Chicago Close
17/06/11 -- Soybeans: Jul 11 soybeans closed at USD13.33, down 17 1/2 cents; Nov 11 soybeans closed at USD13.33 1/4, down 17 cents; Jul 11 soybean meal closed at USD349.00, down USD4.70; Jul 11 soybean oil closed at 55.92, down 40 points. Beans shed 54 1/4 cents on the week, with meal losing USD24.30 and oil 93 points. Funds were liquidating again today, selling an estimated 6,000 bean contracts on the day, as oil slumped USD2/barrel with front month July ending at it's lowest since Jan 27th. Beans settled at their lowest levels in a month on continued concerns over Greek debt, and the impact it might have on demand from Europe.
Corn: Jul 11 corn closed at USD7.00 1/4, down 1 1/4 cents; Dec 11 corn closed at USD6.60, up 7 cents. July corn was down 86 3/4 cents, or 11%, on the week. Funds were estimated to have bought 9,000 contracts on the day, but liquidated something like 50,000 lots on the week overall. That's a weighty 6.35 million tonnes as reports circulate of ethanol producers closing down and looking to sell their inventory back onto the market. Crude oil falling to its lowest levels for a front month since February wont help improve their margins any, so I guess that corn prices need to do that to make the industry economically viable again, even whilst they still hang onto their 45c/gallon tax break.
Wheat: Jul 11 CBOT wheat closed at USD6.72 1/4, down 1 cent; Jul 11 KCBT wheat closed at USD8.04 1/2, up 6 1/2 cents; Jul 11 MGEX wheat closed at USD8.97 1/4, down 3 cents. Chicago wheat lost 87 cents on the week, with Kansas down 63 1/2 cents and Minneapolis falling a dollar and 2 /34 cents. This was the lowest front month close for Chicago wheat in three month as it closed lower every day this week. The US harvest is ongoing and with widely variable results although protein levels are generally high. Harvest pressure and global economic concerns, along with Russia's arrival back onto the export market being just two weeks away are the main fundamentals behind the slump. Widespread fund liquidation has meant that despite suggestions to the contrary speculators really do move markets.
EU Wheat Close
17/06/11 -- EU grains closed mixed with July London wheat down GBP0.15 to GBP176.50/tonne and with new crop Nov up GBP1.00/tonne to GBP174.50/tonne. Nov Paris wheat closed EUR3.00/tonne lower at EUR210.25/tonne whilst May12 fell EUR2.50/tonne to EUR218.25/tonne.
On the week as a whole July London wheat fell every day to close GBP15.50/tonne, or 8% lower. Nov was down GBP9.95/tonne, or 5%. Interestingly Nov Paris wheat was down EUR21.00/tonne, or 9%, on the week. That narrows the gap between Nov Paris milling wheat and Nov UK feed wheat to around 16 euros.
Heavy rain fell across much of southern England, central and northern France and much of Germany too today. Opinion is divided over how much good it will do, but it certainly can't do any harm.
Very early barley harvesting in France a few weeks ago reported some "disastrous" yields, but as the harvest has progressed results are coming in generally not as bad as feared.
Better than expected yields and quality are also being reported from the US winter wheat crop.
The barley harvest in Ukraine is expected to begin next week when the combines start rolling in Crimea, according to our man on the ground over there Mike Lee.
The EU has extended the duty free period for imports of feed wheat and barley, due to expire at the end of the month, until the end of the year.
Russia's Deputy Economy Minister Andrei Klepach says the the country's grain crop could top 85 MMT this year, in his personal opinion. There are mixed reports coming out of Russia, some well-conncected people are suggesting that yields will be 15-20% below normal (not on last year obviously). Others on the inside suggest that lack of moisture in some parts "isn't really an issue" at the moment.
Fund money exiting the commodities arena has certainly been a feature this week. NYMEX crude oil finished two dollars down on the day for a loss of more than six dollars on the week. Brent closed with losses of almost five dollars on the week.
Early Vibe
17/06/11 -- With Chicago wheat closing 35 1/4c down last night, and the overnights being lower again this morning then I guess that we're going to see London and Paris wheat extending their losses again today.
July London wheat is already down GBP15.35/tonne, or 8%, on the week so far, with Nov Paris wheat down a slightly more modest EUR15.25/tonne, or 7%.
It would seem that we may be adopting the seasonal price trend of a May peak slumping into a harvest low. Here's a chart of the seasonal price trend for London wheat 1990-2010:
Keen to cash in on high prices Pakistan have exported a record 2 MMT of wheat so far this year, and are likely to have shipped out another 1 MMT by the time the UK harvest gets going in August, traders say.
Funds sold an estimated 21,000 CBOT corn contracts yesterday, bringing their weekly dumping to around 60,000 say Agrimoney.com, that's equivalent of more than 7.6 million tonnes.
Chicago Closing Comments
16/06/11 -- Soybeans: Jul 11 soybeans closed at USD13.50 1/2, down 17 1/2 cents; Nov 11 soybeans closed at USD13.50 1/4, down 16 1/2 cents; Jul 11 soybean meal closed at USD353.70, down USD6.30; Jul 11 soybean oil closed at 56.32, down 73 points. Soybean weekly export sales were 185,400 MT, a bit slack but in line with trade ideas of just 100-200 TMT. Widespread nervousness surrounding the global economy is encouraging money to continue to exit commodities. Spillover weakness from slumping corn, which soybeans managed to ignore yesterday, was simply too great today.
Corn: Jul 11 corn closed at USD7.01 1/2, down 24 1/4 cents; Dec 11 corn closed at USD6.53, down 13 cents. Weekly export sales for corn were 794,700 MT, again a bit flat compared to expectations of 700,000 to 1,200,000 MT. In its second vote in a week the Senate went 73-27 in favour of cutting the 45 cent ethanol blenders tax break, also cutting the 54 cent import duty on shipping ethanol into the US from abroad. We're still a long way off that becoming law though. Front month July has dropped almost a dollar in four down sessions in a row as large fund length exits the market.
Wheat: Jul 11 CBOT wheat closed at USD6.73 1/4, down 35 1/4 cents; Jul 11 KCBT wheat closed at USD7.98, down 21 1/4 cents; Jul 11 MGEX wheat closed at $9.00 1/4, down 36 3/4 cents. Wheat remains cheaper than corn by virtue of the fact it is falling even faster than it's competitor based on today's performance. Weekly export sales were 455,500 MT - at the low end of pre-report expectations of 400-800 TMT. Technically July CBOT wheat put in a damaging performance from a chartists viewpoint having failed to break through resistance at 6.90 on three previous occasions.
EU Grains Close
16/06/11 -- EU grains closed mixed with July London wheat down GBP1.35 to GBP176.65/tonne and with new crop Nov falling GBP1.50/tonne to GBP173.50/tonne. Nov Paris wheat closed EUR0.75/tonne higher at EUR213.025/tonne whilst May12 rose EUR1.25/tonne to EUR220.75/tonne.
Paris wheat rose on the back of a weak euro on a continuation of the Greek debt crisis. London wheat fell as it continues to re-align itself with wheat markets elsewhere, having fallen less than either Paris or Chicago since the Russian export ban was agreed to be lifted.
French analysts Strategie Grains cut their EU-27 soft wheat production estimate by 6 MMT from last month to 125.6 MMT, now 1 MMT lower than last year. They've correspondingly cut export projections for 2011/12 by 4 MMT from last month to 12.9 MMT, 6 MMT below what they expect in 210/11.
Barley production is seen down 2 MMT from last month to 52.2 MMT and the corn crop reduced 100,000 MT to 59.0 MMT.
The market hardly reacted to the news, a worrying sign. US corn futures meanwhile continue to decline at an alarming rate given the much publicised tight ending stocks highlighted in last week's USDA report.
Anecdotal reports from many parts of the UK suggest that the wheat crop isn't looking as bad as feared after some decent rains finally arrived a month or so ago.
More rain is forecast to bring further moisture relief to much of the country by the weekend, indeed one market report today has to be credited with being the first to say that there can be too much of a good thing!
Brussels issued export licences for 151,000 MT of soft wheat this past week, bringing the YTD total to 17.95 MMT with two weeks of the campaign left to run. That's only a 3% increase on where we were a year ago, before Christmas we were running at 35% ahead of a year previously.
EU Rapemeal Prices
16/06/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jun11 | 197.00 | +3.00 |
| Jul11 | 197.00 | +3.00 |
| Aug/Oct11 | 195.00 | +1.00 |
| Nov11/Jan12 | 200.00 | +5.00 |
| Feb/Apr12 | 202.00 | +5.00 |
| May/Jul12 | 199.00 | +4.00 |
| Aug/Oct12 | 178.00 | unch |
Early Call On Chicago
16/06/11 -- The overnights closed lower again with beans down around 12-14c, corn 7-11c easier and wheat 4-8c weaker.
Wonder if we may have fallen enough these past few sessions to flush out one or two bargain hunters this afternoon? The market certainly has a different feel to it this week, even though there are plenty of bullish stories about.
July corn is down 72 1/4 cents from last Friday's close with July CBOT wheat falling 58 3/4 cents and July beans down 33 3/4 cents.
Weekly export sales from the USDA were within the range of trade estimates, although nothing spectacular. The dollar is firm as investors shun the euro, and crude oil is flat.
S. Korea has bought 55,000 MT of corn from Cargill, Japan has bought 259,303 MT of US/Canadian/Oz wheat for August delivery. Algeria has bought 350,000 MT of probably French wheat and also 50,000 MT of feed barley.
For the time being market direction will be led by the funds willingness to continue to liquidate longs, with almost all other factors playing second fiddle. Who was it that said "speculators aren't driving global commodity prices" again? They drove them up and they're driving them back down again now from where I am standing.
Early calls for this afternoon's Magical Mystery Tour: corn down 8-10c, wheat down 6-8c, beans down 12-14c.
USDA Export Sales
16/06/11 -- The USDA's weekly export sales report pegs wheat sales at 455,500 MT (including 57,800 MT for Egypt) at the low end of pre-report expectations of 400-800 TMT.
Corn sales came in at 794,700 MT, again a bit flat compared to expectations of 700,000 to 1,200,000 MT considering that we already knew about the recent sale of 548,600 MT of new crop to Mexico.
Soybean sales were 185,400 MT, slack but in line with trade ideas of just 100-200 TMT.
