Nogger's Blog

EU Rapemeal Prices

05/02/13 -- Rapemeal prices on the continent are firmer across the board again today, mirroring gains in soymeal values in Chicago last night and again this morning.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:

Chicago Beans Up On Strong Demand, Not So For Corn And Wheat

04/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.88 3/4, up 14 1/2 cents; May 13 Soybeans closed at USD14.80 1/4, up 14 3/4 cents; Mar 13 Soybean Meal closed at USD434.30, up USD6.10; Mar 13 Soybean Oil closed at 53.11, up 12 points. Large weekly export inspections of almost 54 million bushels (nearly 1.5 MMT) along with the USDA announcing 116 TMT of US beans sold to China - split half and half between old crop and new crop - set the bullish tone. Weekend rains that disappointed, in Argentina at least, and a drier outlook for there also added support. Fund buying in beans was estimated at a net 4,000 contracts on the day. Argentina's Ag Ministry said that 98% of the Argentine bean crop has been planted versus 97% a year ago. A Bloomberg survey estimated Argentina's soybean crop at 52.9 MMT versus 54.0 MMT from the USDA. Ag Rural estimated Brazil’s soybean crop at 81.2 MMT, down from their previous estimate of 82.2 MMT. They said that Brazil’s bean harvest is 6% complete versus 5% a year ago. The USDA issue revised world crop production estimates on Friday.

Corn: Mar 13 Corn closed at USD7.34 1/4, down 1 3/4 cents; May 13 Corn closed at USD7.36 1/4, down 1 1/2 cents. Corn export inspections of only 5.348 million bushels were truly pathetic and only a tenth of those for soybeans. That takes the marketing year-to-date inspections to only 311 million bushels, less than 44% of the same time a year ago. Weekly export inspections now need to exceed 21 million bushels/week to hit USDA targets for 2012/13. Funds were said to have ended up as net sellers of around 4,000 corn contracts on the day. Argentina Ag Ministry said that 96% of the Argentine corn crop has now been planted versus 94% a week ago and 98% a year ago. They said that 25% of the corn crop is at the pollination stage and said that 83% of the crop is rated good to excellent. A Bloomberg survey pegged the Argentine corn crop at 26.4 MMT versus the USDA's 28 MMT. News broke Friday of another US ethanol plant closure, bring the total currently idle to 37.

Wheat: Mar 13 CBOT Wheat closed at USD7.63, down 2 cents; Mar 13 KCBT Wheat closed at USD8.17, down 5 cents; Mar 13 MGEX Wheat closed at USD8.47, down 4 3/4 cents. Wheat gave in to spillover weakness from corn, having traded higher for much of the overnight session. Weekly export inspections of only 15.206 million bushels were poor, even if they were almost three times those of corn. They need to be around 27 million to hit the current USDA target for the season. Egypt bought one 60 TMT cargo of US wheat over the weekend, the trade would have liked more. Intriguingly, the winning bid from Venus was at least USD10/tonne cheaper than anything else on the table (including other US offers). India continues to make a nuisance of itself on the international wheat export stage with 710,000 MT of wheat up for export to start the week - and they are already selling new crop too. Stats Canada's year end stocks report comes out tomorrow, with the trade expecting all wheat inventories at 21.7 MMT from within a range of estimates of 19.8-23.5 MMT. In 2011 all wheat stocks were 20.831 MMT.

EU Wheat Falls - Friday's Gains Seen Overdone

04/02/13 – EU grains closed mostly lower with Mar 12 London wheat down GBP1.90/tonne to GBP212.50/tonne, benchmark May 13 also GBP1.90/tonne lower at GBP214.50/tonne and new crop Nov 13 down GBP3.00/tonne to GBP190.00/tonne. Mar 13 Paris wheat fell EUR1.00/tonne to EUR247.50/tonne.

Friday's relatively strong EU wheat closes could maybe be considered a bit false. EU wheat therefore seemed to spend most of the day re-adjusting to a US market that closed around 14-15 cents lower on Friday night, and even allowing for this morning's gains of 4-5 cents, still means a net decline of 10 cents over the two sessions.

Weekend rains in Argentina were not as good as was hoped for. MDA CropCast said "the rains resulted in only slight improvements in moisture in these areas, and drier weather across all of the region this week will allow moisture shortages to quickly increase once again. Temperatures will also begin to warm again in southwestern areas."

The market seems relatively content to worry about the miserable state of US winter wheat a bit closer to harvest time, at least for now. Exports, or rather the lack of them are the problem for the bulls looking for higher prices.

Egypt bought one cargo of US wheat in their weekend tender, which doesn't amount to much of a game-changer. India has a whopping 710,000 MT of wheat up for export to start the week and is already selling new crop too. Egypt won't buy it but there are plenty who will, which may limit the upside in wheat for now.

At least the outlook for mild temperatures across the Plains and Delta this week will keep winterkill threats low for wheat. "Wheat will likely begin to green up again across the central and southern Delta as well as the far southeastern Plains. Showers in the Delta and far southeastern Plains will improve moisture slightly, while dryness will remain extensive in the central and western Plains. Additional improvements in moisture are expected in the southern Midwest, Delta, and southeastern Plains in the 6-10 day period," MDA CropCast forecast.

This outlook for warmer weather ahead is echoed by Martell Crop Projections. "The Great Plains forecast calls for strong warming in the week ahead. Tropical air from Mexico would stream up into the Great Plains raising temperatures into the 60s F Wednesday-Thursday, and 10-15 degrees above average. Strong drying would occur on the High Plains with gusty winds and no important rainfall," they say.

After taking a battering last week, the pound consolidated against a euro itself under renewed pressure on heightened concerns over Spain and their worsening employment crisis. That probably led to London wheat coming off worse than Paris today.

IKAR said Russia has exported 14 MMT of grains so far this season, including 10 MMT of wheat. The Ukraine Ministry say that they have exported 16.25 MMT of grains so far this season, including 7.95 MMT of corn and 6.04 MMT of wheat.

Russia are said to be reviewing whether they will waive the existing 5% import duty on grains until the 2013 harvest with an answer expected this week. If they do that could add a bit of support to the market, although it may be that Kazakhstan is likely to be the main beneficiary.

EU Rapemeal Prices

04/02/13 -- Rapemeal prices on the continent are firmer, following steadier Chicago soymeal after weekend rains in Argentina disappointed.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:

The Morning Vibe

04/02/13 -- A glance at the overnight markets will tell you what you need to know. Weekend rains in Argentina were a bit of a let down, and the further forward forecast, which promised decent rains last week, has now turned drier.

"Scattered showers occurred in Entre Rios, northern Cordoba, northern Santa Fe, far eastern Buenos Aires, southern Santiago Del Estero and Chaco. Amounts were 0.25 to 1.0” locally up to 2.25” with 45% coverage. A few showers will push into La Pampa this week. Amounts through Friday should be 0.25 to 1.25”, locally 2”, with less than 10% coverage. Drier conditions this week will allow soybean conditions to decline once again. Temperatures are forecast to warm across northeastern areas in the 6-10 day period," say MDA CropCast this morning.

In contrast, in Brazil: "Weekend rainfall was above expectations. Rains favored Rio Grande do Sul, Goias, Santa Catarina, Sao Paulo, central and southern Minas Gerais, Mato Grosso do Sul, Bahia, Parana, and Mato Grosso. Amounts were 0.25 to 1.5”, locally up to 3.25” with coverage of 90% for corn and soybeans," they say. It seems that the outlook for southern Brazil is now wetter than it was on Friday, although the positive effect of those beneficial rains may be balanced by the negative further unwanted rain further north where they are keen to get on with the soybean harvest and get the second crop corn into the ground.

Things haven't improved on the US Plains. "Weekend precipitation was near expectations. Mostly dry weather prevailed. Scattered rain showers will favour eastern OK, eastern TX and eastern KS today and Monday. Amounts through Friday will be 0.10 to 0.50 locally up to 1.0” with 25% coverage. Mostly dry weather will maintain moisture shortages in central and western crop areas. The 6-10 day outlook is drier in western crop areas and colder overall versus Friday’s outlook. The 11-15 day outlook is slightly drier overall," they add.

Egypt's GASC bought just the one cargo of US soft red winter wheat over the weekend for March 1-10 shipment at USD306.80/tonne FOB, plus freight (said to be USD25.64/tonne). Intriguingly, the winning bid from Venus was at least USD10/tonne cheaper than anything else on the table.

Russia are said to be considering whether to remove the existing 5% import duty on grains until Aug 1, despite some politicians earlier denying that this was on the agenda. A decision could come as early as today, but we should certainly know either way within the next few days.

On the calendar this week are US weekly export inspections due this afternoon. Stats Canada are out with their Dec 31 stocks numbers tomorrow. Wednesday brings the latest weekly ethanol production and stocks numbers from the US Energy Dept (remember that last week's production was the lowest since weekly reports began in 2010). Thursday see the usual weekly export sales report from the USDA, before the Feb WASDE comes out on Friday.

Chicago Closing Comments - Friday

01/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.74 1/4, up 5 3/4 cents; May 13 Soybeans closed at USD14.65 1/2, up 5 3/4 cents; Mar 13 Soybean Meal closed at USD428.20, up USD1.80; Mar 13 Soybean Oil closed at 52.99, up 13 points. For the week nearby beans were up 33 1/4 cents, with meal up USD11.80 and oil rising 89 points. Fund buying in beans was estimated at around 2,000 lots on the day. Yesterday's bullish export numbers added a bit of follow-through positivity for the soycomplex today, despite weakness in corn and wheat. Informa Economics estimated the Brazilian soybean crop at 84 MMT and Argentina's at 54.5 MMT. Both forecasts are a bit higher than the USDA's 82.5 MMT and 54.0 MMT January estimates. The USDA will issue revised forecasts next week. Until then South American weather developments will dominate proceedings. Light showers are forecast in Argentina today and tomorrow before dry weather returns Sunday. Southern Brazil should be in for rain, respected analyst Michael Cordonnier says that these rains are "critical" as the last good rain in the north-central part of Rio Grande do Sul was January 3rd. To highlight just how tight spot soybean availability is right now in South America the Brazilian Trade Ministry report that January soybean exports were just 284 MT versus just over 1 MMT in January 2012. CNGOIC estimated China’s March bean ending stocks at 4.0 MMT, down 35% on 6.2 MMT a year ago. They see Q2 soybean imports rising to 15.0 MMT from 11.6 MMT in Q1 as South American supplies come on stream. Vietnam bought 40 TMT US meal for March shipment along with 80 TMT of Argentine meal for April shipment, they are said to be still shopping for more.

Corn: Mar 13 Corn closed at USD7.36, down 4 1/2 cents; May 13 Corn closed at USD7.37 3/4, down 4 1/4 cents. For the week as a whole that pegs Mar 13 corn up 15 1/4 cents. Funds were said to have been net sellers of around 5,000 contracts on the day. Informa pegged Brazil's corn crop at 70.3 MMT and Argentina's at at 25 MMT. Both those are a little lower than the USDA's 75 MMT and 28 MMT respectively. The USDA's Argentina attaché estimated the corn crop there at 27.5 MMT. Unlike soybeans, there's still plenty of corn left to export in Brazil. The Trade Ministry placed January exports at 3.37 MMT versus 2.79 MMT in December and up dramatically on 846,900 MT in January 2012. The US Energy Dept say that 36 US ethanol plants are currently idle, accounting for around 15% of national capacity. Meanwhile cattle numbers as of Jan 1st were said to be the lowest since 1952 at 89.3 million head. Neither of those two bits of news bode well for US corn demand. Whether the forecast South American weekend rains deliver will decide where the market goes on Monday. "Scattered showers have occurred in Argentina the past 36 hours, but a dry forecast is set to resume in the next 7 days. Recurring high pressure continues to have a stabilizing effect on Argentina weather. Brazil's two southernmost farm states (Rio Grande do Sul and Parana) are expecting scattered showers with the same cool front that triggered rainfall in Argentina, moving up from the south. The Brazil forecast is somewhat wetter than indicated yesterday, especially in Parana, where 1-1.5 inch rains are now predicted. Southern Brazil has grown progressively drier, along with Argentina, with much below-normal January rainfall," say Martell Crop Projections.

Wheat: Mar 13 CBOT Wheat closed at USD7.65, down 14 1/2 cents; Mar 13 KCBT Wheat closed at USD8.22, down 15 3/4 cents; Mar 13 MGEX Wheat closed at USD8.51 3/4, down 13 1/4 cents. For the week Mar 13 Chicago wheat was 11 1/2 cents lower, with Kansas down 7 1/2 and Minneapolis falling 13 1/4 cents, with all of those losses coming today. Fund selling in Chicago wheat today was estimated at around 5,000 contracts. There's talk that the Russian Prime Minister is to hold a meeting next week to discuss suspending the 5% grain import tax until August 1st 2013. Egypt announced a late wheat tender, the US should stand a good chance of being successful in that. India keep picking up business from Asia, the Middle East and Africa. Yesterday's US weekly export sales fell short of the level required to hit the USDA's projected target for 2012/13. There was some talk last month that the USDA may decide to lower that projection in the January report, although they subsequently didn't. Maybe they will do so in the February report due next Friday? South Korea bought 35 TMT of Australian noodle quality wheat for April shipment along with 55 TMT of new crop Ukraine wheat. The USDA attaché in Argentina estimated the wheat crop at 10.3 MMT. Informa went even lower coming out with a forecast of 9.5 MMT, which falls in the middle of estimates from the Rosario Grain Exchange (9.3 MMT) and the Buenos Aires Grain Exchange (9.8 MMT). The USDA attaché forecast Argentine wheat exports at a 24-year low of just 4.3 MMT. Theirs is not just a volume issue but also one of quality this season. The Ukraine Ag Ministry said Ukraine exported 16.3 MMT of grains between July and the end of January, up 47% from 11.07 MMT a year ago. That total included 6.14 MMT of wheat, 7.89 MMT of corn and 1.98 MMT of barley. That should draw a line under wheat exports until new crop, the prospects for which look very good at the moment.

EU Wheat Rises, Weak Pound Supports London Market

01/02/13 -- EU wheat futures closed mixed but mostly higher with Mar 13 London wheat up GBP2.10/tonne to GBP214.40/tonne, benchmark May 13 up GBP2.15/tonne to GBP216.40/tonne and new crop Nov 13 GBP2.45/tonne higher at GBP193.00/tonne. Mar 13 Paris wheat was EUR0.75/tonne higher at EUR248.50/tonne.

For the week overall that places old crop London wheat GBP1.40-GBP2.40/tonne higher and new crop Nov 13 GBP5.70/tonne firmer, whilst Mar 13 Paris wheat added EUR1.25/tonne. Sterling weakness continues to support the London market relative to that in Paris.

The pound has fallen off a cliff against the euro, slumping to close the week at just 1.15 versus the single currency for a 6.5% decline since the turn of the year. After it's biggest one day drop since May 2010 today, sterling hasn't been this low against the single currency since October 2011.

Yesterday's soft wheat export license figures from Brussels now mean that sales in 2012/13 are now running almost 40% up on this time a year ago, an astonishing increase and one that is still rising steadily. This may lead the USDA to review their estimate for EU wheat exports in next week's WASDE report released on Friday. The January report only pegged EU wheat exports 5% higher in 2012/13 than last season.

The American markets continue to be heavily influenced by the weather forecasts from South America. Whilst these are critical for developing corn and soybeans, the wheat harvest there is already passed, and what we do know is that it was a bit of a disaster.

The USDA's attaché in Buenos Aires today cut his estimate on wheat production in Argentina to 10.3 MMT, which is 0.7 MMT lower than the current official USDA estimate (and even that might be optimistic compared to forecasts from the various local grain exchanges of 9.3-9.8 MMT).

What was particularly interesting was the revised forecast from the attaché for wheat exports of only 4.3 MMT this season - the lowest volume in 24 years and down by 66% on the USDA's 2011/12 figure of 12.9 MMT.

We've already had sharply reduced wheat exports from Russia and Ukraine this season, now it looks like Argentina is also to be relegated to only play a relatively minor role on the international stage. There is one country though with plenty of wheat to sell, especially if the buyer isn't too discerning on quality: India. Their wheat reserves at the turn of the year were said to be 34.4 MMT and they start harvesting the 2013 crop at the end of next month.

They've really been flexing their export muscles lately, picking up tenders from Ethiopia, South Korea and Yemen this week. One news wire today is reporting that a UK company has bought two cargoes (80,000 MT) of Indian wheat for shipment by March 10. Of course that doesn't necessarily mean that the wheat is coming to the UK, but it's an interesting development.

Most of the reported Indian business this week has been at around USD314/tonne FOB (circa GBP200/tonne), although they have also been actively selling new crop wheat too for April/May shipment at around USD305-308/tonne FOB (around GBP195/tonne).

One buyer that won't be importing Indian wheat is Egypt, despite saying earlier in the week that they had sufficient wheat stocks to last until the middle of June, they issued a tender for wheat for March shipment late in the day.

Chicago Close - Thursday

31/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.68 1/2, down 10 1/4 cents; May 13 Soybeans closed at USD14.59 3/4, down 7 3/4 cents; Mar 13 Soybean Meal closed at USD426.40, down USD6.40; Mar 13 Soybean Oil closed at 52.86, up 26 points. A better chance for rain in southern Brazil and Argentina over the weekend, and in the 6-10 day forecast got the market on the defensive. That was despite weekly export sales for beans of a combined 1.25 MMT, well above expectations for sales of 6-900 TMT. The US has now already exported 25.8 MMT of soybeans so far this season and has a further 7.6 MMT on the books waiting to go in 2012/13. That's more than 91% of the USDA's projections for the entire season. There has been a noticeable shift in sales from old crop to new crop however, with the latter outselling the former for the second week in a row. In addition, the USDA announced further new crop sales of 220 TMT to China under the daily reporting system. There is unconfirmed talk that China has bought 2-3 US bean cargoes for February shipment in the past day or two due to loading delays in Brazil. The Buenos Aires Grains Exchange said that 99.4% of the Argentine soybean crop is planted, up 2% from a week ago. They also said that the dry Argentine weather is starting to threaten bean yields. Nevertheless, fund selling in beans was estimated at a net 6,000 contracts on the day and so the market moved lower.

Corn: Mar 13 Corn closed at USD7.40 1/2, up 1/4 cents; May 13 Corn closed at USD7.42, up 1 cents. Weekly export sales of 186,800 MT for the 2012/13 marketing year and 66,500 MT for 2013/14 were just about in line with trade expectaitons of 2-400 TMT. At least physical shipments themselves were half decent at 609,200 MT - up 65 percent from the previous week and up noticeably from the prior 4-week average. They also included 167,500 MT for China. Shipments plus outstanding sales are 13.5 MMT, 52% of the USDA target for the season. Old crop corn sales now need to be in excess of 400 TMT/week to match the USDA's estimate for 2012/13. The Buenos Aires Grains Exchange said 98.7% of the Argentine corn crop is planted versus 96.4% a week ago. The Argentine markets were closed today for public holiday. Informa come out tomorrow mid-session with their latest South American crop estimates. Last month they had the Argentine corn crop at 27.0 MMT and the Brazilian corn crop at 66.2 MMT (versus 28.0 MMT and 71.0 MMT respectively from the USDA). Funds were estimated as net buyers of 1-2,000 corn contracts on the day.

Wheat: Mar 13 CBOT Wheat closed at USD7.79 1/2 down 7 1/2 cents; Mar 13 KCBT Wheat closed at USD8.37 3/4, down 3 cents; Mar 13 MGEX Wheat closed at USD8.65, down 4 cents. Weekly export sales of 293,600 MT of old crop and 94,300 MT of new crop were just about in line with trade estimates for sales of 300-550 TMT. Shipments plus outstanding sales are now 70% of the USDA target. Old crop wheat sales now need to be around 490 TMT/week to reach the USDA's target for this marketing year. Russia’s Deputy Ag Min estimated Russia's 2012/13 grain imports at 1.2 MMT, adding that they have already imported 486,000 MT of grain, mostly from Kazakhstan, between July–December 2012. There is still talk that Russia may temporarily lift the existing 5% import tax on grains. They are still bullish on their chances of a rebound in production in 2013/14 however, estimating a grain crop of 95.0 MMT, although they only predict an exportable surplus of 15.0 MMT (versus foreign sales of 14 MMT this season). Presumably that is due to a rebuilding of stocks next season as it would appear that this year's reserves will have been virtually wiped out by the time the 2013 harvest comes around.