Chicago Ends Lower Across The Board, Soymeal Very Choppy
23/07/13 -- Soycomplex: A very volatile session saw front end beans and meal collapse, Aug 13 meal traded between USD18 up and USD18 down during the session, before settling towards the lower end of that range. Aug 13 beans also ended sharply lower in what was described as a very crowded bull market one week ahead of first notice day, by Benson Quinn Commodities. August options expire Friday too. Reports that China is considering releasing 3 MMT of state-owned soybeans onto the market may have helped change sentiment a little. Few expect that the USDA's target for Chinese soybean imports of 69 MMT in 2013/14 will be met, with 64 MMT maybe nearer the mark, potentially adding 5 MMT to global bottom line ending stocks next year. US weather conditions remain non threatening, recent rainfall will help improve conditions as the crop edges towards the all-important month of August. Aug 13 Soybeans closed at USD14.62 1/2, down 57 3/4 cents; Nov 13 Soybeans closed at USD12.60 1/4, down 28 1/4 cents; Aug 13 Soybean Meal closed at USD487.80, down USD14.60; Aug 13 Soybean Oil closed at 44.78, down 63 points - another fresh lowest close for a front month since October 2010.
Corn: As with soybeans, US weather conditions are being seen as "near ideal" by many with normal temperatures and rains of 1/2 to 1 1/2 inches for much of the Corn Belt expected this week. Few areas are looking at temperatures higher than the mid-90's. Dec corn stayed below USD5/bu for the duration of the session, posting a new 2 1/2 year low of USD4.82/bu, and not closing too far off that intra day low. The market will be looking to see if the next support level of USD4.79/bu can hold. Resistance is now at USD4.94/bu and USD5.02/bu. The USDA announced the sale of 106,400 MT of US corn to neighbouring Mexico, which included 11,000 MT of old crop. US corn doesn't feature into most destinations though. Japan bought 300 TMT of Ukraine (120 TMT) and Brazil corn (180 TMT) for Oct/Dec shipment yesterday. US corn was said to be priced out to the tune of USD20/tonne versus Brazilian origin and USD30/tonne versus Ukraine origin material. Rain expected in France this week could provide corn there with a needed boost. Chinese weather is also considered favourable for corn yields. The weekly ethanol production numbers are out tomorrow. Last week ethanol production fell to 876,000 barrels/day from 881,000 bpd the previous week. Sep 13 Corn closed at USD5.22 1/2, down 18 1/4 cents; Dec 13 Corn closed at USD4.85 1/2, down 12 1/2 cents.
Wheat: Wheat closed lower on all three exchanges for a second session in a row. Corn offered no support. The first day of the annual Spring Wheat tour in the Dakotas reported yield potential at or above average. Harvesting there is said to be only 2-3 weeks away. Ukraine's winter wheat crop is 81% harvested, producing 17.16 MMT so far. Based on that result this season's harvest should certainly exceed 20 MMT, and maybe even 21 MMT, versus the current USDA forecast of 19.5 MMT. Russia's wheat harvest currently stands at 25.4 MMT with yields up 24% versus last year. Buyers are looking for cheaper alternatives to wheat. Tunisia are tendering for 100 TMT of feed barley for Aug/Oct shipment. Their 2013 grain harvest is said to be sharply lower than last year's 2.2 MMT at 1.2 MMT due to drought. Jordan are also in the market for feed barley, tendering for 100 TMT for Jan/Feb shipment. Egypt are said to be likely to ask the Russian government for deferred payment terms on wheat shipments, after being rebuffed by Russian exporters themselves. Russia's Jul 1-17 grain exports were said to be almost 1 MMT, including 772 TMT of wheat. Sep 13 CBOT Wheat closed at USD6.53 3/4, down 6 cents; Sep 13 KCBT Wheat closed at USD6.99, down 3 cents; Sep 13 MGEX Wheat closed at USD7.44, down 2 3/4 cents.
EU Wheat Continues To Slide
23/07/13 -- EU grains ended lower, extending the recent slide, on harvest pressure. London wheat began the day higher, trying to consolidate a little, but with the pound rising to a 4-week high against the dollar, weaker US markets and new crop Dec CBOT corn slumping to its lowest levels since Nov 2010, holding onto those gains was never going to those early be easy. And so it proved.
Benchmark Nov 13 London wheat closed GBP1.65/tonne weaker at GBP164.50/tonne, with Jan 14 down GBP1.50/tonne to GBP165.75/tonne and Nov 13 Paris wheat settling EUR2.25/tonne easier at EUR190.25/tonne.
The Spanish Ag Ministry forecast soft wheat production there up 29% this year to 6.01 MMT, with all wheat output rising 35% to 6.89 MMT. The barley crop, of which Spain is the highest spring producer in the EU, is forecast even higher at 41% up on 2012 at 8.41 MMT. Corn production is also seen rising 7% to 4.53 MMT.
Tunisia's cereal crop is not seeing doing so well, down from a previous Ministry forecast of 1.36 MMT to only 1.2 MMT, a substantial drop on output of 2.2 MMT last year.
It's output in the Black Sea, particularly Ukraine, that is weighing on market sentiment though. Their grain harvest currently stands at 23.47 MMT, with average yields up 25% on last year at 2.86 MT/ha.
That includes a winter wheat harvest of 17.16 MMT so far, off 81% of the planned area, which suggests final output of around 21 MMT. That would be up 33% up on last year and above the USDA's current forecast of 19.5 MMT.
The Ukraine barley harvest currently stands at 5.55 MMT, roughly split 50:50 between winter and spring sown crops. The winter barley harvest is almost over at 98% done, with the spring harvest 66% complete. The 2013 OSR harvest is 90% done at 1.92 MMT, suggesting final output in excess of 2 MMT, a 50% increase on last year.
Agritel forecast 2013/14 Ukraine wheat exports at 9 MMT versus 8 MMT from the USDA and 7.2 MMT in 2012/13, barley exports are seen at 2 MMT.
Russia's grain harvest is currently seen at 30.7 MMT, with average yields up 22% at 2.98 MT/ha. That includes 25.4 MMT of wheat (yields up 24%) and 2.6 MMT of barley (yields up a more modest 6%).
Russia's grain exports for Jul 1-17 stood at just under 1 MMT, an increase of 10% versus last year. Of that wheat accounted for 772 TMT. IKAR yesterday increased their forecast for Jul 13 wheat exports from 1 MMT to 1.2 MMT.
The Kazakhstan Ministry forecast a 2013 grain crop of 15 MMT, up 17% versus last year.
French market prices see OSR offered at EUR371/tonne (circa GBP320/tonne) on an FOB basis Moselle for August shipment. New crop milling wheat is offered at EUR190/tonne (circa GBP164/tonne) deld store. New crop barley is EUR176/tonne (circa GBP152/tonne) deld store.
EU Rapemeal Prices
23/07/13 -- Rapemeal prices on the continent are mostly lower today, despite a precipitous rise in Chicago soymeal values last night and again this morning.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| LH Jul13 | 260.00 |
+5.00 |
| Aug13 | 234.00 |
unch |
| Sep/Oct13 | 225.00 |
-3.00 |
| Nov13/Jan14 | 214.00 |
-2.00 |
| Feb/Apr14 | 212.00 |
-2.00 |
| May/Jul14 | 210.00 |
-2.00 |
| Aug/Oct14 | 195.00 |
+3.00 |
Chicago Soybeans And Meal Press On To New Highs, Oil Slumps
22/07/13 -- Soycomplex: It was a continuation of the same old theme, with nearby months posting strong gains on strong demand, tight US stocks and a likely late harvest further exacerbating the front end squeeze. Aug 13 meal closed limit up bid, with front month beans gaining almost 30 cents. This was a lifetime contract high for Aug 13 meal, whilst Aug 13 soybean oil closed at a new lowest close for a front month since October 2010. Everybody wants meal and nobody wants oil it would seem. The USDA continue to stand behind their "line in the sand" of 2012/13 US soybean ending stocks of 125 million bushels, but most believe that things are/will be far tighter than that. "One private analyst lowered its 12/13 soybean ending stocks estimate over the weekend to 95 to 105 million bushels due to higher than expected June NOPA crush," said Benson Quinn Commodities. The same analyst cut 2013/14 US soybean ending stocks to 240 million bushels versus the USDA's current 295 million estimate. Oil World estimated the global 2013/14 soybean crop at 284.22 MMT versus 265.02 MMT in 2012/13 and 285.89 MMT from the USDA. They see the US crop at 92.0 MMT versus 82.0 MMT last year and 93.0 MMT from the USDA. Brazilian output is pegged at 84.0 MMT (vs. 81.5 MMT and 85.0 MMT respectively) with the Argentine crop at 52.3 MMT (vs. 48.5 MMT and 53.5 MMT). Weekly soybean export inspections came in at 2.847 million bushels, low but in line with expectations. After the close the USDA cut US soybean crop conditions good to excellent by 1% from a week ago to 64%. They have blooming at 46% versus 26% a week ago and 59% fro the 5-year average. The proportion of the crop setting pods is 8% versus 33% a year ago and 19% for the 5-year average. Aug 13 Soybeans closed at USD15.20 1/4, up 29 1/2 cents; Nov 13 Soybeans closed at USD12.88 1/2, up 14 1/2 cents; Aug 13 Soybean Meal closed at USD502.40, up the daily USD20.00 limit; Aug 13 Soybean Oil closed at 45.41, down 9 points.
Corn: Weekly export inspections came in at 8.867 million bushels, down sharply from 16.338 million a week ago and below the 10-16 million that was expected. US weather offers a generally non threatening outlook for the rest of the week. Safras e Mercado estimated Brazil’s second corn crop at 45.2 MMT, down from a previous forecast of 45.8 MMT, although well up on 38.0 MMT in 2012 and still a record. Japan were said to have bought 300 TMT of Ukraine (120 TMT) and Brazil corn (180 TMT) for Oct/Dec shipment in preference to US origin. They have been gradually decreasing the volume of corn used in feed over the past year/18 months and also moving away from more expensive US corn, giving a greater proportion of their business to South America and the Black Sea. Vietnam bought 20 TMT of South American corn for Nov/Dec shipment. The Brazilian vessel line up shows 3.5 MMT of Brazilian corn waiting to be shipped in August. Analysts expect 2013 Brazilian corn exports to be 15-17 MMT. In the 1st half of 2013 Brazil exported 8.4 MMT of corn. The USDA's FAS in Russia estimated their 2013 corn crop at 9.0 MMT versus 8.21 MMT last year, with exports seen rising from 2.0 MMT in 2012/13 to 2.5 MMT in 2013/14. The EU Commission's MARS unit forecast corn yields in the EU at 7.22 MT/ha, up from the 7.13 MT/ha forecast in June and 18.9% higher than in 2012. A Reuters poll of 7 analysts estimated South Africa’s 2013 corn crop at 11.134 MMT versus 11.83 MMT in 2012. After the close the USDA cut good/excellent US corn crop ratings by 3 percentage points from last week to 63%. The proportion of the crop silking (pollinating) was raised to 43% from 16% a week ago, but down on 56% for the 5-year average. Sep 13 Corn closed at USD5.40 3/4, down 3 1/4 cents; Dec 13 Corn closed at USD4.98, down 2 3/4 cents.
Wheat: Wheat closed around 3-4 cents lower on all three exchanges. IKAR said Russia had exported 700 TMT of wheat between July 1-20th and raised their estimate for full month exports from 1.0 MMT to 1.2 MMT. Iraq bought 50 TMT of Australian wheat for August shipment, at prices said to be well above offers out of the Black Sea, for quality reasons. They will likely not be so fussy next time round. Algeria are tendering for a nominal 50 TMT of optional origin milling wheat for Nov shipment. They bought 575 TMT in their last tender around a week ago. The USDA's FAS in Russia estimated wheat production there this year at 53.0 MMT, up sharply from 37.72 MMT last year, although 1 MMT below the current official USDA forecast. He sees 2013/14 Russian wheat exports rising from 11.2 MMT in 2012/13 to 17.0 MMT this season. The USDA's FAS in Kazakhstan cut his forecast for wheat production there from 14.5 MMT to 14.0 MMT citing drought in some parts of the country and a lower planted area than previously thought. The early wheat harvest is underway in the Kazakh region of Almaty, with early yields said to be 2.5 MT/ha versus only 1.0 MT/ha last year. Ukraine's Ag Ministry said that the country had exported 640 TMT of grains so far this month and will ship 24.82 MMT in the full 2013/14 season, other estimates are as high as 29 MMT (record). Weekly export inspections came in at 23.136 million bushels, down slightly on 24.459 million the previous week and at the low end of expectations. After the close the USDA said that the US winter wheat harvest was 75% complete versus 67% a week ago and 76% for the 5-year average. Spring wheat crop conditions are 68% good to excellent, down 2% from a week ago. Sep 13 CBOT Wheat closed at USD6.59 3/4, down 4 3/4 cents; Sep 13 KCBT Wheat closed at USD7.02, down 3 1/4 cents; Sep 13 MGEX Wheat closed at USD7.46 3/4, down 3 3/4 cents.
EU Wheat Down, Rapeseed At Near 3-Year Low
22/07/13 -- EU wheat closed lower, in a relatively slow start to the trading week, although one not without one or two interesting developments.
Nov 13 London wheat ended the day GBP1.65/tonne lower at GBP165.85/tonne and with Jan 14 also closing down GBP1.65/tonne at GBP167.25/tonne. Nov 13 Paris wheat fell EUR1.75/tonne to close at EUR192.50/tonne. Friendless Aug Paris rapeseed is falling faster than Felix Baumgartner after a particularly heavy Sunday lunch, ending EUR8.50/tonne easier at EUR371.00/tonne -the lowest for a front month since August 2010.
The on, off, UK bioethanol plant Ensus - one of the largest in Europe - has been sold to German company CropEnergies AG, a member of the Südzucker Group who are the largest sugar producer in Europe, at a fraction of the original cost of building the plant which only opened three years ago.
CropEnergies already operate bioethanol production plants in Germany, Belgium and France. They say that the move will potentially increase its annual production capacity of bioethanol by 50% to more than 1.2 million cubic metres and that they plan to spend more than GBP50 million improving the competitiveness of the plant.
That's good news for domestic wheat demand on the face of it, with Ensus potentially requiring around a tenth of the UK crop in 2013/14 were it to run at full capacity and operate on 100% wheat. Although there are a couple of fairly large "ifs" there. It may be that the new owners will continue to also incorporate a certain percentage of corn into the grind, as Ensus were doing when the plant was last operational, and if they do decide to do that then they may also opt to wait until cheap new crop Black Sea material comes onto the market.
There are reports of Black Sea corn for November shipment being available CIFFO (prior to discharge and storage/transport costs) into the UK in the lower GBP150's.
Other interesting news today concerned the announcement last Friday that the US Federal Reserve were going to review their 2003 decision to allow investment banks to trade and store physical commodities, and what the implications of that might be for the grains sector.
On the fundamental news front, the EU Commission's MARS unit released their July yield forecasts today, increasing their projections for wheat, barley, corn and rapeseed on an EU-wide basis. The yield forecasts for soft wheat were in fact raised for twenty four of the EU-28 countries with the exception of Italy, Bulgaria, Finland and Greece.
They now project EU all wheat yields at 5.45 MT/ha, up from the 5.32 MT/ha predicted last month and a 5.0% increase on last season. For all barley they estimate yields averaging 4.78 MT/ha versus 4.68 MT/ha in June and up 9.1% compared to 2012. For corn they are now looking for an average EU-28 yield of 7.22 MT/ha, versus 7.13 MT/ha in June and up 18.9% compared with 2012. OSR yields are seen at 3.08 MT/ha (versus 3.02 MT/ha last month although still down slightly on 3.11 MT/ha in 2012).
Spanish grain yields potential are said to be amongst the highest on record, up more than 50% in the case of wheat compared to 2012, and rising by over 75% in the case of barley.
In the UK, wheat yields were estimated at an average 7.90 MT/ha, up 18.7% versus last year (and compared to the 7.63 MT/ha forecast in June). Barley yields here are called at 5.69 MT/ha, up 3.1% compared with 2012 and versus the 5.54 MT/ha predicted a month ago. OSR yields were estimated at 3.32 MT/ha, the same as in June and slightly lower (-2.1%) than the 3.40 MT/ha achieved in 2012. Considering the air of total despondency around concerning the prospects for UK rapeseed yields earlier in the year that would be very impressive, if it can be achieved.
"With relatively dry days and mild temperatures, the period from 1 June until 15 July has brought favourable conditions for (UK) crop growth that improve the outlook for reasonable yields," they said.
French wheat and barley yield potential was increased versus June, although corn's prospects were cut. German wheat and barley yields were also raised from last month, with corn potential left unchanged. Essentially the warmer and drier weather experienced in the last 6 weeks has been of benefit to wheat and barley, but not so for corn, they suggested.
Separately to MARS the HGCA today released their forecasts for the UK harvested area for 2013. That gave us a UK wheat area down 19% versus 2012 at 1.61 million acres, whilst the total barley area is seen up 26% at 1.23 million ha and the total OSR area pegged 9% lower than last year at 686k ha.
If the HGCA are correct with their area estimates, and MARS also on the ball with their yield forecasts (two more sizeable "ifs" I'll grant you), then the UK will harvest 12.7 MMT of wheat, 7.0 MMT of barley and 2.28 MMT of OSR this year - all far better results than almost anybody imagined a few months ago!
But then again, if me Auntie had a cock she'd be me Uncle wouldn't she? She has got a pretty impressive handlebar moustache though, just thinking about it...
EU Rapemeal Prices
22/07/13 -- Rapemeal prices on the continent are mostly firmer today, with the exception of nearby July, which continues to fall to realign itself closer to new crop levels.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| LH Jul13 |
255.00
|
-5.00
|
| Aug13 |
234.00
|
+2.00
|
| Sep/Oct13 |
228.00
|
+3.00
|
| Nov13/Jan14 |
216.00
|
+2.00
|
| Feb/Apr14 |
214.00
|
+2.00
|
| May/Jul14 |
212.00
|
+2.00
|
| Aug/Oct14 |
192.00
|
unch
|
The Midday News
22/07/13 -- The overnight market sees beans and meal continuing to add nearby premium. Why on earth was Aug 13 such a substantial discount to Jul 13 when the latter expired a little over a week ago?
Corn is 2-3 cents easier on the overnight Globex market, with new crop Dec 13 crucially back below the USD5/bu mark. Wheat is 1-2 cents firmer. Both London and Paris wheat are up a tad.
Poor old Paris rapeseed, what on earth are we going to do with that? Front month Aug 13 is down EUR5.75/tonne again this morning, to trade at EUR373.75/tonne. The contract closed at EUR439.50/tonne on the first trading day of June.
The news that Ensus has been sold to the Germans will sound promising for the wheat bulls. Let's wait and see what happens there. Will they open straight away, or will they prefer to sit tight and wait for cheap new crop corn to come along first? Indeed will they continue to use corn, or switch back to 100% wheat? Or could they even increase the percentage of corn used in the grist? Questions, questions. That's better than orders, orders, though I suppose.
Catching me eye over the weekend, and potentially something that may not be music to the bull's ears, was news that the Fed announced late Friday that they were going to review their decision (made in 2003) to allow investment banks to trade and hold physical commodities.
Ten years ago was the start of the beginning of the banks/funds love affair with commodities of course. As things stand right now there is no suggestion that the Fed might extend this possible U-turn on trading physical commodities into trading futures in commodities.
However, the first question to ask is "well, if they think that trading physical commodities is/might be causing the unprecedented volatility that we've seen in the markets since 2003, who's to say that they won't next turn their attention to futures trading as well?"
We might also want to ponder "might the banks/funds view this potential change of heart on trading the physicals as a time to get out/cut back on futures trading now, before it becomes compulsory and they all have to exit at the same time, with the inevitable consequences?"
It's very difficult to operate in a market where the rules at the start of the game are prone to get changed at half-time, and could be completely different again by the time the final whistle blows. (Unless of course if you are a Man Utd supporter- in which case this is perfectly normal).
Oil World say that global oilseed production in 2013/14 will increase 4.5% to 479.69 MMT. They have the world OSR crop down at 63.47 MMT, up 1.5%, with the EU-28 crop rising to 20.40 MMT, an increase of 5.1% on last year.
They estimate the world sunseed crop up 7.9% at 38.73 MMT, with production in Europe rising to 8.07 MMT, an increase of 17.1% versus last year.
The USDA attaché in Kazakhstan has cut his wheat production estimate there to 14.0 MMT versus 14.5 MMT from the USDA themselves, on drought in some parts and a lower planted area than originally expected.
The early Kazakh harvest is underway in the Almaty region, with very early yields said to be 2.5 MT/ha versus only 1.0 MT/ha a year ago.
Ensus Sold To Germans
22/07/13 -- Breaking news this morning is that stop-start UK bioethanol business Ensus has been sold for a knock-down price to German firm CropEnergies AG, a member of the Südzucker Group, the largest sugar producer in Europe.
CropEnergies say that they plan to invest more than GBP50 million to improve the competitiveness of the plant.
The acquisition was said to have been completed on Friday "by a contribution in kind in return for the issuance of 2.25 million new CropEnergies shares. The issuing price per share is EUR5.98 (GBP5.15), ex dividend, corresponding to a total value of EUR13.5 million (around GBP11.6 million)."
CropEnergies already operates bioethanol production plants in Germany, Belgium and France. They say that the move will potentially increase its annual production capacity of bioethanol by 50% to more than 1.2 million cubic metres.
Conceptualised in heady days of 2006, the plant was said to have been built for a total cost of GBP250 million, although subsequent additional expenditure may have taken that figure as high as GBP300 million according to some estimates.
