMT opening gambit from the Ministry of Agriculture due to the lower winter grain planted area - 14.7 million hectares versus 15.8 million a year ago. The Ministry said though that an unusually high percentage (96%) of winter grains were in good to satisfactory condition.
The USDA's Outlook Forum meanwhile have this week released various acreage estimates for US wheat, corn and soybeans that all contradict the figures included in their baseline projections released last week.
To add further confusion, today's conclusion to the Forum, pegged US corn, soybean, wheat and cotton acres at a combined 238.5 million acres. That's exactly the same area as last year, yet that was a year that saw an unusually high number of "prevent plant" insurance claims due to early season wetness.
Meanwhile, despite the USDA forecasting 2014 all wheat plantings in the US down 700,000 acres on last year to 55.5 million, they see production higher than in 2013 due to lower abandonment levels.
Much closer to home, opinion is still divided as to exactly how much impact the wet weather and flooding will ultimately impact upon the UK wheat crop. It will surely be higher than last year, given the sharp increase in acreage alone, but what will quality be like? There are similar question marks over crops on the continent too.
Meanwhile, UK wheat imports might not be quite at the sort of runaway levels seen last season, but they aren't that far behind. We are also still struggling to export our very large 2013/14 barley surplus. Wheat demand from the bioethanol sector is almost certainly being overstated by Defra, and meanwhile corn continues to flood into the country.
UK ending stocks for both wheat and barley may therefore prove to be unusually high come the summer, particularly in such a low production wheat year.
It seems that we probably need to get some of the current level of market uncertainty out of the way, before we can gauge more accurately which way prices will go later in the year. May could be pivotal, just as it was 12 months ago.
20/02/14 -- Soycomplex: Beans closed higher, despite the USDA's Outlook Forum pegging the 2014 US soybean area at 79.5 million acres, 3 million up on last year and 1.5 million above last week's baseline projections. If anything though, many in the trade were talking of soybean plantings coming in even higher at 80 million acres or even more. The USDA also forecast US soybean prices averaging $9.65/bushel in 2014/15 versus a 2013/14 average price of $12.70/bushel. The very strong US export pace, backed up by Tuesday's 1.5 MMT of weekly export inspections and the lack of the widely anticipated wholesale Chinese cancellations is supportive. Cumulative 2013/14 US soybean exports to date are 33 MMT (versus 28.2 MMT a year ago), or 80.5% of the USDA's target for the season. With a further 10.1 MMT sold and ready to go we have total US soybean commitments of 43.1 MMT versus a USDA export forecast for the season of only 41 MMT. Brazil's 2013/14 soybean production potential is being trimmed, with most analysts now in the 88-90 MMT region, although Oil World today cut their outlook from 89.5 MMT to only 85 MMT. MDA CropCast cut their Argentine soybean production estimate by 730 TMT to 54.39 MMT citing current wetness and earlier heat. Trade estimates for tomorrow's weekly soybean export sales report are around 200-500 TMT for both marketing years. Old crop sales have been expected to come in negative, but failed to do so, for the past couple of weeks. Will tomorrow be the day? Mar 14 Soybeans closed at $13.58 1/4, up 4 cents; May 14 Soybeans closed at $13.47 3/4, up 5 3/4 cents; Mar 14 Soybean Meal closed at $450.90, down $2.10; Mar 14 Soybean Oil closed at 40.57, up 33 points.
Corn: The corn market closed around a couple of cents firmer, with the Mar 14 contract posting it's best close since October. The USDA's Outlook Forum pegged 2014 US corn plantings at 92 million acres, towards the bottom end of trade estimates, 1.5 million below last week's baseline projection, and 3.6% down on last year's 95.4 million. They also forecast US corn prices in 2014/15 only averaging $3.90/bushel versus $4.50/bushel this season. The weekly US ethanol grind came in at 903k barrels/day, up 1,000 bpd on last week but below the circa 930k bpd needed to hit the USDA's target for the season. The political crisis in Ukraine is seen as possibly improving demand for US corn, although there's no evidence yet that it has thus far had a negative impact on grain exports from the country. Japanese customs data showed that Japan imported 2.24 MMT of grain in January, up 4.2% from a year ago, including 1.093 MMT from the US - up 24.1% from a year ago. The Japanese Ministry reported that corn usage in feed in December was 45.2% versus 44.4% in November and 42.7% in December 2012. Lower world corn prices seem to be encouraging increased demand. Analysts said India’s poultry feed demand expected to increase by 9% in 2014. The Poultry Federation of India said corn feed demand from the sector is estimated at 750-800 TMT/month. Trade estimates for tomorrow's weekly export sales for corn are around 800 TMT to 1.2 MMT. Mar 14 Corn closed at $4.55 3/4, up 2 cents; May 14 Corn closed at $4.62 1/4, up 2 cents.
Wheat: The wheat market closed around 1-4 cents lower across the three exchanges. The USDA's Outlook Forum estimated US all wheat plantings for the 2014 harvest at 55.5 million acres versus 56.2 million last year and 57 million in last week's baseline projections. They forecast the average wheat price in 2014/15 at $5.30/bushel versus $6.80/bushel this season. "Prices for most row crops are expected to fall to the lowest levels since 2009/10," said Joseph Glauber, the USDA's chief economist. China sold 413 TMT of the 600 TMT of wheat it offered up at auction. They've gone quiet on buying wheat on the international market of late, but there's talk that they could be back in the market soon for May/Jul cargoes. Egypt have also gone quiet. They say that they now have enough wheat bought to last until June. Weekly export sales tomorrow are expected to be quite robust at around 500-700 TMT. It seems possible that US wheat demand might be getting a boost from Canadian logistical issues. European exports meanwhile press on unabated, with Brussels issuing 756 TMT worth of soft wheat export licences this week. That takes the marketing year total to 19.3 MMT versus only 12.7 MMT this time last year. The problems in Ukraine may further boost EU wheat exports it is thought. Mar 14 CBOT Wheat closed at $6.16 1/4, down 4 cents; Mar 14 KCBT Wheat closed at $6.91 3/4, down 3/4 cent; Mar 14 MGEX Wheat closed at $6.81 3/4, down 2 1/4 cents.
20/02/14 -- EU grains finished mostly higher, supported by tensions in Ukraine, excessive wetness in parts of western Europe and the continued strong export pace.
The session closed with Mar 14 London wheat ending up GBP0.40/tonne at GBP154.50/tonne, and with new crop Nov 14 London wheat closing GBP0.70/tonne higher at GBP149.00/tonne. Mar 14 Paris wheat was down EUR0.25/tonne to EUR198.75/tonne, Mar 14 Paris corn was up EUR1.00/tonne to EUR174.25/tonne, whilst May 14 Paris rapeseed jumped EUR7.75/tonne to close at EUR389.00/tonne.
The trade is pondering whether the civil unrest problems in Ukraine will have a negative impact on their anticipated record grain export program this season. Whilst there is little evidence that this has been the case so far, some reports suggest that they still have around 3 MMT of wheat sold, and as yet unshipped. The volume of corn unshipped is likely to be significantly higher than that too.
Farmers and merchants in Ukraine appear to have understandably "shut the shop" for the time being until the situation improves, restricting the movement of grains. As and when things do improve however you could make a case that there could then be a sudden upswing in exports, particularly given the recent weakness of the local currency, the Ukraine hryvnia.
MDA CropCast cut their forecast for the 2014 EU-28 wheat crop by 560 TMT from last week citing excessive wetness in northen Italy, western Spain, western France and the UK. Their estimates for EU-28 barley and oilseed rape production were left unchanged.
Brussels announced another bumper week of exports, granting licences to ship 756 TMT of soft wheat. That takes the 2013/14 marketing year total to 19.3 MMT, up 52% versus this time last year. Corn import licences came in at 352 TMT, and now total 8.1 MMT for the season so far versus 7.6 MMT twelve months ago.
Canada is suffering logistical problems getting its record wheat and canola crops to market, due to problems with their infrastructure. Things haven't been helped by much colder than normal temperatures across the winter.
Tunisia seeks 67,000 MT of milling wheat and 59,000 MT of durum wheat of optional origin for March-April shipment. Algeria are tendering for 50,000 MT of optional origin barley for March/April shipment.
Temperatures across most of Europe and into the FSU look set to remain warmer to much warmer than normal across the next few weeks. Despite some localised flooding issues, many will be starting to think about making an early start with spring planting.
The USDA forecast the US wheat area at 55.5 million acres, down from 56.2 million last year and last week's baseline projection of 57 million. Despite that, they only forecast US wheat prices to average $5.30/bushel in the 2014/15 season. Corn prices are seen averaging only $3.90/bushel and soybeans $9.65/bushel. All those are significantly below current forward levels.
19/02/14 -- EU grains were mostly a little higher at the close of business on Wednesday, with fresh news hard to come by.
Mar 14 London wheat ended GBP0.35/tonne firmer at GBP154.10/tonne, with Mar 14 Paris milling wheat unchanged at EUR199.00/tonne, Mar 14 Paris corn up EUR0.25/tonne to EUR173.25/tonne and May 14 Paris rapeseed EUR6.00/tonne lower at EUR381.25/tonne.
Ukraine said that they expect only relatively minimal winter crop damage this season, suggesting that maybe only 500k hectares will need to be replanted in the spring.
Around 300k ha of that will go into corn, they estimate. That potentially puts the FSU nation on for another record corn crop this year, as around 500k ha of winter crops didn't get sown due to the wet autumn as well. Much of that area will also probably go into corn.
Russia too could increase their corn planted area in 2014, and thus may also be in line for another record crop this year. Both nations have already seen corn production treble in the last five years or so, partly due to increased plantings, but also the more widespread use of better yielding hybrid varieties.
The USDA's FAS said that India will harvest a record 96 MMT of wheat this year. With an election coming up, local government offices are said to be lining up to pay big prices this year, which could swell state-owned stocks to unprecedented levels. That could keep them active exporters for some time to come.
Egypt have gone quiet across the last few weeks, there's some trade talk that they may be back in the wheat market again within the next few days.
Texas weekly winter wheat crop conditions came in at 17% good to excellent, down 1% from a week ago. Some 44% of the state's crop is now rated as poor to very poor, up 3% from a week ago.
There’s continued talk that dryness in the Central and Southern US Plains will be detrimental to crop conditions coming out of dormancy soon, and weather forecasts don’t add much moisture to the region over the next 7 days.
Japan issued a new tender for 120 TMT of feed wheat and 200 TMT of feed barley for May shipment.
Canadian farmers are likely to plant 24.7 million acres of wheat next year, down 6% from this year, according to Ag Canada. Record production in 2013 means that local prices are low. They are forecasting a wheat crop of 29.3 MMT this year, down 22% from a year ago.
The Canadian canola planted area is seen up 8% from a year ago.
18/02/14 -- Soycomplex: Beans closed sharply higher on the old chestnut of very strong demand, with funds seen as net buyers of around 8-10,000 bean contracts on the day. Weekly export inspections, delayed a day due to Monday's President's Day holiday, for beans came in at close to 1.5 MMT again. Chinese cancellations? There were none announced today, and with 1.5 MMT of beans being shipped out of the US every week at the moment it won't take that long to hit the USDA's export target for the season. Brazilian firm AgRural cut their forecast for soybean production there from 88.8 MMT to 87 MMT due to drought in some areas. That's 3 MMT below last week's USDA estimate. Dr Cordonnier estimated Brazil's soybean crop at 89.0 MMT versus a previous estimate of 89.5 MMT. He estimated the Argentine bean crop at 53.5 MMT, unchanged from his previous estimate. Some are now saying that continued heavy rains in some areas could soon start to have a negative impact on Argentine production. The strong demand scenario didn't get any assistance from the January NOPA crush figure though. That came in at 156.9 million bushels, which was below the average trade guess of 162.4 million, and down from the record 165.4 million crushed in December. Two hard cold snaps in January may have hindered the crush however, as movement of beans was restricted. Mar 14 Soybeans closed at $13.61, up 23 1/2 cents; May 14 Soybeans closed at $13.47 3/4, up 22 3/4 cents; Mar 14 Soybean Meal closed at $456.90, up $6.90; Mar 14 Soybean Oil closed at 40.36, up a hefty 121 points.
Corn: The corn market finished around 4-5 cents higher, aided by spillover support from beans and wheat. Weekly export inspections came in at 827,610 MT, better than the expected 545–675 TMT. Dr Cordonnier estimated the Brazilian corn crop at 68.5 MMT, with production in Argentina coming in at 22.5 MMT. Both were unchanged from his previous estimates. Japan and Mexico are said to be seeking and/or buying US corn for April-July shipment. The trade will be eager to see what the USDA have to say in this week's Outlook Forum (taking place Thurs/Fri) with regards to US spring plantings. Last week's baseline projections pencilled in 93.5 million acres of corn going into the ground this spring. The trade is expecting a lower number than that on Friday. Argentina’s corn planting is 99% complete versus 97% a year ago, according to the Ag Ministry there. The Argentine corn crop is said to be rated 70% good to excellent. Libya were reported to have purchased 30,000 MT of Black Sea origin corn. Ukraine are said to have exported 23.2 MMT of grains to date, including 13.69 MMT of corn. The fund community seems to have had a dramatic change of heart concerning corn in recent weeks, slashing their sizable short position, and now seeming to want to play from the long side for the first time since early last summer. Funds were estimated to have been net buyers of around 10,000 contracts on the day. Mar 14 Corn closed at $4.49 1/2, up 4 1/4 cents; May 14 Corn closed at $4.55 1/2, up 4 3/4 cents.
Wheat: The wheat market closed sharply higher on short-covering/fund buying (estimated at around 3-5,000 CBOT wheat contracts on the day). Friday’s Commitment of Traders report shows funds buying back shorts in Chicago and adding to their net long positions in Kansas and Minneapolis last week. If this indicates a radical change of heart then maybe we've seen the bottom of the market on CBOT wheat? Funds have been short CBOT wheat all the way through 2013, and were sitting on a near record short in excess of 100k contracts at the turn of the year. The Commitment of Traders report as of February 11th showed Non-Commercial traders were then net short 45,171 contracts, a decrease of 7,587 contracts for the week. Weekly export inspections of 266,507 MT were below expectations of 300–400 TMT, but that didn't appear to have an influence today. China are to auction 600,000 MT of wheat from reserves on tomorrow. Russia's grain intervention purchase program appears to have run it's course, totalling only 610 TMT against an originally intended 5-6 MMT. Jordan passed on a tender to import 100 TMT of optional origin feed barley. Mar 14 CBOT Wheat closed at $6.12, up 13 1/2 cents; Mar 14 KCBT Wheat closed at $6.85 3/4, up 11 1/4 cents; Mar 14 MGEX Wheat closed at $6.79 1/4, up 12 3/4 cents.
18/02/14 -- EU grains closed mostly higher, with Paris wheat hitting a one month high, although falling short of attempting to break through the EUR200/tonne barrier.
Mar 14 London wheat closed GBP1.25/tonne firmer at GBP153.75/tonne, whilst new crop Nov 14 was GBP1.35/tonne higher at GBP148.00/tonne. Mar 14 Paris wheat closed EUR0.75/tonne higher at EUR199.00/tonne, Mar 14 Paris corn was EUR0.25/tonne lower at EUR173.00/tonne, whilst May 14 Paris rapeseed was EUR1.00/tonne lower at EUR387.25/tonne.
US grain markets opened firmer after their extended weekend break, and Europe followed suit.
The Kazakhstan Stats Agency said that the country's 2013 grain crop was 18.2 MMT versus a previous estimate of 19.0 MMT. The Ag Ministry said that Kazakhstan will export 9.0 MMT of grains in 2013/14 versus 7.1 MMT a year previously.
The Ukraine Ministry said that overall 93% of their winter cropped area was in good to satisfactory condition. Some damage has been observed in the Poltava region, with losses of 15-23% in winter wheat due to low temperatures and the lack of a protective snow covering in January and early February, they said.
The Ministry also said that Ukraine had exported 23.2 MMT of grains to date, including 13.69 MMT of corn, 7.16 MMT of wheat and 2.13 MMT of barley. They've also exported 2.05 MMT of rapeseed and 0.87 MMT of soybeans, they added.
Jordan cancelled a tender for 100,000 MT of optional origin feed barley for July shipment.
The French Senate rushed through a stopgap legislative measure to prevent the planting of GM corn (which normally begins around a month from now) this spring.
The thus far mild winter means that French crops are generally in pretty good condition, despite some localised flooding, according to FranceAgriMer. They also see crop maturity as fairly advanced, with 87% of winter wheat at the early tillering stage versus 75% a year ago. Winter barley is 97% at the early tillering stage versus 90% this time last year.
Russia has only managed to pick up 610 TMT of grain for it's intervention fund (including a little over 142 TMT of feed barley) out of an original intention to but 5-6 MMT as the prices being offered by the government are too low.
17/02/14 -- EU grains finished a desperately dull day, in desperately dull fashion. America was closed for the President's Day holiday and Europe reacted in a typically subdued fashion.
The session closed with Mar 14 London wheat ending unchanged at GBP152.50/tonne, and with new crop Nov 14 London wheat closing GBP0.35/tonne easier at GBP146.65/tonne. Mar 14 Paris wheat was down EUR0.25/tonne to EUR198.25/tonne, Mar 14 Paris corn was up EUR1.00/tonne to EUR173.25/tonne, whilst May 14 Paris rapeseed extended recent gains, adding EUR5.25/tonne to close at EUR388.25/tonne.
The close on Paris rapeseed was the highest for a front month since last September
Fresh news was very thin on the ground, as you might expect, and less than 100 lots traded in London wheat all day.
The pound was down a little from last week's highs against both the US dollar and the euro, but still traded close to the best levels in 4 1/2 years against the former and a more than 1 year high versus the latter.
Despite some flooding issues, FranceAgrMer said that winter wheat crops there were rated 76% good/excellent, compared with 66% a year ago. Winter barley is 74% good/excellent versus 67% this time in 2013.
A report on Reuters said that Germany shipped around 250 TMT of wheat to Iran last month, and a further 195 TMT is lined up to go there this month.
SovEcon said that Russia's corn exports have hit a new record high following bumper production in 2013. Shipments this month are expected to be around 350 TMT.
India's MMTC picked up a best bid of only $263.36/tonne in its wheat tender, that's now barely more than the government's minimum guideline of $260/tonne.
Bangladesh bought 50 TMT of wheat from Glencore, believed to be of Indian origin, in a tender said to be priced at $303 CIFFO.
India will begin harvesting what is expected to be a record 95-100 MMT 2014/15 wheat crop within weeks.
Both Cargill and Bunge are said to be refusing to accept corn of a new Syngenta variety, currently unauthorised for entry into the EU/China, into their 2014/15 US export program.