Nogger's Blog

Rage Against The Machine

20/03/13 -- A very interesting couple of Defra surveys into computer usage by farmers can be found here Luddites!

All sorts of statistics catch the eye, including that only 86% of farms have access to a computer, according to the October 2012 Farm Practices Survey. Techno geek that I am, it's also astonishing to read that only 29% of farmers have a smartphone.

A different Farm Business Survey found that a slightly higher 90% of farm businesses had a computer. Presumably the other 10% that they emailed failed to reply?

Perhaps not surprising is the finding that "faster broadband and/or better internet connections were the most frequently cited factors that would increase (computer) usage."

Another interesting stat is that more than half of those that do have a computer have one that is 3 year old or more. Jesus, I've got redundant computers/tablets that are younger than that!

Interaction with Defra and/or other government services were the most commonly reported uses of the farm computer. Online banking (49%) and sales/purchasing online (45%) were also said to feature highly (although it is unclear if by "sales/purchasing online" they thought that doing the shopping from Tesco and/or buying some new wellies off Amazon counted).

Does the fact that only 29% of farmers have a smartphone, and only 26% have one that they use for business, mean that farming apps are a waste of time? Or does it mean that there's a golden so far relatively untapped opportunity here?

This farmer was on his way to Cheltenham last week, and Tony McCoy was sat opposite him on the train. The farmer and McCoy got chatting and McCoy said "Look I don't normally do this but would you like the winner of the first race?" The farmer said "No thanks, I've only got a very small garden."

EU Rapemeal Prices

20/03/13 -- Rapemeal prices on the continent are generally steadier today, in line with overnight gains in Chicago soymeal. The current widespread cold snap across much of Europe may not be helping winter OSR too much either.

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

Morning Snippets

20/03/13 -- The overnight grains are firmer, with May 13 wheat up 8 1/2 cents to a near one month high on ideas of a pick up in world demand for US wheat, and also the notion that next week's US stocks report might come in lower than anticipated thanks to increased domestic US feed usage. Funds have built up a sizable short in CBOT wheat over the past couple of months, leaving the market vulnerable to an upside correction, that appears to be what we are getting ahead of next week's stocks numbers.

Tunisia are said to have bought US soft wheat in it's 67 TMT optional origin tender, one where you would normally expect France to be favourites to win. Algeria, Jordan, Bangladesh and Iraq all also have wheat export tenders pending.

Soybeans are also firmer in overnight trade, which is probably also down to a mini correction following recent losses. May 13 corn meanwhile is pressing on to it's highest levels since early February as news filters through of more US ethanol plants coming back on stream, increasing demand and keeping stocks tight.

News that the BoE's MPC voted 6-3 in favour of keeping QE unchanged this month has given the pound a little boost this morning ahead of the budget. Some thought that the split may have been closer than that. The pound went from 1.5030 to 1.5130 versus the dollar following the release if the minutes of the meeting shortly after 9.30 am.

Early doors European trade sees May 13 London wheat up GBP2.25/tonne; May 13 Paris wheat up EUR2.75/tonne; May 13 Paris rapeseed up EUR2.50/tonne; May 13 Paris corn up EUR1.75/tonne.

Whilst there's already talk of it being too wet to get early spring crops sown in southern US states, it remains far too cold in the north. "Early morning temperatures in Canada and the Northern United States bottomed out below zero F (-18 C). A thick layer of snow persists in the northern latitudes. Extreme cold in March is worrisome for delays in spring fieldwork and planting in the Canadian prairies and Midwest," say Martell Crop Projections.

Elsewhere in the US: "Portions of the Midwest corn belt are still affected by drought. This may be another deterrent to obtaining a profitable corn yield. Top yielding corn districts in Iowa and Nebraska still are very dry, the subsoil drought a lingering effect from last summer. Nebraska has accrued a 7-inch moisture deficit accruing from mid July through winter," they add.

According to Oil World, Argentina’s biodiesel exports were down by more than a half to 376,000 MT in the October 2012 to February 2013 period. They estimated EU February biodiesel imports from Argentina at 36,000 MT versus 145,000 MT in 2012, saying that "Argentine exports of biodiesel are plummeting owing to reluctance from EU importers." They pegged March biodiesel imports from Argentina falling to only 20-30 TMT.

Also in Argentina, Oil World say that "Argentine farmers are still very reserved sellers of soybeans. The difference between the fixed exchange rate and the 'blue dollar' has further widened to 2.94 pesos."

The 'blue dollar' rate being the black market value of the peso vs the US dollar. Farmers exporting beans have to take the official exchange rate. With Argentine inflation raging, and an export tax on beans on top of this it's no wonder that Argentine farmers are reluctant sellers of beans.

With US soybean exports already at 97% of the USDA target for the season, China cancelling large Brazilian purchases, Argy reluctance to sell (and them having their own logistical problems when they do) the recent collapse in Chicago soybean prices is all the more surprising. Particularly at the front-end.

Chicago Soybeans Lower, Corn And Wheat Higher

19/03/13 -- Soycomplex: Beans fell for a seventh straight day, with May 13 closing at the lowest levels for a front month since the early days of 2013. A report that China has cancelled purchases of Brazilian beans was the catalyst. It is suggested that Sunrise Group (one of the largest private importers in China who are said to import around 7 MMT of beans annually) may have cancelled almost 2 MMT of Brazilian beans, comprising 23 regular cargoes for April/June shipment and the 10 panamax cargoes for Jan/Feb shipment. Exactly why the market chooses to decided that this news is bearish as far as demand for US soybeans goes is unclear. Unless they were completely overbought to the tune of 2 MMT then surely some of these cargoes will be switched to the US? It is suggested that some, if not most, of the April/June requirement will be switched to Argentina. It seems inevitable though that they too will suffer logistical shipping problems once their soybean export program also gets underway. Oil World meanwhile said that China’s soybean stocks are at undesirably low levels and that the Argentine soybean crop may fall below their current estimate of 49.0 MMT. May 13 Soybeans closed at USD14.06 3/4, down 2 3/4 cents; Jul 13 Soybeans closed at USD13.88, down 6 1/2 cents; May 13 Soybean Meal closed at USD411.60, down USD1.70; May 13 Soybean Oil closed at 49.48, down 20 points.

Corn: The corn market continues to divorce itself from the demise of beans on increased domestic demand heading into next week's stocks report. Valero were said yesterday to have reopened it's idled ethanol plant in Bloomingburg, Ohio. Today came the news that they will restart another idled ethanol plant in Linden, Indiana, in a few weeks time. Tomorrow we get the weekly ethanol production data from the US Energy Dept. The bulls will be looking for an increase on last week's 797,000 barrels/day, which was below the level required to hit the USDA's target of 4.5 billion bushels worth of demand from the ethanol sector this season. Safras e Mercado said that 88% of the Brazilian 2nd corn crop has been planted, up from 77.5% a week ago and versus 89% a year ago. Michael Cordonnier left his Argentine corn production forecast unchanged at 24 MMT, but increased his Brazilian estimate by 2 MMT to 74 MMT. He anticipates 55% of this year's output will come from the 2nd crop corn. He also said that "the current cost of transporting corn from Sorriso in central Mato Grosso to the Port of Santos in southeastern Brazil is actually more than the cost of the corn." Japan, the world's largest corn importer, continue to tweak back their corn usage. Their Ag Ministry said that January use of corn in animal feed was 42.2% versus 42.7% in December and versus 45.1% a year ago. Japan imported 1.19 MMT of corn in January, down 7.7% from a year ago, they added. May 13 Corn closed at USD7.28 1/2, up 8 1/2 cents; Jul 13 Corn closed at USD7.12, up 8 3/4 cents.

Wheat: The market firmed on spillover support from corn, and short-covering. Funds shorts may be a little nervous heading into next week's stocks report, which may indicate more domestic wheat feeding and therefore lower stocks than the market expects. There are also ideas that Russia's grain crop might not rebound quite so successfully this year as the Ministry's current official estimate of 95 MMT. Russia's Deputy Ag Minister said on Monday the the country would produce 80 MMT of grains this year, which is "only" 11.5% up on last year. There's also talk of the stocks being so low at the end of the current season that the government will be aggressive buyers in the Aug/Oct period, thereby limiting the impact that we usually see when new crop Russian grain comes onto the market. SovEcon today estimated Russia’s 2013/14 grain exportable surplus at 16.0 MMT, little more than the 15.1 MMT of this season. Japan is seen importing more wheat then ever before as they cut back on corn usage in animal feed. They are shopping for 132,777 MT of milling wheat for April/June shipment in their regular weekly tender, of which 76,858 MT is of US origin. Whilst winter wheat crop conditions in Kansas and Oklahoma improved a little this week, they were down in Texas. Even with that improvement in the former two 29% of Kansas wheat and 37% of Oklahoma wheat is still rated as poor to very poor. May 13 CBOT Wheat closed at USD7.22, up 9 1/4 cents; May 13 KCBT Wheat closed at USD7.51 3/4, up 7 1/2 cents; May 13 MGEX Wheat closed at USD7.98 3/4, up 10 cents.

EU Wheat Rises As Cyprus Fears Ease

19/03/13 -- EU wheat futures closed higher as fears over the wider consequences of the Cyprus bailout, and the risk of contagion across Europe, eased a little.

On the day, London wheat closed with Mar 13 up GBP1.15/tonne to GBP194.50/tonne and new crop Nov 13 also GBP1.15/tonne higher at GBP183.90/tonne. May 13 Paris wheat was EUR3.75/tonne firmer at EUR238.50/tonne.

Fresh news was relatively light. Ukraine said that they'd shipped 921 TMT of grains so far this month, almost all of which was corn (861 TMT). For the marketing year to date that means that they've exported 18.72 MMT, a 30% increase on this time a year ago, of which 10.14 MMT has been corn, 6.2 MMT what and 2.02 MMT barley. Optimism remains high for a good crop in 2013.

The Ukraine Ag Ministry said Ukraine will export a further 6.6 MMT of grain (including 4.7 MMT of corn) between now and the end of season.

Russia's grain stocks as of March 1st were 20.4 MMT, down 30% on year ago levels announced the Ministry. They sold 55, 533 MT of intervention grain in today's government tender, bringing the total sold so far since sales began to 2.37 MMT.

SovEcon estimate Russia’s 2013/14 grain exportable surplus at 16.0 MMT versus 15.1 MMT this season. The grain crop in the Southern Region of Russia was estimated at 28-30 MMT versus 24.1 MMT in 2012.

Officials in India are set meet this week to discuss the release of an additional 5 MMT of wheat for export. Top the agenda must be whether they will/can afford to drop their price aspirations following the market's recent move lower. They are said to have released another 65,000 MT of wheat for export overnight.

Egypt announced that it expects wheat production of around 9.5 MMT this year, if good weather conditions continue. Domestic stocks are much lower than normal amidst the financial and political crisis there, and there is talk of bakeries going on strike as they say that the government owes them 400 million Egyptian pounds in unpaid refunds for subsidising bread prices.

US winter wheat conditions improved in the top two winter wheat states of Kansas (up 2% good/excellent to 29%) and Oklahoma (up 4% to 24% good/excellent) in the past week. However, in Texas the same proportion of the crop rated good/excellent fell two percentage points to 16%.

Bangladesh have re-tendered for 50 TMT of optional origin wheat for April shipment. Libya are also in the market for 30,000 MT of milling wheat, along with Iraq for 50,000 MT. North African buyers Algeria seek 50 TMT of optional origin milling wheat for June shipment and Tunisia are shopping for 67 TMT of optional origin soft wheat for April/May shipment. France is frequently the usual supplier to the latter two.

The market is biding it's time now ahead of next week's quarterly stocks numbers and March planting intentions report from the USDA. Informa are due out at the end of this week with their 2013 US acreage estimates.

EU Rapemeal Prices

19/03/13 -- Rapemeal prices on the continent continue to slide reflecting recent losses in Chicago soymeal and a general lack of fresh demand.

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

Chicago Close - Monday

18/03/13 -- Soycomplex: The soybean market began the week as it spent all of last week, closing lower for a sixth session in a row. The dollar was firmer following the announcement of the Cypriot bailout, which didn't help. Further risk-off moves out of commodities saw funds dump an estimated 7-8,000 soybean contracts on the day. Weekly export inspections were very disappointing at only only 8.927 million bushels, the lowest of 2012/13 so far in fact.Worries about Chinese demand were spurred on by news that end February pig numbers there were down 1.9% compared with the end of January and down 1.3% vs February 2012. Agrural estimated the Brazilian soybean crop at 82.1 MMT and said 54% of the Brazilian bean harvest is complete vs 55% a year ago. Safras e Mercado said that the Brazilian harvest is 58% complete vs 48% a week ago, vs 55% a year ago and the five year average of 42%. Mato Grosso is 87% complete vs 71% on average at this time. May 13 Soybeans closed at USD14.09 1/2, down 16 1/2 cents; Jul 13 Soybeans closed at USD13.94 1/2, down 16 1/4 cents; May 13 Soybean Meal closed at USD413.30, down USD5.50; May 13 Soybean Oil closed at 49.68, down 23 points.

Corn: Outside influences saw corn open lower but close higher, continuing with last week's theme of doing the opposite to soybeans. Weekly export inspections of 15.399 million bushels were up on last week and at the upper end of trade estimates of 10-15 million. Even so this was below the 17.9 million bushels required to meet the USDA's 825 million bushels export target. Safras e Mercado pegged the Brazilian corn crop at 77.341 MMT, which is well above the USDA's estimate of 72.5 MMT. Argentina is seen dry this week, which will help advance a corn harvest that's 14% complete so far, according to the Buenos Aires Grain Exchange. Rain is forecast this week for southern and northwestern areas of Brazil. Harvesting should slow once again as a result, say MDA CropCast. South Korea's largest feed manufacturer, NOFI, said that their feed import needs are covered until July. Valero are said to have reopened it's idled ethanol plant in Bloomingburg, Ohio. They are also said to be preparing to bring an Indiana facility back online in the coming weeks as increasing numbers of US plants come out of mothballs. May 13 Corn closed at USD7.20, up 3 cents; Jul 13 Corn closed at USD7.03 1/4, up 3 cents. Funds were said to have been net buyers of around 2-4,000 contracts on the day.

Wheat: Unlike corn, wheat opened lower on outside influences and stayed there for the duration of the session. Weekly export inspections of 23.947 million bushels were bang in line with expectations of 21-27 million. The 2013 US winter wheat harvest is drawing a little closer. The Kansas wheat crop has started to green up with the warmer temperatures. The crop was said to be 3 percent jointed, compared to 11 percent a year ago and 5 percent average in the latest crop progress report. The condition of the crop was rated as 10 percent very poor, 19 percent poor, 42 percent fair, 27 percent good, and 2 percent excellent. That puts good/excellent up two percentage points on the week. Jordan are looking for 100 TMT of optional origin milling wheat and a similar volume of optional origin feed barley for May/June shipment. Algeria seeks 50 TMT of optional origin milling wheat for June shipment and Tunisia are shopping for 67 TMT of optional origin soft wheat for April/May shipment. France would be the usual suspect to win the latter two bits of business. Egypt's Ag Minister estimated Egypt’s 2013 wheat crop at 9.475 MMT. Fund selling in CBOT wheat was estimated at around 3,000 lots on the day. May 13 CBOT Wheat closed at USD7.12 3/4, down 10 1/4 cents; May 13 KCBT Wheat closed at USD7.44 1/4, down 7 1/4 cents; May 13 MGEX Wheat closed at USD7.88 3/4, down 7 1/2 cents.

EU Grains Mostly Lower, Outside Influences Weigh

18/03/13 -– EU grains were mixed but mostly lower on the day, pressured by outside influences and weaker US markets. News of the Cypriot bail out, and the possible wider implications for the rest of Europe and beyond, got the week off to a cautious start.

London wheat closed with Mar 13 down GBP1.30/tonne at GBP193.35/tonne and new crop Nov 13 GBP0.40/tonne lower at GBP182.75/tonne. May 13 Paris wheat was unchanged at EUR234.75/tonne.

The timing of the bailout announcement was clearly timed to coincide with a Cypriot bank holiday today, and there are reports that the banks may remain closed tomorrow (and possibly longer) to avoid mass over the counter cash withdrawals after ATM's were drained at the weekend.

The market will be thinking to itself, well if this can happen in Cyprus then why can't it happen in Italy or Spain, and what would be the consequence of much larger removals of cash deposits with the banks in those countries? Could indeed the Cypriot move encourage such a cash exodus elsewhere?

If there's one thing the market doesn't like then it's uncertainty. Mid-morning the screens were a sea of red, with stocks, grains, crude oil and softs all lower. Only the safe haven of gold was green, although later in the day most Paris wheat had at least managed to crawl into some positive territory on the back of euro weakness.

These latest development will do little to encourage fund money to come flooding back into the grains however, a sector that they've already been actively getting out of for the past couple of months.

Sterling has bounced off it's recent lows against the dollar and euro in the past week or so, but it should be noted that the minutes of the March Bank of England's MPC meeting come out on Wednesday. They could show an increased likelihood of more QE sooner rather than later.

Back to the fundamentals, Coceral pegged the EU-28 soft wheat crop at 127.8 MMT on Friday, or 127.0 MMT if we exclude Croatia for comparison with last year's production. With an 8.3 MMT durum wheat crop this year that gives us an EU-27 all wheat crop of 135.3 MMT, only a little over 3 MMT, or 2.3%, higher than last year's output (using the USDA's latest figures).

They have output in the UK down a further 10% on last year's disaster at a smidgen under 12 MMT. French all wheat production is seen lower too, although only marginally at 38.0 MMT. It's Germany (+5%) and Eastern Europe where the gains are seen being made, with Poland +8%, Hungary +10%, Bulgaria +12%, Romania +22% and the Czech Republic +23%.

The EU-28 barley crop is basically forecast unchanged at 54.8 MMT, although UK output is seen up 17.5% courtesy of a 34% rise in spring barley plantings. The EU-28 rapeseed crop is forecast at 20.05 MMT, up nearly 2.8%, although output in the UK is set to drop 25% to 1.92 MMT, they predict.

Across the Pond: "More precipitation is coming to the Central Great Plains this week. Wheat in Kansas and northern Oklahoma are expecting 0.25 to 0.75 inch of moisture, a mixture of rain and wet snow Wednesday night-Saturday that would improve soil moisture," said Martell Crop Projections. That should further improve things for winter wheat.

The export tender line-up for this week is average at best so far. Libya are in for 30,000 MT of milling wheat, Iraq’s 50,000 MT tender is pending until March 28th and Bangladesh are in for 50,000 MT. Jordan also issued a new tender for 100,000 MT of soft wheat over the weekend.

Russia's Deputy Ag Minister said the the country would produce 80 MMT of grains this year, which is "only" 11.5% up on last year, according to the Interfax News Agency. That number is well below the official Ministry estimate of 95 MMT issued last week.