CBOT Closing Comments
03/12/10 -- Soybeans
CBOT Jan soybeans ended 20 1/2c higher at USD13.00 1/4c a bushel; Jan soymeal rose USD5.90 to USD351.60; Jan soyoil ended 61 pips higher at 53.45. Beans broke through the psychologically important USD13/bushel mark, with Jan posting the highest weekly settlement in the life of the contract. The dollar fell on the back of a lower than expected nonfarm payroll increase, and crude oil posted it's highest close since October 2008 nearing USD90/barrel. Argentine dryness is already causing concern with little more than half the crop in the ground.
Corn
Dec corn rose 17 3/4 cents to USD5.58 1/2; March corn rose 18 cents to USD5.73 1/2. The weak dollar and rising crude oil price also helped corn, as too did spillover support from resurgent wheat. Corn bulls should be mindful that the problems in Australia could actually be negative for US corn demand into Asia. The dryness problems in Argentina raise concerns over the corn crop as well as soybeans, in what is the world's second largest exporter of the grain. Unlike soybeans corn planting in Argentina is ahead of last year at 81% complete, versus 77% this time a year ago.
Wheat
CBOT March wheat ended up 30 1/2c at USD7.79 a bushel; KCBT March wheat rose 20 1/4c to USD8.22; MGEX March wheat climbed 22c to USD8.35 1/4. Wheat posted strong gains on all three exchanges as the market starts to catch onto the fact that before too long there's maybe only going to be one quality wheat shop left open - the US. Eu exports are flying out, and Australia's wheat crop seems to be deteriorating on a daily basis. Argentina will have a better wheat crop this year, but much of their surplus is likely to go to neighbouring Brazil.
EU Wheat Close
03/12/10 -- EU wheat futures closed higher once again Friday, with Jan London wheat up GBP2.45 to GBP187.45/tonne and Jan Paris wheat EUR1.50 firmer at EUR235.25/tonne.
This was London wheat's twelfth higher close out of the last thirteen trading sessions, during which time it has posted impressive gains of GBP31.70/tonne having risen more than GBP10.00/tonne this week alone. Paris wheat is up EUR17.00/tonne since last Friday.
London wheat is gaining on ideas that the domestic crop has been more aggressively sold for export in the last six months than anybody realised. UK exports are subsequently running well ahead of schedule, as too are those in the EU as a whole - 40% up on last season at the last count earlier this week.
That puts Europe on course to export almost 2 MMT more than the USDA currently predict, which would come straight off the bottom line ending stocks for 2010/11. At 10.7 MMT those are already forecast to be the smallest since 1983/84.
What are by now becoming well-documented problems in Australia sees the harvest in the east running 4-6 weeks behind schedule, with serious implications on quality, if not also now quantity starting to emerge.
Potential problems now also lie ahead for US and Russian winter wheat when it emerges from dormancy in the spring. US wheat currently has one of the highest poor/very poor ratings in the last twenty years at 17%. In the top producing US state of Kansas poor/very poor is now rated at a weighty 25%, further west in Colorado it's 40%.
Russian winter wheat plantings are forecast down 14% to 28 million acres, according to the IGC. That puts a lot of pressure on spring plantings, especially as spring wheat normally yields around 20% less than winter sown wheat in Russia. In addition, sunflowers are said to be a more profitable crop than spring wheat for Russian growers.
Early Call On Chicago
03/12/10 -- The overnight grains were firmer, led by wheat which posted gains of 17/22c. Corn finished 6/7c on spillover support from wheat, with beans up 7/8c.
Considering that the world can ill-afford a weather problem in 2011, suddenly the market is like a punch-drunk boxer on the ropes, getting hit from all angles.
Eastern Australia's wheat crop is in a mess, with talk of up to half of it only making feed grade. With Western Australia's crop slashed to around 3.5 MMT by drought, South Australia and east are expected to chip in with a wheat crop of around 20 MMT to make up the deficit. So we could be looking at taking up to 10 MMT out of the quality wheat supply chain for 2010/11.
The US winter wheat crop is entering dormancy in the worst state for years. The USDA reported on crop conditions this side of spring for the last time on Monday, pegging only 47% of the crop in the good/excellent category, one of the lowest percentages in years.
Now reports are circulating that around 9 million acres of China's principal wheat growing areas have been hit by drought. That's around 20% of the total planted area, and below average rainfall is expected to continue through to February.
Taiwan bought US wheat today, reputedly paying just under USD550/tonne for 14% Dark Northern Spring wheat, that would have to be amongst the highest prices paid in a good while as Asian buyers scramble for quality wheat.
Stats Canada peg all wheat production there this season at 23.2 MMT, 12.5% down on last year. Heavy spring flooding is also said to have taken it's toll on quality here too.
La Nina seems to be throwing up more difficulties than El Nino ever did with Argentina also under threat from only scant rainfall, with soybean plantings only managing to reach 57% done this week, according to the Buenos Aires Grain Exchange.
Meanwhile Russia's sharply lower and late planted winter wheat acreage faces a testing few months, and there are serious concerns as to their ability to be able to pull-off their targeted big spring planting increases.
For the week so far (excluding today's Globex markets) we see March CBOT wheat up 61 1/4 cents, Jan soybeans up 41 1/4 cents and March corn up 2 1/2 cents. Corn is clearly lagging on ideas that there may be 10 MMT more feed wheat on the market to tempt Asian buyers early in 2011.
Early calls for this afternoon's CBOT session: Corn and beans up 8-10c, wheat up 20-25c.
London Wheat Surges To Fresh Highs
03/12/10 -- London wheat has me flipping back through the record books this morning after front month January opens GBP3.45 higher at GBP188.45/tonne. Not only is that a contract high, a close at that would be the highest since March 26th 2008. Which just happens to be my birthday!
The overnight Globex market now sees wheat up around 23-24c, posting gains of 75-85c since last Friday's close.
"There is clearly going to be a dearth of quality wheat available in the first half of 2011, with America looking like being the only volume long-holder," say Dow Jones Newswires today. I wonder where they read that? Oh, there it is just a bit lower down, says an observer.
There you go, you wait all this time then two free lunches come along in quick succession. They could at least call me Nogger rather than an observer, you'd have thought. Internationally renowned blogger, market analyst, divorce specialist and raconteur would be better, but I'd settle for Nogger.
No Such Thing As A Free Lunch?
03/12/10 -- Who says that there's no such thing as a free lunch? Get your knife and fork out and pull up a chair, say the people at Farmers Weekly. Due to potential circulation issues with the wintry weather gripping the country they've put this week's edition of the magazine out in digital format completely free!
Have a quick (or leisurely) shuftie here: Shameless freeloader and proud of it
Early Vibe
03/12/10 -- Chicago wheat, which was 25c up in early trade yesterday, gave up much of those gains by the close finishing 8-9c higher on spillover weakness from corn and beans. That lost ground has been recovered this morning though, with the overnight session showing gains of 15-20c.
Australian milling wheat futures are soaring, posting 7% gains overnight for a rise of almost 30% in a week. The current La Nina episode, which is causing dryness concerns in Argentina, continues to dump rain across the entire grain belt on the eastern side of Australia which starts in Queensland runs down through NSW, Victoria and finishing in South Australia. "The same front has been hanging around now for about 7 days and looks like staying here for another week or so," says my newest Australian buddy Shaneo.
His wheat is now only likely to be suitable for feeding after earlier looking like being "the best they have been for as long as my father can remember," he says.
Thanks to Shaneo, Bill Crabtree and Andrew Jurgs who all emailed me to confirm that grain driers are indeed relatively few and far between Down Under, leaving most Australian farmers with little choice other than to sit back and watch the cricket whilst Mother Nature does their drying for them.
They're going to have to wait a while longer yet, QT Weather say that "A progression of storms will keep east Australia soggy for the next 10 days."
"In major cropping areas, rainfall anomalies for November were 50-150mm (2-6 inches) above normal, setting the stage for this month’s flooding, crop damage and harvest stoppages as rains have been relentless," they add.
Yet again, the quality wheat supply and demand picture continues to tighten.
Meanwhile the Chinese government got no bids whatsoever in this week's 300,000 MT soybean auction. It would seem that the minimum price was set too high to attract local interest. They also announced plans to auction off a further 100,000 MT of rapeseed oil next week. They sold 70% of what was on offer at their last auction.
The lucky old Chinese say that they had a record grain harvest of 546.4 MT in 2010, the seventh year of increases in a row, according to the National Bureau of Statistics. They say that production rebounded this year from last season's drought-affected crop. They don't explain how last season's drought-affected crop officially managed to top 2008's non drought-affected crop. Neither do they enlighten us on why last season they insisted that the crop hadn't been affected by drought. Better get me Charlie Chan on line two....
Brussels have now issued export licences for 10.1 MMT of soft wheat less than halfway through the marketing year, 40% up on this time a year ago. If we were to maintain that pace then we'd export 23.9 MMT in 2010/11, almost 2 MMT more than the USDA currently predict. The vast majority of this week's licences went once again to France - 396,000 MT.
Going back to QT Weather, they say that a second wave of ocean cooling means that we won't see La Nina peak until March. That's later than the Dec/Feb time frame that other forecasters are giving. If they're right that could continue to cause problems for South America, particularly Argentine soybeans and corn.
Chicago Close
02/12/10 -- Soybeans
Jan 11 soybeans closed at USD12.79 3/4, down 3 1/4 cents; Dec 10 soybean meal closed at USD344.10, down USD2.50; Dec 10 soybean oil closed at 52.47, up 22 points. Today's weekly export sales came in at 1.4 MMT, above trade expectations for sales of 1-1.3 MMT, and the highest in a month. China booked it's biggest total in four months. US sales currently stand at more than three quarters of the USDA's projected total for the entire marketing year, normally that total is on 55%.
Corn
Dec 10 corn closed at USD5.40 3/4, down 11 cents; Mar 11 corn closed at USD5.55 1/2, down 10 3/4 cents. Export sales were in line with trade expectations at 758,050 MT. In addition to those sales the USDA today announced 135,000 MT of corn sold to Japan and 238,000 MT to "unknown". Trade talk for corn is starting to focus on the likelihood, or otherwise, of the existing tax break on corn ethanol being extended when it expires at the end of the year.
Wheat
Dec 10 CBOT wheat closed at USD7.06 1/2, up 9 cents; Dec 10 KCBT wheat closed at USD7.87 1/4, up 6 1/2 cents; Dec 10 MGEX wheat closed at USD7.93 1/4, up 9 cents. Wheat futures closed up but well off session highs. The USDA today reported wheat export sales of 663,300 MT for the 2010/11 marketing year, plus 40,900 MT for delivery in 2011/12. That is in line with expectations for sales of 500-700,000 MT. Australian problems are adding to ideas that quality wheat will be in short supply come the spring.
EU Wheat Close
02/12/10 -- EU wheat futures closed higher with Jan11 London wheat up GBP1.75 to GBP185.00/tonne and Nov11 London wheat up GBP1.95 to GBP156.00/tonne. Jan11 Paris wheat rose EUR4.75 to EUR233.75/tonne and Nov11 Paris wheat was up EUR3.00 to EUR209.50/tonne.
Futures closed a little off the days highs, which were set early on, on profit-taking. Even so London wheat posted new contract highs and the highest close for a front month since March 26th 2008.
The strong pace of EU exports continues unabated. Brussels issued export licences for 558,000 MT of wheat during the past week, that brings the cumulative total for the marketing year to date to 10.1 MMT, 40% up on this time last year.
Missing out on yesterday's Egyptian tender looks like a blessing in disguise at this rate.
Australia's wheat crop is going downhill rapidly in the east, with some reports suggesting that things are so drowned out that some of the crop there won't even be suitable for feeding. It is an enormous kick in the nether regions for farmers in the area who have struggled against drought over the past few years.
The harvest there is now running at least a month behind. Unlike in the UK, many growers are huge distances away from the few grain driers that they have Down Under. So sitting tight and waiting for nature to do it's job is the only really viable option for the majority of Australian farmers, according to Andrew Jurgs, grain analyst at Czarnikow.
There is clearly going to be a dearth of quality wheat available in the first half of 2011, with America looking like being the only volume long-holder.
