09/01/15 -- Soycomplex: Beans and meal closed with small gains on the day, and with fair advances for the week, heading into Monday's all important USDA reports. These have actually been neutral for beans in 3 of the last 5 years, bullish once and bearish once. "Talk that the USDA could lower US 2014 planted soybean acres due to the discrepancy between NASS and FSA registered acreage data, and thereby lower production and US carryout in next Monday’s production report has triggered a modest amount of short covering this week," noted Benson Quinn. The market is expecting harvested acres to come in at around 83.04 million, versus 83.4 million in the USDA's December report. Given the strong sales and export pace of US soybeans, currently 90% of the USDA target for the season versus only 73% typically, the USDA may raise expectations for these and correspondingly lower 2014/15 carryout from 410 million bushels to around 393 million. Conab increased their forecast for the Brazilian 2014/15 soybean crop slightly from 95.8 MMT to 95.9 MMT, which is almost 2 MMT higher than the USDA's current estimate. The latter may raise that to around 94.6 MMT on Monday, with Argentina at 55.45 MMT versus 55 MMT previously, according to a trade survey. Dr Cordonnier said that some very early soybeans have been harvested in Brazil's Mato Grosso and Parana states. Harvest pace is "timid but picking up" and yields are variable, he said. IMEA estimate Mato Grosso soybeans to only be 6% harvested by the end of the month, with the bulk of activity (66%) taking place between LH Feb and FH Mar, he added. Jan 15 Soybeans closed at $10.51 1/2, up 6 1/2 cents; Mar 15 Soybeans closed at $10.52 1/4, up 4 cents; Jan 15 Soybean Meal closed at $363.80, up $2.50; Jan 15 Soybean Oil closed at 33.54, down 4 points. For the week, nearby beans were up 49 cents, with meal up $7.30 and oil gaining 156 points.
Corn: The corn market closed around 4-6 cents higher, and back above the key $4/bushel mark on front month Mar 15. "In addition to profit-taking ahead of the weekend, credit position squaring and the inability to trigger selling below the 50 day moving average for today’s firmer tone. While it feels like the bulk of the trade favours going into Monday’s report positioned for lower price action, it didn’t feel like they wanted to add to that position during today’s trade," said Benson Quinn. As with soybeans, the trade is expecting a downwards revision to US 2014 corn harvested acres, and a subsequent drop in production from the previously forecast 83.097 billion bushels to around 82.765 billion this time round. In other news, the USDA reported 136,000 MT of corn sold to South Korea for the 2014/15 marketing year. They also reported 116,000 MT of sorghum sold to unknown for 2014/15, which will be widely assumed to be a continuation of China's recent buying spree. Conab raised their outlook on Brazil's corn crop from 78.7 MMT to 79.1 MMT, which is now more than 4 MMT above the USDA's December forecast. Dr Cordonnier said that the early 2014/15 corn harvest in Brazil's Rio Grande do Sul is underway, with good yields being reported. There's some talk that the US will restore the statutory ethanol mandate levels later this year, rather than reduce them as they proposed previously, which would be supportive for corn demand. The Buenos Aires Grain Exchange reported Argentine corn for grain planting at 80.9% complete, up 7.9 points on a week ago, but 1.9 points behind last year's pace. Farm Futures Magazine estimated US 2015 corn plantings at 88.51 million acres, a drop of 2.6% on a year ago. Monday's upcoming USDA reports have been bullish for corn in 3 of the last 5 years, and bearish twice. Mar 15 Corn closed at $4.00 1/4, up 6 cents; May 15 Corn closed at $4.08 1/4, up 5 1/2 cents. Nearby Mar 15 was up 4 1/2 cents on the week.
Wheat: The wheat market closed lower on the day and lower for the week. The perpetually firm US dollar remains a millstone around the neck of US wheat, as was backed up by yesterday's paltry weekly export sales total of only 151,000 MT for delivery in the 2014/15 marketing year, the lowest total of the season so far. The wheat bulls could do with some help from the USDA on Monday. Benson Quinn think that they might get it. "The focus on Monday’s report will be on SRW acreage. The trade is looking for something in the neighbourhood of 8 million acres, which would be down about 500,000 from the prior year. I am looking for the estimate to come in below that market," said their Brian Henry. It will also be interesting to see what the USDA do, if anything, with regards to their projections for Russian and Ukraine 2014/15 wheat exports and ending stocks, given recent developments there. The Buenos Aires Grain Exchange cut their forecast for the 2014/15 Argentine wheat crop from 11.5 MMT to 11.2 MMT due to lower than anticipated yields, although that's still 10.9% up on year ago levels. They said that the harvest is now 95.9% complete. Talk of winterkill amongst US wheat on the Plains has been pushed to the back burner, as the details of any such damage won't be fully known for a good while yet. There's similar talk of damage having been done to crops in Ukraine and Russia too, but again details are sketchy. The Russian Ag Ministry did say last year that they would review crop conditions sometime this month, but no specific date was given. Bad weather in the region is hampering traders' attempts to get as much Russian wheat shipped out as possible this month, before the Feb 1 export duty is introduced. Trade activity out of Russia has been light this week, as most there are still on holiday until Monday. Mar 15 CBOT Wheat closed at $5.63 3/4, down 3 1/4 cents; Mar 15 KCBT Wheat closed at $6.00 1/2, down 7 1/4 cents; Mar 15 MGEX Wheat closed at $6.02, down 6 1/2 cents. For the week that puts Chicago wheat 17 1/2 cents lower, with the Kansas market down 16 1/2 cents and Minneapolis 9 cents easier.
09/01/15 -- EU grains finished the day mixed, but mostly lower, with Jan 15 London wheat down GBP0.30/tonne at GBP131.20/tonne, Jan 15 Paris wheat ended EUR4.00/tonne higher at EUR194.75/tonne, Mar 15 Paris corn was down EUR0.50/tonne at EUR162.75/tonne and Feb 15 Paris rapeseed ended EUR0.25/tonne easier at EUR361.25/tonne.
It was a choppy session, in which expiring Monday Jan 15 Paris wheat traded in an EUR8.25/tonne range. May 15 London wheat closed towards the middle of its GBP2.80 daily trading range.
For the week, Jan 15 London wheat was GBP0.50/tonne weaker, Jan 15 Paris wheat fell EUR3.25/tonne, Mar 15 Paris corn was up EUR1.50/tonne and Feb 15 Paris rapeseed jumped EUR13.50/tonne.
The pound rose a little versus the dollar and euro today. Against the US currency it was still almost 2 cents lower on the week, and remains close to yesterday's 1 1/2 year low of 1.5088, whereas it's close to a 36 month high versus the euro.
It's been a week low on news really, with traders in Europe and the US settling back into the post-holiday routine, and many in Russia and Ukraine still absent for their orthodox Christmas celebrations.
Reuters reported that the Ukraine government are to meet with domestic trading houses on Jan 13 to discuss wheat exports, with some sort of limitation on the agenda. They are said to be concerned that the Feb 1 Russian export duty will see more interest switch to Ukraine wheat. The country has already shipped around 80% of their exportable wheat surplus for the season, according to the report.
EU soft wheat licences for the past week only came in at 196 TMT, taking the total volume granted by Brussels so far this year to 14.8 MMT. That's the first sign of things starting to lag behind the year ago record pace of 15.1 MMT, although it was of course for a holiday shortened week.
Strategie Grains were said to have raised their outlook a little on the 2015 French soft wheat crop to 37.191 MMT, although that is 0.8% lower than last year's output.
All eyes now are on the USDA's WASDE report, quarterly stocks figures and US winter wheat planting estimates due on Monday at 17.00 GMT.
This day often causes some big price movements in the markets. It's been bearish on wheat for three of the past five years and bullish for corn in three out of five.
08/01/15 -- Soycomplex: Beans closed 7-8 cents lower. The USDA announced 118,000 MT of beans sold to China for 2014/15 shipment under the daily reporting system. Weekly export sales for beans came in better than expected (again) at 910,600 MT for 2014/15 shipment. These were up 49 percent from the previous week and 39 percent above the prior 4-week average. Shipments of 1.6 MMT (with China taking 1 MMT) were also pretty good for a holiday week. The US has now already shipped 29.64 MMT of soybeans so far this season, with a further 13.55 MMT of outstanding sales remaining. That takes total commitments past 90% of the USDA target for the season, one which is only 18 weeks old. The trade is now starting to focus on Monday's WASDE and stocks numbers from the USDA. The very strong pace of US soybean sales so far this season mean that US 2014/15 ending stocks are seen at 393 million bushels versus 410 million from the USDA last month. Jan 15 Soybeans closed at $10.45, down 7 3/4 cents; Mar 15 Soybeans closed at $10.48 1/4, down 8 cents; Jan 15 Soybean Meal closed at $361.30, down $7.20; Jan 15 Soybean Oil closed at 33.58, up 60 points.
Corn: The corn market closed with small losses. Weakness in wheat didn't help corn's cause today, and neither did continued strength in the US dollar. Weekly export sales came in at only 387,600 MT for 2014/15 – a marketing-year low – and were down 57 percent from the previous week and 63 percent below the prior 4-week average. That fell beneath trade expectations, even for a holiday shortened week. There were also sales of 210,000 MT for 2015/16 shipment for Japan. The USDA also reported another strong week of sorghum sales and shipments - all for China once more. US sorghum commitments were already running at 103% of the USDA target for the entire season. China have also been a featured buyer of large volumes of US DDGS of late. The weather is improving in Argentina. "Crop prospects have improved in Argentina from a heavy soaking rainfall last week. Cordoba received 50-100 millimeters of rain (2-4 inches) relieving a very severe drought. This is Argentina's top farm province producing 38% of national corn and 29% of soybeans," said Martell Crop Projections. Cordoba is set to receive a further 1 to 2.5 inches of welcome rainfall in the next 5-7 days, they added. Mar 15 Corn closed at $3.94 1/4, down 2 cents; May 15 Corn closed at $4.02 3/4, down 2 cents.
Wheat: The wheat market closed lower across all three exchanges, on the notion that US wheat is simply too expensive compared to other origins. Weekly export sales of only 151,000 MT for delivery in the 2014/15 marketing year – a marketing-year low – did little to change that view. These were down 57 percent from the previous week and 61 percent from the prior 4-week average. Even if it was a holiday week, that was a pretty dire performance. The strong US dollar, which is forecast to appreciate further in 2015, is doing little to help the US export cause. Egypt's GACS bought 180 TMT of French wheat for Feb 8-18 shipment in their tender. US wheat was nowhere to be seen, ditto Russia and Ukraine origin material. There's now talk of a possible Ukraine wheat export quota being introduced this season, to protect the local market should the Russian export duty switch extra demand to that origin. Concerns about possible winter kill issues for US, Russian and Ukraine wheat have been pushed to the back of traders' minds, as a clearer picture of what damage, if any, may have been caused won't be known for many weeks yet. Mar 15 CBOT Wheat closed at $5.67, down 12 1/2 cents; Mar 15 KCBT Wheat closed at $6.07 3/4, down 12 1/4 cents; Mar 15 MGEX Wheat closed at $6.08 1/2, down 7 1/4 cents.
08/01/15 -- EU grains traded mostly lower, despite a clean sweep victory for French wheat in Egypt's first tender of 2015.
The day ended with Jan 15 London wheat down GBP1.60/tonne at GBP131.50/tonne; Soon to expire Jan 15 Paris wheat was down EUR5.00/tonne to EUR190.75/tonne; Mar 15 Paris corn was EUR1.25/tonne lower at EUR163.25/tonne; Feb 15 Paris rapeseed was EUR1.25/tonne firmer at EUR361.50/tonne.
Jan 15 Paris wheat goes off the board on Monday, and is displaying particular weakness in thin trade. It closed tonight at an EUR6.00/tonne discount to what will become the new front month, Mar 15.
The Bank of England left UK interest rates on hold at 0.5%, where they've now been since March 2009. UK inflation is reported to have fallen to a 12 year low of 1%.
In the eurozone, inflation has now turned negative, strengthening the case for the ECB to introduce more QE measures sooner rather than later.
The pound is therefore back in the familiar position of being up against the euro and down versus the dollar, with the US Fed now looking likely to be the first major central bank to raise interest rates in 2015.
Sterling has already declined 3.3% against the US currency in the first week of the year, with many analysts now forecasting a drop to the 1.40-1.43 region later in 2015. It currently stands at an 18-month low against the US unit, yet is close to a 36-month high versus the euro.
This should support Paris wheat more than the London market in the months ahead, and could also be construed as bearish for US wheat prices.
World ethanol prices are finally showing signs of cracking, following the astonishing slump in crude oil values witnessed in the last 6 months. It remains to be seen if the UK and EU bioethanol industries can ignore these developments for much longer, given that the price of their feedstock has increased significantly in the last few months.
Defra reported that 604 TMT of wheat was milled in the UK in the 4 weeks to Nov 22, 2014 - a 13% rise on a year ago. The proportion of home grown wheat used in the grist was 86%, a 2 1/2 year high.
Wheat usage in UK animal feed was up 5% year-on-year in November to 250 TMT, and barley usage fell 20% to 72 TMT.
Reuters reported that Algeria's recent wheat buying spree had actually amounted to around 900 TMT, which is far more than the 450-500 TMT originally reported.
Egypt's GASC tendering for wheat for Feb 8-18 shipment, booking 3 cargoes (180 TMT) of French wheat. Russian wheat wasn't offered, given that the delivery period falls after the introduction of their new minimum EUR35/tonne export duty.
Russian shippers say that they are better off carrying old crop into new crop rather than pay the "fine".
Ukraine wheat didn't feature either. There are now some reports circulating that the Ukraine government will cap wheat exports this year.
07/01/15 -- Soycomplex: Beans closed mixed and meal was a little lower at the end of a choppy session. "The rally back to the recent highs on the front month couple with rally in the US dollar to 9-year highs today may have attracted new selling from the Brazilian producer that capped gains," said Benson Quinn. Informa estimate world 2014 soybean production up 575,000 MT from their previous forecast at 312.96 MMT (the USDA are at 312.8 MMT). They see 2015 output up 500,000 MT from their previous estimate at 313.7 MMT. They see world rapeseed production in 2014 at 71.89 MMT, which is 755,000 MT up from their previous estimate (and very close to the USDA's 71.87 MMT). Output in 2015 is seen falling to 68.9 MMT, which is 2 MMT below their previous forecast. FC Stone estimated Brazil’s 2014/15 soybean crop at 93.5 MMT versus a previous estimate of 93.1 MMT. A Reuters survey estimated the US 2014 soybean crop slightly lower than last month's 3.958 billion bushels from the USDA at 3.956 billion. US 2014/15 ending stocks are seen at 393 million bushels versus 410 million from the USDA last month. The USDA release their revised estimates on Monday. Trade estimates for tomorrow's weekly export sales report for beans are around 500-700,000 MT in a holiday shortened week. Jan 15 Soybeans closed at $10.52 3/4, up 1 3/4 cents; Mar 15 Soybeans closed at $10.56 1/4, up 1/2 cent; Jan 15 Soybean Meal closed at $368.50, down $2.30; Jan 15 Soybean Oil closed at 32.98, up 29 points.
Corn: The corn market closed 8-9 cents lower, slipping back below the $4/bu mark on front month March. "After multiple weeks of good ethanol production, this morning’s EIA data offered evidence of the perils of ethanol trading a premium to gasoline," said Benson Quinn. US ethanol production was down 23,000 barrels/day to 949,000 bpd, and stocks were up 700,000 barrels to 18.8 million. Is this finally a sign of a slow up in demand, or is it simply down to the data being for a holiday shortened week? Many are saying that ethanol at a premium to gasoline is simply unsustainable. WTO crude oil hit a new more than 5 year low, and now seems comfortable trading below $50/barrel. Brent also dipped below $50/barrel for the first time since May 2009 today. Informa raised their forecast for the 2014 world corn crop by 8.3 MMT to 990.1 MMT (the USDA are at 991.6 MMT). They cut world 2015 production by 2.3 MMT to 965.6 MMT however. FC Stone estimated Brazil’s 2014/15 corn crop at 73.8 MMT versus a previous estimate of 74.3 MMT. South Korea MFG are tendering for 70,000 MT of optional origin corn for Apr-May shipment. Monsanto said that it expects a significant drop in corn seed sales to both North and South American farmers in the year ahead. Weekly export sales tomorrow are expected to be in the region of 600-800,000 MT. Mar 15 Corn closed at $3.96 1/4, down 8 3/4 cents; May 15 Corn closed at $4.04 3/4, down 8 3/4 cents.
Wheat: The wheat market closed generally around 9 to 12 cents lower. The market seems to be more focused on the fact that US wheat is generally too expensive to pick up much in the way of export interest to all but traditional homes, rather than buying into the possible US winterkill story. Trade estimates for tomorrow's weekly export sales report are only a modest 200-400,000 MT, which is a pretty poor total even for a holiday week. On the weather front however "a polar air mass dominates the Canadian prairies and United States. Minimum temperatures have dropped as low as -25 F in Canada this morning, while 0 to -11 F is being reported in the northern US. There are worries over potential freeze damage in US winter wheat. Only a thin layer of snow exists, not providing much insulation from the bitter cold. Soft red winter wheat is in jeopardy in the Midwest. Poor conditions in the Southern Great Plains is another worry for the national wheat outlook. In the bread wheat states Oklahoma and Texas wheat has not recovered from a year-long drought, placing 20% of hard red winter wheat in jeopardy. Oklahoma producers this week reported subsoil moisture at 24% very short and 36% short. Texas field conditions are similarly dry as pockets of 'extreme' and 'exceptional' drought have persisted, hampering wheat growth and development," said Martell Crop Projections. Mar 15 CBOT Wheat closed at $5.79 1/2, down 12 1/4 cents; Mar 15 KCBT Wheat closed at $6.20, down 11 1/4 cents; Mar 15 MGEX Wheat closed at $6.15 3/4, down 9 3/4 cents.
But today I thought that it was about time I did something about it and said thank you, I have noticed this, and you deserve some credit.
So thank you Gemcom. Once again the fastest payer on the books this month, by a mile. These boys pay faster than Usain Bolt with a bad dose of the trots. I'm only a little one man band, and these things make all the difference. If you don't already do business with them then maybe you should do.
I might do a name and shame next week, so those of you who are in danger of getting lapped three or four times by Usain Gemcom better get the chequebook out!
07/01/15 -- EU grains trade mixed, but mostly a little lower. Rapeseed in Paris was around EUR2.00/tonne higher. Fresh news remains generally lacking ahead of Monday's USDA WASDE and quarterly stocks report. They will also give us their thoughts on US winter wheat plantings then too.
At the close, Jan 15 London wheat was down GBP1.80/tonne at GBP133.10/tonne, Jan 15 Paris wheat was EUR1.55/tonne easier at EUR195.75/tonne, Mar 15 Paris corn was EUR3.75/tonne lower at EUR164.50/tonne and Feb 15 Paris rapeseed ended EUR1.75/tonne higher at EUR360.75/tonne.
May 15 London wheat has reached a more than GBP20/tonne discount to the equivalent May 15 Paris wheat contract for the first time ever today, the HGCA highlighted.
"The export pace of UK wheat has remained behind where it would need to be to balance 2014 production according to the latest available data," they said. Strategie Grains see UK wheat carryout at the end of the current season at 3.6 MMT, around 1.7 MMT higher than normal and at levels not seen since the intervention days.
"It will be interesting to see if the increasing UK discount manages to stimulate sufficient exports," the HGCA added.
With Nov 15 trading at around a GBP9.50/tonne premium to Jan 15, those growers carrying wheat currently feel under little pressure to sell on the spot market, unless they need the cash. Note though that this gap has narrowed from GBP12.00/tonne at the beginning of December.
Even so, this GBP9.50/tonne premium to carry wheat into new crop is still unusually high, the equivalent of more than 7%. Note that the current premium in Paris for Dec 15 over Jan 15 is only EUR2.25/tonne, or little more than 1%.
Brent crude fell below $50/barrel for the first time since May 2009 this morning, and WTI crude in the US slipped below $47/barrel, as that market continues under pressure.
Adverse weather conditions in the Black Sea and US are a threat to winter wheat unprotected by snow, although we won't get confirmation of how much damage has been done until the spring.
Russia's Ag Ministry said that the priority of grain production is for animal feeding, not exports. Since Russia issued various tit for tat sanctions against Western meat imports, domestic feed demand is likely to have increased.
APK Inform said that the new export duty on wheat will probably lead to 2014/15 Russian wheat ending stocks doubling from the previously forecast 5 MMT to around 10-11 MMT.
Agritel said that Russia exported 2.45 MMT of grain in December, down from 3.5 MMT a month previously. This was partly due to adverse weather conditions, and also a significant slow up in the issuing of the necessary paperwork, they said.
Ukraine's December grain exports also fell due to bad weather, down to 3.0 MMT from 3.6 MMT in November, they added.
Ukraine are said to be planning to cancel the VAT refund on grain exports, which may hit foreign sales for the remainder of the season.
Brussels said that they'd issued 965 TMT of soft wheat export licences in the past two weeks (no figures were released last week). That takes the season to date total to 14.6 MMT versus 14.4 MMT a year ago at this time.
The USDA estimates that EU all wheat exports will total 29 MMT this season, down 9% from 31.9 MMT a year ago.
Brussels also said that they'd issued 4.3 MMT of barley export licences so far this season, down from 4.8 MMT this time a year ago. The USDA estimate total EU barley exports at 6.7 MMT this season versus 4.9 MMT in 2013/14.
The pound and euro both fell to new lows against the US dollar.
Morgan Stanley said that the euro "is likely to remain a sell over the course of 2015 as ECB easing remains a prominent possibility and political risks loom large."
They hold a similar view on sterling too. "We remain bearish on GBPUSD. The BoE believes inflation could fall further, and both our economists and markets have pushed back their estimate of the timing of the first hike. What’s more, the latest OBR forecasts suggest that the UK’s fiscal position is worse than previously thought. Further austerity is likely, which will weigh on UK growth, supporting our bearish view."
The weak pound and euro should aid grain exports relative to those from the US.
06/01/15 -- Soycomplex: Beans extended yesterday's winning streak, closing around 10 cents higher. "There was little new in the way of fresh news today but upward was the trend for the beans as trade continues to trim short positions ahead of next Monday’s production, supply and demand and quarterly stocks reports," said Benson Quinn. The USDA announced 243,000 MT of US beans sold to China for 2015/16 shipment under the daily reporting system. Abiove said Brazil exported 45.7 MMT of beans in 2014 versus 42.8 MMT in 2013. They said that Brazil exported 13.7 MMT of meal in 2014 versus 13.3 MMT in 2013. There's talk of dryness issues in central and northern parts of Brazil. "The updated forecast is both warmer and drier than normal in Mato Grosso and the tropics at large," said Martell Crop Projections. A few early planted new crop beans have been harvested in the state, and also in Parana, said Dr Cordonnier. The bulk of the Mato Grosso harvest is expected to kick off 2-3 weeks from now. Informa pegged the 2014 US soybean crop at 3.969 billion bushels, with yields at 47.6 bu/acre, both a little higher than the USDA. Jan 15 Soybeans closed at $10.51, up 11 1/4 cents;
Mar 15 Soybeans closed at $10.55 3/4, up 10 1/2 cents; Jan 15 Soybean Meal closed at $370.80, up $1.80; Jan 15 Soybean Oil closed at 32.69, down 1 point.
Corn: The corn market closed with small losses. Firmer trade in soybeans and wheat offered some support to corn today, but not enough to see the market close higher. "In orderly trade, the corn market settled into a relatively narrow range with a lower bias until a round of buying emerged late in the session," said Benson Quinn. The continually firm US dollar offers a negative bias to trade. Weekly export inspections are running below the level required to hit USDA forecasts for the season. Informa estimated the US 2014 corn crop at 14.425 billion bushels, with a national average yield of 172.7 bu/acre. Their production estimate is higher than the USDA, although their yield figure is lower, by virtue of a 400,000 acre increase in the harvested area. Ukraine said that they'd exported 7.6 MMT of corn since the start of the 2014/15 season in July. Corn currently accounts for around 80% of all their weekly grain exports as wheat shipments fall off. There's talk that the Ukraine government have cancelled VAT rebates on grain exports. It remains to be seen if these now continue at the current pace. Crude oil fell below $50/barrel for the first time since 2009. Monday's USDA report may provide corn with some much needed direction. Prior to that we have some Brazilian crop production estimates due from Conab on Friday. Mar 15 Corn closed at $4.05, down 1 cent; May 15 Corn closed at $4.13 1/2, down 1 1/4 cents.
Wheat: The wheat market closed with small gains, but well off the intra-day highs which showed double digit advances at one stage. A slump in US winter wheat crop ratings was supportive, with Illinois down 32 percentage points in the good to excellent category. Kansas and Nebraska wheat were down 12 points each and South Dakota fell 11 points. Drought and winterkill worries are the main reasons for the sharp declines. China were said to have bought 120,000 MT of hard wheat over the past few days, most likely of US and/or Australian origin. Algeria were said to have bought 450-500,000 MT of optional origin wheat for March/April shipment, most likely of French/German origin. Tunisia seeks 117,000 MT of soft milling wheat, along with 50,000 MT of barley, both of optional origin for Feb-Mar shipment. Kuwait are in the market for 80,000 MT of optional origin feed barley for Apr-May shipment. India’s government said that as of Jan 2nd the country has planted 29.3 million ha of wheat versus 29.4 million a year ago. Informa estimated US winter wheat production down 10.7% from last year at 1.378 billion bu. They have all wheat output down 5.1% year on year at 2.026 billion bu. Mar 15 CBOT Wheat closed at $5.91 3/4, up 2 3/4 cents; Mar 15 KCBT Wheat closed at $6.31 1/4, up 6 1/2 cents; Mar 15 MGEX Wheat closed at $6.25 1/2, up 4 cents.
06/01/15 -- EU grains finished the day mixed, with Jan 15 London wheat up GBP0.50/tonne at GBP134.90/tonne, Jan 15 Paris wheat was EUR1.75/tonne easier at EUR197.00/tonne, new front month Mar 15 Paris corn was up EUR1.50/tonne at EUR168.25/tonne and Feb 15 Paris rapeseed ended EUR3.25/tonne higher at EUR358.50/tonne.
The market largely shrugged off the news that US winter wheat crop ratings had fallen sharply in many states across the last month.
Illinois saw the largest decline, with the proportion of the crop rated good to excellent down a whopping 32 percentage points, from 56% at the end of November to only 24% now.
Kansas (-12 percentage points), South Dakota (-11) and Nebraska (-12) all suffered double digit falls in the good to excellent category too.
Still, the HGCA's Jack Watts says that US winterkill concerns are premature so "don’t be surprised if current ‘fears’ are not realised come summer."
Crop conditions heading into winter dormancy were in fact rather good, historically, he notes. So perhaps things aren't really as bad as the bare bones of these numbers suggest?
The situation wasn't much different 12 months ago, however and early 'fears' then proved to be more than justified. In Kansas, the leading US winter wheat producing state, the crop was rated 63% good to excellent at the end of November 2013. That had fallen to 58% at the end of December and by the end of January 2014 the Kansas wheat crop had slumped to be only rated 35% good to excellent.
Kansas wheat production ultimately finished up as the lowest since 1989 last year, and the current rating is 9 points below where things were at the end of December 2013!
Something for the bulls to hang onto there.
Both the pound and euro remained under pressure again today. The former from a string of disappointing economic data to start 2015, and nervousness already kicking in over the General Election despite it still being 4 months away. The latter is potentially even sicker than sterling, with a serious round of eurozone QE on the cards, and talk of a Greek default/eurozone exit if the poll-leading left-wing Syriza party get elected on Jan 25.
Barclays are forecasting the pound to fall to 1.43 against the US dollar by the end of the year, some 6% lower than today's rate. They also see the EUR/GBP exchange rate dipping to 0.75 in the year ahead, around 4% below where the pair currently trade.
Essentially that would appear to be a continuation of the 2014 trend. The pound lost 5.5% of it's value against the US dollar last year, but gained 7.4% versus the euro.
That could however see Paris wheat outperform London wheat for a third year in a row in 2015.
05/01/15 -- Soycomplex: Beans, meal and oil all closed sharply higher on what looks like short-covering/the establishment of fresh longs. There wasn't anything outrageously bullish to warrant a near 40 cents higher move, maybe it was simply new month, new year, new money? Weekly export inspections of 1.4 MMT were good, and far more than needed to meet USDA projections for the season. South American weather doesn't seem overly concerning, a bit too wet in parts of southern Brazil, and a bit dry in some central/northern areas, and also in parts of Argentina, but nothing to get too excited about just yet. Traders still see record Brazilian production this year, and if not record output, then certainly close to, from Argentina. Chinese demand also remains high however. The USDA also reported 233,000 MT of US beans sold to China for 2014/15 shipment under the daily reporting system. The Argentine grower is said to have over 25% of his 2013/14 soybean crop still to sell. The National Bank of Argentina are said to be carrying out their threat to close the accounts of, and refuse to extend credit to, those still carrying old crop beans. For new crop they are said to be around 5% sold, which is similar to a year ago. Flooding in Malaysia remains a threat to palm oil production there. Fund money was said to have ended up as a net buyer of 15,000 soybean contracts on the day. Jan 15 Soybeans closed at $10.39 3/4, up 37 1/4 cents; Mar 15 Soybeans closed at $10.45 1/4, up 37 3/4 cents; Jan 15 Soybean Meal closed at $369.00, up $12.50; Jan 15 Soybean Oil closed at 32.70, up 75 points.
Corn: The corn market closed around 10 cents higher. As with soybeans, it seems that fund money came out of the blocks in buying mode on what could be called the first "proper" full day of trading of 2015. They were given credit for ending up as net buyers of around 10-12,000 lots on the day. Again, there wasn't any single element that really seemed to justify today's action. Weekly export inspections were 538,945 MT, which is not a huge number, even for a holiday shortened week. They need to be around 900,000 MT to reach the USDA's target for the season. Year to date inspections are up only 1% on a year ago. The market largely ignored the US dollar trading to new highs, and crude slumping to fresh lows. "Technicals hinted at improving with today’s higher trade. However, it feels like the market is going to need to force more short covering to sustain a rally from the current levels. The current technical structure of the market does not support that idea," said Benson Quinn Commodities. The Argentine Ministry reported growers there to be almost 93% sold on old crop corn (versus 84% a year ago), and already 20% committed on new crop (compared to less than 7% sold a year ago). China are said to be in the market for US DDGS for Feb–Mar shipment. The Chinese government is due to attempt to auction up to 5 MMT of corn stocks this week. Traders don't expect the auction to be particularly well subscribed. Mar 15 Corn closed at $4.06, up 10 1/4 cents; May 15 Corn closed at $4.14 3/4, up 10 1/4 cents.
Wheat: The wheat market closed with fair gains, but looked more like a follower than a leader today. Prices ended will off the intra-day highs. There's talk of potential winterkill to US wheat in some parts of the Plains, but damage is not as yet expected to be particularly significant or widespread. The winterkill talk also extends to the Black Sea region, which is also seeing very cold temperatures with some areas lacking snow coverage, noted Benson Quinn. As with corn and beans today simply looks like fund money looking to start the new year on the offensive, establishing new longs, for all the recent talk of "rebalancing" meaning them starting 2015 as a wheat seller. There's some debate as to whether agri-commodities are currently perceived as being a better investment bet than equities, which may be encouraging some new money into the market. Weekly US export inspections of 352,829 MT were less than thrilling. The dollar hitting new 9-year highs against the euro won't help US wheat compete with offers out of Europe. The Argentine Ag Ministry reported growers there have still only sold 81% of their old crop wheat, and have nearly 40% of their new crop committed. Russian seaports were said to have shipped out 19 MMT of wheat in 2014, more than double the volume exported in 2013. Russian wheat is offered in the market for January shipment, but anything after that is uncompetitive once the new export duty kicks in. Ukraine seaports shipped out 9.4 MMT of wheat in 2014, up 42% on a year previously. Mar 15 CBOT Wheat closed at $5.89, up 7 3/4 cents; Mar 15 KCBT Wheat closed at $6.24 3/4, up 7 3/4 cents; Mar 15 MGEX Wheat closed at $6.21 1/2, up 10 1/2 cents.
05/01/15 -- EU grains closed mostly with some good gains to start the first week of 2015, and a return to "normality" for many traders, despite the fact that fresh news was generally lacking. There wasn't anything particularly bullish that was new, was it therefore simply a case of new month, new year, new money?
At the close Jan 15 London wheat was up GBP2.70/tonne at GBP134.40/tonne; Soon to expire Jan 15 Paris wheat was up EUR0.75/tonne to EUR198.75/tonne (although Mar 15 was up EUR3.75/tonne and May 15 was EUR4.25/tonne higher); Expiring Jan 15 Paris corn was EUR1.50/tonne higher at EUR158.00/tonne (and again slightly further forward months posted much better gains than this); Feb 15 Paris rapeseed was EUR7.50/tonne firmer at EUR355.25/tonne.
The euro fell to a 9-year low against the US dollar following hints that the ECB may soon start a major QE offensive in an attempt to kick-start the eurozone economy, where record low interest rates have so far largely failed.
Political turmoil in Greece also has the single currency under pressure. With the left-wing Syriza party leading in the polls heading into their Jan 25 general election. A victory for them might prompt a default on the previously agreed terms of its international bailout, and possibly lead to a eurozone exit, it is thought.
Further euro weakness therefore seems likely in the coming weeks.
It may also be a factor today that traders sitting back at their desks for the first time in over two weeks in many cases think that the market has fallen a bit too far in thin trade since Christmas Eve. As of Friday night London wheat was down GBP3.65/tonne, with Paris wheat down EUR3.00/tonne, Paris corn down EUR4.75/tonne and Paris rapeseed EUR5.75/tonne lower since then.
This will also have been some traders' first chance to react to the news of the Feb 1 introduction of the new minimum EUR35/tonne Russian wheat export duty.
In other news, APK Inform said today that Russian seaports had exported over 24 MMT of grains in the 2014 calendar year, a 95% rise compared to only 12.3 MMT in 2013. Wheat accounts for 19.1 MMT (80%) of that total, which is more than double the 9.3 MMT shipped out a year previously.
The top exporting ports were Novorossiyk on the Black Sea with 9.9 MMT, followed by Azov with 4.1 MMT, Taman with 2.4 MMT and Rostov with 2.0 MMT, they said.
Ukraine seaports meanwhile shipped 36.4 MMT of grains in 2014, up 54% on 2013. Wheat accounted for 9.4 MMT (26%) of that total versus 6.6 MMT in 2013, with corn contributing 23.2 MMT (64%) versus 14.9 MMT the year previously, they added.