Chicago Soybeans Slip From Record Highs
04/09/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.71, up 6 1/2 cents; Nov 12 Soybeans closed at USD17.68 1/4, up 11 3/4 cents; Sep 12 Soybean Meal closed at USD541.40, down USD5.70; Sep 12 Soybean Oil closed at 57.57, up 115 points. Beans and meal raced to new contract highs in electronic trade, although profit-taking kicked in to pare those gains later in the day. Funds were said to have ended up as net buyers of around 4,000 soybean contracts on the day. The remains of Hurricane Isaac brought drenching weekend rains to the lower Mississippi Valley and eastern Midwest, which will have improved soil moisture, but came too late to help soybeans pod filling, say Martell Crop Projections. Allendale estimated the US soybean yield at 34.9 bpa versus the USDA's August estimate of 36.1 bpa, and place the 2012 US soybean crop at 2.602 billion bushels versus the USDA August estimate of 2.692 billion. Dr Michael Cordonnier came out with a yield estimate of 34.5 bpa, and it is rumoured that satellite technology analysts Lanworth are now saying 35.0 bpa. It would seem therefore that we finally have a fairly narrow and consistent range of trade guesses after a summer of great disparity. FCStone are expected to release their latest production estimates tomorrow afternoon with Informa due on Friday morning ahead of the USDA's own revised numbers are out next Wednesday.
Corn: Sep 12 Corn closed at USD8.07, up 4 1/4 cents; Dec 12 Corn closed at USD8.05, up 5 1/4 cents. Corn also closed well off session highs, although funds were given credit for having been net buyers of around 7,000 contracts on the day. Allendale estimate the 2012 US corn yield at 118.2 bpa versus the USDA's August estimate of 123.4 bpa. This year's US corn crop is estimated at 10.326 billion bushels compared to 10.779 billion from the USDA. Dr Cordonnier came up with an estimate of 119.0 bpa, down 2bpa from his previous estimate of 121.0 bpa. Unconfirmed reports suggest that Lanworth lowered their corn production by 2.5% to 10.195 billion, using a US yield of 116.64 bpa. The USDA announced the sale of 180 TMT of US corn to Japan for 2013/14 delivery. Further evidence of demand rationing, at least for old crop corn, came via the USDA's weekly export inspections report. For corn just 6.37 million bushels were inspected for export this week, compared to 15.061 million last week. Export interest is clearly switching elsewhere. Brazil's Ministry says that the nation exported a record 2.76 MMT of corn in August versus 1.70MTM in July and 1.52 MMT in Aug 2011. Safras e Mercado estimated Brazil’s 2012/13 corn crop at 68.03 MMT, down 6% from a year ago.
Wheat: Sep 12 CBOT Wheat closed at USD8.66, down 4 cents; Sep 12 KCBT Wheat closed at USD8.81 1/4, up 1/2 cent; Sep 12 MGEX Wheat closed at USD9.28 3/4, down 3 cents. Fund activity was said to have been around even on the day for Chicago wheat. US wheat was well priced out of Egypt's weekend tender, the majority of which went to Russian origin grain. Russia’s Ag Ministry said that the grain harvest there is 65% complete with an average yield of 1.89 MT/ha down 27% from a year ago. The average wheat yield is 1.95 MT/ha versus 2.87 MT/ha a year ago. Things are even worse in Kazakhstan where they've harvested 6.4 MMT of grain off 55% of the planted area, with yields at just 0.75 MT/ha, almost half the 1.4 MT/ha level of a year ago. The USDA reported weekly export inspections for wheat of 25.446 million bushels, up almost 35% on the 18.888 million inspected for export last week, and well above the 10-15 million that the trade was expecting. The USDA reported spring wheat harvesting almost over at 95% complete, versus 72% normally. In the southern hemisphere, Australian wheat areas picked up only light showers across the weekend, with coverage of around 25%. Argentine wheat areas continue to see abundant moisture, although farmers there have sown the smallest wheat area in at least 50 years, according to one local Cereals Exchange.
EU Grains Closing Comments
04/09/12 -- EU wheat closed mixed with Nov 12 London wheat unchanged at GBP204.50/tonne and Nov 12 Paris wheat down EUR1.75/tonne to EUR262.75/tonne.
US markets re-opened strongly after their 3-day long weekend, although they'd begun to slip off from the highs by the time Europe was entering the home stretch. Chicago soybeans set fresh all time highs in early trade.
There are reports circulating of an unusual Glencore sale of 60 TMT of barley to Iran loading at the port of Rouen in northwest France this week, which would be the first such sale to Iran for quite a few years. Western sanctions against the Middle Eastern buyer do not include food, of course.
The news is interesting as it comes at a time when EU-27 2012/13 barley sales are already running well ahead of last year's levels. Brussels have issued 1.4 MMT of barley export licences so far in the new marketing year, versus only 757 TMT at this time in 2011.
Whilst EU-27 barley production is forecast steady at 52.85 MMT this year, a modest increase of 2.7% on last year, other producer's output has fallen sharply in 2012. Kazakhstan's crop is down 42%, with Ukraine's falling 27.5% and Russia's output seen declining almost 15% this year, according to the USDA.
That leaves the EU-27 well placed to take advantage of whatever barley export business is around into the Middle East, as we possess a significant freight advantage to other traditional barley exporters such as Australia, Canada and Argentina.
The USDA forecast Kazakhstan's barley exports to fall 75% in 2012/13, with Russia's seen down 37.5% and Ukraine's declining 13%.
The world's largest barley importer is Saudi Arabia, accounting for 42% of all world trade in the grain.
Kazakhstan's Ministry says that the nation has harvested 6.4 MMT of grain off 55% of the planted area, with yields almost half that of those of a year ago at just 0.75 MT/ha.
Russian wheat won the majority of the weekend's Egyptian tender, but there is a feeling around that this may be a good thing, as the sooner they sell whatever their exportable surplus might be this year then the better.
Heading into the close of European trade the USDA reported US wheat export inspections of 25.446 million bushels, up almost 35% on the 18.888 million inspected for export last week. That would seem to indicate that the US is finding steady offtake for it's own wheat even if it is a premium to Black Sea origin grain.
The Late Lunch
04/09/12 -- The overnight electronic market is drifting a little easier after Sep 12 beans made a new historic high overnight of USD17.94 3/4 versus the previous all time high of USD17.80 3/4. Front month Sep 12 is currently "only" 13 3/4 cents higher at USD17.78 1/4. Wheat is up 3-5 cents and corn around 5-7 cents higher.
There's speculation that the ECB will announce measures to boost economy this week, although we've seen/heard that one all before.
CNGOIC estimate China’s soybean imports are starting to slip with Sep and Oct shipments forecast at a combined 7.0 MMT, adding that Aug imports were 4.7 MMT.
Allendale estimate the 2012 US corn yield at 118.2 bpa versus the USDA's August estimate of 123.4 bpa. This year's US corn crop is estimated at 10.326 billion bushels compared to 10.779 billion from the USDA.
They put the US soybean yield at 34.9 bpa versus the USDA's August estimate of 36.1 bpa, and place the 2012 US soybean crop at 2.602 billion bushels versus the USDA August estimate of 2.692 billion.
FCStone are expected to release their latest production estimates tomorrow afternoon with Informa due on Friday morning. The USDA are out next Wednesday.
Martell Crop Projections say that "Hurricane Isaac delivered heavy soaking rain to the lower Mississippi Valley and Eastern Midwest, improving soybean prospects, though the rain came too late in the soybean pod filling stage for the maximum yield benefits."
Brazil's soybean exports are slowing, if that is down to dwindling stocks (as it seems to be), then the US is shaping up to have the export market to itself for the remainder of 2012.
EU Rapemeal Prices
04/09/12 -- Rapemeal prices on the continent are firmer, following overnight gains in the electronic Globex soymeal market.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Sep12 | 294.00
|
+2.00
|
| Oct12 | 294.00
|
+1.00
|
| Nov12/Jan13 | 296.00
|
+2.00
|
| Feb/Apr13 | 294.00
|
+2.00
|
| May/Jul13 | 267.00
|
+4.00
|
| Aug/Oct13 | 224.00
|
+1.00
|
| Nov13/Jan14 | 228.00
|
+1.00
|
The Morning Paper
04/09/12 -- The overnight electronic market is sharply higher, with soybeans closing in on the USD18/bushel mark for the first time ever. Front month Sep 12 has reached USD17.94 3/4 in overnight trade, and currently stands 21 1/2 cents higher at USD17.86/bu. Corn and wheat are both around 7-10 cents higher.
Beans still look like the one with the most upside to me. News out of Brazil is that they only shipped less than 2 MMT of soybeans out in the first four weeks of August, less than half the volume exported in July. Logistics might have something to do with it, but the trade is thinking that this is a clear sign that soybean supplies in South America are already running low.
There's been very little evidence thus far of USD17 beans rationing demand. The USDA's weekly export sales report continues to show robust volumes being sold, at least for soybeans. CNGOIC said today that China's August soybean imports were probably around 4.7 MMT, which is a bit more than the 4.5 MMT previously forecast. That would bring China's imports for the calendar year to date to 33.7 MMT.
Soybean imports this month and next may decline to less than a combined 7 MMT however on poor domestic crush margins, they add. We shall see. The government are doing their best to keep a lid on prices by auctioning off 400 TMT of soybeans every two weeks, with the last two auctions both fully subscribed. It also remains to be seen how long they can keep that up for, and what the quality of the beans on offer is like.
Wheat is up overnight, unperturbed by the revelation that US wheat was USD40/tonne outpriced in Egypt's weekend tender. The feeling there is clearly "let Russia sell all it's cheaper wheat, the more they sell now the quicker they will be out of the market." Not unsound reasoning, there's a hell of a long way to the 2013 crop.
From a UK perspective, if we are going to see wheat go significantly higher from where it is now then it's likely to be in the Apr/Jun 2013 period. UK on-farm wheat stocks going into 2012/13 were the lowest since 1999/2000, according to the HGCA. Production this year looks like being little more than 14 MMT, Ensus have re-opened and Vivergo should also be operational by then, so stocks should be pretty tight come the last quarter of 2012/13.
Kazakhstan has harvested 6.4 MMT of grain off 55% of the planted area, with yields almost half that of a year ago at just 0.75 MT/ha. That doesn't make things in the UK sound quite so bad after all does it?
In the southern hemisphere, Australian wheat areas picked up only light showers across the weekend, with coverage of around 25%. Only further light relief is in the forecast for the rest of the week and first half of next week. Meanwhile Argentine farmers have planted their smallest wheat area in at least 50 years, according to the Bahia Blanca Cereals Exchange.
EU Wheat Mixed In Thin Trade
03/09/12 -- EU grains ended narrowly mixed with Nov 12 London wheat down GBP0.35/tonne to close at GBP204.50/tonne and with Nov 12 Paris wheat EUR0.75/tonne firmer at EUR264.50/tonne.
With America closed for the Labor Day holiday, fresh news was hard to come by and volume was light in an extremely dull session.
With the kids going back to school this week, the UK weather is predictably finally improving, which should see the wheat harvest move northwards with significant progress expected by the end of the week.
Hopefully quality will improve, even if optimism isn't too high over yields.
The HGCA noted last week that the poor results seen so far are from a survey "biased towards earlier harvested bread milling wheat, so figures can be expected to change when more nabim group 3 and 4 varieties have been harvested."
Ensus are back up and running and taking in wheat I understand.
Meanwhile, UK on-farm wheat stocks at the end of June were the lowest since 1999/2000, report the HGCA.
Saudi Arabia bought 575 TMT of hard wheat over the weekend, split between European, Australian and "north and south American" origin. It is unclear if by "north American" they mean US or Canadian wheat.
Egypt were also in the market, booking 365 TMT of Russian, Ukraine and Romanian wheat in its largest purchase of the season so far. Russia proved that they aren't out of the market just yet, picking up the lion's share of the order by winning four cargoes worth of the business, whilst Ukraine and Romania picked up one apiece. US wheat proved to be around USD40/tonne too expensive, and that's before more expensive freight is added on top.
Ukraine has had a busy start to the new 2012/13 marketing year, exporting 60% more grain than in the same period last year. They shipped out 1.78 MMT of grain in August, bringing the marketing year-to-date total to a fraction under 3 MMT, including 1.3 MMT of wheat, 1.1 MMT of corn and over 550 TMT of barley.
Ukraine's Ag Ministry forecasts 2012/13 grain exports at around 20 MMT, approximately 8% down on the 21.8 MMT shipped in 2011/12.
There's not much on the agenda this week as far as important data releases are concerned. The USDA's usual weekly crop progress report is delayed until tomorrow night. Next week offers a bit more excitement potential though. The USDA's world supply & demand numbers are out on Wednesday September 12.
Also that day, Germany's Constitutional Court is due to rule on whether the European Stability Mechanism (ESM) is lawful under the German constitution. Morgan Stanley apparently rate the chances of a 'No' verdict as high as 40 percent, according to Reuters. If they did vote against it, that would potentially savage the euro.
EU Rapemeal Prices
03/09/12 -- Rapemeal prices on the continent are little changed today with Chicago markets closed for the Labor Day holiday. UK rapemeal is up almost GBP60/tonne in the past 12 weeks, mimicing gains in soymeal which is up by more than GBP100/tonne in the same period.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:
| Sep12 | 292.00
|
unch
|
| Oct12 | 293.00
|
unch
|
| Nov12/Jan13 | 294.00
|
unch
|
| Feb/Apr13 | 292.00
|
unch
|
| May/Jul13 | 263.00
|
+1.00
|
| Aug/Oct13 | 223.00
|
+1.00
|
| Nov13/Jan14 | 227.00
|
+1.00
|
News Snippets
03/09/12 -- There's no overnight Globex market this morning due to the Labor Day holiday, so today is already shaping up to be a bit of a non-event.
The results of the Saudi tender are out, and they bought 575 TMT of hard wheat, spreading the business around between the EU, Australia and north & south America for shipment between December and February.
Egypt also bought wheat over the weekend, taking 365 TMT of Russian, Ukraine and Romanian material for Oct. 11-20 shipment. Prices were around USD321-323/tonne, with US wheat well priced out at around USD40/tonne more than that. EU wheat wasn't even offered. Russia picked up the lion's share of the business with 240 TMT.
Bangladesh are tendering for 50 TMT of wheat, with the lowest offer reported to be USD344 CIF.
Ben Bernanke kept hopes of QE3 alive in his speech at the Jackson Hole on Friday afternoon, weakening the US dollar.
The Kazakh Farmers' Union estimate the grain harvest there at 11 MMT, versus the Ministry's figure of 12.5 MMT.
Belarus has harvested 8.7 MMT of grain off 96% of the planted area, according to the Ag Ministry there.
India says it's sold 250 TMT of soymeal to Asian buyers in recent weeks in the face of strong demand and high world prices.
Parts of the Midwest picked up 3-5 inches of rain over the weekend, thanks to the remnants of Hurricane Isaac.
