Chicago Drifts Lower Into Weekend
13/04/12 -- Soybeans: May 12 Soybeans closed at USD14.36 3/4, down 4 1/4 cents; Nov 12 Soybeans closed at USD13.61 3/4, down 11 cents; May 12 Soybean Meal closed at USD395.80, up USD1.20; May 12 Soybean Oil closed at 56.52, down 71 points. On the week as a whole May beans were slightly higher, up 2 3/4 cents although new crop Nov was almost 20 cents weaker. Meal added almost USD4 whilst oil was 12 points lower. Funds were estimated to have sold 4,000 soybean contracts on the day, whilst buying 1,000 on the meal. The USDA has reported the sale of 165,000 MT of new crop soybeans to China. Argentine soybean production estimates keep getting smaller. The Buenos Aires Grain Exchange yesterday went 44 MMT for Argentina, the Rosario equivalent now say 43.1 MMT against the USDA's 45 MMT announced on Tuesday.
Corn: May 12 Corn closed at USD6.29 1/4, down 8 1/4 cents; Dec 12 Corn closed at USD5.37, down 9 3/4 cents. Old crop May corn was 29 cents lower on the week with new crop Dec down 13 1/4 cents. Funds were said to have sold around 10,000 contracts on the day. An ideal start to the early planting season looks set to get the boost of widespread Midwest rains over the weekend. The La Nina weather phenomena that has been in place across the winter, resulting in dry conditions for much of the Midwest, is said to have weakened rapidly. That potentially puts cooler and wetter conditions on the cards for the summer growing season. A drift into the El Nino weather pattern, should it occur, would be seen as being even more beneficial this summer.
Wheat: May 12 CBOT Wheat closed at USD6.23 1/2, down 15 3/4 cents; May 12 KCBT Wheat closed at USD6.43, down 10 cents; May 12 MGEX Wheat closed at USD8.24 1/4, down 12 1/4 cents. Chicago wheat fell 15 cents on the week, with Kansas wheat down 19 cents and Minneapolis wheat losing 21 3/4 cents. Wheat seems to be drifting lower, US stocks are ample and with each week that passes winter wheat harvesting draws ever nearer. Crop conditions are sharply better than a year ago and spring wheat planting is also well advanced. Algeria bought 200,000 MT of what is thought to have been French wheat this week. Egypt stayed out of the market. European weather conditions have improved, potentially drawing a line under talk of crop losses there.
EU Wheat Ends Mostly Lower
13/04/12 -- EU grains finished mostly lower although May 12 London wheat bucked the trend closing GBP1.00/tonne higher at GBP175.65/tonne, new crop months were GBP0.55/tonne easier. The more liquid May 12 Paris wheat fell EUR0.75/tonne to EUR209.00/tonne.
On the week as a whole that puts front month May 12 London wheat GBP3.90/tonne higher, but new crop Nov 12 GBP3.00/tonne lower. That means that the gap between May 12 and Nov 12 has increased by more than fivefold since the turn of the year.
Clearly something is amiss with front month London wheat which has now appreciated by more than 15% since the turn of the year. Paris wheat meanwhile is only up 3% since then and Chicago wheat is down by almost 5%.
Exactly the same thing happened a year ago. On the first day of May 2011 front month May 11 London wheat was GBP206.00/tonne, by the end of June it was GBP155/tonne. The May/Nov spread saw Nov at a GBP34.00/tonne discount to May on the first trading day of May 2011, by the time May went off the board that gap had fallen to GBP11.50/tonne and before May was out the new front month old crop Jul 11 was trading at a discount to new crop Nov 11.
The much more liquid market that is Paris wheat is clearly a better barometer of what is really going on in the market. May 12 ended the week EUR2.25/tonne lower than it began it and Nov 12 fell EUR3.25/tonne.
Brussels only issued soft wheat export licences for 84 TMT this week, a lower weekly volume than that we have only seen once in the entire marketing year.
UK and EU weather conditions in general have improved significantly over the past week, that will hopefully mean that crop prospects will be enhanced for the 2012 harvest. It should perhaps be noted that this improvement comes a month earlier than it did in 2011.
Early Call On Chicago
13/04/12 -- The overnight grains ended barely changed in a "the weekend can't come soon enough" kind of a manner. Beans are around 7 cents higher on the week so far, with corn around 20 cents lower and wheat pretty flat. Crude is slightly easier and the dollar marginally firmer.
Fresh news is extremely thin on the ground. US weather is non-threatening, European weather has improved.
The USDA has reported the sale of 165,000 MT of new crop soybeans to China. They just love it don't they?
Argentine soybean production estimates keep getting smaller. The Buenos Aires Grain Exchange yesterday went 44 MMT for Argentina, the Rosario equivalent now say 43.1 MMT.
I have a funny feeling that once the harvest kicks off things could get lower again.
Early calls for this afternoon's CBOT session: wheat down 1-2 cents; soybeans down 1-3 cents; old crop corn flat to up 2 cents, new crop down 1-2 cents.
EU Rapemeal Prices
13/04/12 -- Rapemeal prices on the continent are back on the up, with crushers taking downtime meal availiability is extremely tigh and looks set to stay that way at least through until new crop comes along.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Apr12 | 245.00 | +4.00 |
| May/Jul12 | 242.00 | +2.00 |
| Aug/Oct12 | 209.00 | +4.00 |
| Nov12/Jan13 | 209.00 | +2.00 |
| Feb/Apr13 | 211.00 | +2.00 |
| May/Jul13 | 203.00 | +3.00 |
| Aug/Oct13 | unq | n/a |
| Nov13/Jan14 | unq | n/a |
The Morning Vibe
13/04/12 -- The overnight grains are mostly a tad steadier, and the pound showing little change so far.
Last night's Chicago soybean close was the highest for a front month since the last day of August and came within 10 cents of the 2011 highest close of the year. At USD394.60 May 12 meal took out the 2011 highs.
As the South American soybean harvest progresses south production estimates keep dropping. It was southern Brazil and Argentina that bore the brunt of the drought you will recall. Some private estimates now put the Brazilian crop at 63-65 MMT, versus the USDA's 66 MMT from earlier in the week.
Argentina's crop was pegged at 44 MMT by the Buenos Aires Grain Exchange yesterday, 1 MMT below the USDA's Tuesday estimate, others I am hearing are now in the 41-42 MMT region.
Argentina's farmers will soon start winter wheat planting and are expected to reduce sowings by around 15% on last year due to low domestic prices.
Brussels I see weren't exactly rushed off their feet with paperwork this past week being only asked to issue 84 TMT of soft wheat export licences, the second lowest weekly total of the marketing year.
Algeria however bought 200,000 MT of optional origin wheat yesterday with France thought to be the most likely supplier.
With US winter wheat maturity 2-4 weeks ahead of schedule and corn/soybean prices where they are there's plenty of talk of double cropping with no-till corn or soybeans going into the ground immediately after the wheat harvest.
That could help get those soybean acres up a bit.
Chicago Soybeans Regain Upward Momentum
12/04/12 -- Soybeans: May 12 Soybeans closed at USD14.41, up 19 cents; Nov 12 Soybeans closed at USD13.72 3/4, up 13 3/4 cents; May 12 Soybean Meal closed at USD394.60, up USD7.80; May 12 Soybean Oil closed at 57.23, up 78 points. After three days of light consolidation beans were back on the up today. Weekly export sales were disappointing at 460,100 MT of old crop and 176,300 MT of new crop. However the reported sale of 115,000 MT to China and a further 189,000 MT to unknown under the daily reporting system was supportive. So too was the news that the Buenos Aires Grain Exchange cut its forecast for Argentine soybean production from 45 MMT to 44 MMT, trade gossip now suggests that other local estimates are now as low as 41-42 MMT.
Corn: May 12 Corn closed at USD6.37 1/2, up 1 1/2 cents; Dec 12 Corn closed at USD5.46 3/4, unchanged. Weekly export sales beat expectations falling just short of 1 MMT, heavily stacked in favour of already tight old crop. Unknown took 291,100 MT of that and China was confirmed as having bought one 60,000 MT cargo. WxRisk are forecasting a welcome major rain event for almost all of the Midwest with 75% coverage of 1-3 inches. That may slow corn planting up a little but will be beneficial for new crop overall. Strategie Grains raised their EU-27 corn production estimate by 0.9 MMT from last month to 65.4 MMT.
Wheat: May 12 CBOT Wheat closed at USD6.39 1/4, up 11 1/4 cents; May 12 KCBT Wheat closed at USD6.53, up 9 cents; May 12 MGEX Wheat closed at USD8.36 1/2, down 1 3/4 cents. Wheat export sales of 452,100 MT old crop and 90,400 MT new crop were in line with expectations for combined sales of 400-600 TMT. Strategie Grains cut their EU-27 2012/13 soft wheat crop production forecast by 4.3 MMT to 126.8 MMT citing frost and drought damage. FranceAgriMer cut their 2011/12 French ending stocks estimate from 2.4 MMT to just under 2.1 MMT. US winter wheat crop conditions are well ahead of year ago levels, as are maturity and spring wheat plantings. Weather conditions look largely favourable for now.
Old Crop London Wheat Higher, New Crop Lower
12/04/12 -- EU grains finished mixed with May 12 London wheat up GBP2.65/tonne higher to GBP174.65/tonne, whilst new crop months were GBP0.50/tonne lower. May 12 Paris wheat ended EUR1.00/tonne higher at EUR209.75/tonne, Nov 12 was EUR1.50/tonne firmer at EUR203.75/tonne.
Old crop London wheat widened the gap between it and new crop again, with the May12/Nov12 differential now standing at more than GBP20.00/tonne, at the turn of the year ot was less than a fiver.
The only plausable explanation I can give for this is the news today that Vivergo has begun taking in wheat for testing purposes ahead of rolling into production. It now looks as if they may after all begin some kind of meaningful production this side of new crop.
Strategie Grains cut their EU-27 soft wheat production estimate by a sizable 4.3 MMT today to 126.8 MMT citing frost and drought damage. They also cut their barley production estimate by 1.1 MMT from last month to 52.4 MMT and knocked 0.6 MMT off their durum wheat forecast to 7.8 MMT.
Both the wheat estimates bring them into line with forecasts from Coceral which have already been in the marketplace for a fortnight or so. As a consequence of lower wheat production Strategie Grains also lowered EU-27 2012/13 soft wheat export potential by 3 MMT to 13.5 MMT.
Both analysts also agree on a European all wheat crop of 134.6 MMT, a drop of 2.9 MMT on last year. Before the February freeze hit Strategie Grains were forecasting an all wheat crop of 142.2 MMT this year.
Decent rains have however developed for Europe over the past week or so, with more in the forecast, potentially improving new crop prospects.
Early Call On Chicago
12/04/12 -- The overnight grains ended with beans 6-9 cents firmer, corn up 1-2 cents and wheat 3-5 cents higher. Crude has gone from being slightly higher to a tad lower, the dollar is also a bit weaker.
The USDA gave us strong weekly export sales for corn of 959,100 MT old crop and 16,700 MT of new crop versus expectations of 400-850 TMT. Unknown took 291,100 MT of that and China was confirmed as having bought one 60,000 MT cargo.
Soybean sales of 460,100 MT of old crop and 176,300 MT of new crop were a bit below expectations of 800 TMT-1.1 MMT.
Wheat sales were 452,100 MT old crop and 90,400 MT new crop, against expectations of 400-600 TMT.
The market may be asking "where exactly is all this old crop corn going to come from?" Let's hope that the USDA knows.
WxRisk are forecasting a welcome major rain event for almost all of the Midwest with 75% coverage of 1-3 inches. That may slow planting up a little but will be beneficial overall.
After a couple of days of consolidation are beans set to move higher again? The overnight market seems to think so, but a disappointing look to the export sales numbers may temper some of that enthusiasm a little.
That said the USDA have just confirmed the sale of 115,000 MT of US soybeans to China and a further 189,000 MT to unknown. Both are split between old and new crop.
Some switching of planting intentions must have gone on since the USDA numbers were collated, but how much? I still think we will have a soybean area closer to 75 million acres than the USDA's 73.9 million, but that doesn't make me bearish on beans, they still have the greatest upside potential for my money.
Early calls for this afternoon's CBOT session: corn up 2-3 cents, wheat up 2-4 cents, soybeans up 5-7 cents
