Chicago Closing Comments - Post USDA
08/03/13 -- Soycomplex: Soybeans ended mixed with strong nearby demand and shipping delays in Brazil supporting the nears and prospects for bumper availability later in the year weighing on the deferred positions. The USDA completely ignored the fact that strong US sales, the vast majority of which have already been shipped, surely mean that their export projection for 2012/13 is too low and left it unchanged at 1.345 billion bushels. That allowed them to also leave ending stocks unchanged at 125 million bushels. They would appear to have decided that 125 million is their minimum comfort zone, being little more than 2 weeks worth of supply. They left Brazilian soybean production unchanged at 83.5 MMT, the trade was expecting a modest reduction. They cut Argentine output by 1.5 MMT to 51.5 MMT, the trade was forecasting a 3 MMT cut to 50 MMT. That enabled them to raise world ending stocks slightly to 60.2 MMT versus the trade expecting a small cut to 59.58 MMT. FAPRI (The Food and Agricultural Policy Research Institute) estimated US 2013 soybean plantings at 78.5 million acres versus the USDA projection of 77.5 million. They see the average yield at yield at 43.5 bu/acre versus the USDA projection of 44.5 bu/acre. They see US output in 2013 at 3.367 billion bushels versus the USDA projection of 3.405 billion, but up 11.7% on 3.015 billion in 2012. They don't see US 2013/14 ending stocks rebounding as much from this season's 125 million as the USDA's 250 million bushels, releasing an estimate of 191 million. Chinese customs data shows that the country imported 7.68 MMT of soybeans in Jan/Feb 2013, down 9% from the same period in 2012. Funds were estimated to have been net sellers of around 2-4,000 soybean contracts on the day. Mar 13 Soybeans closed at USD15.08 1/2, up 5 cents; Aug 13 Soybeans closed at USD14.04, down 10 1/2 cents; Mar 13 Soybean Meal closed at USD436.10, up USD0.10; Mar 13 Soybean Oil closed at 50.16, down 24 points. For the week that puts the front months up 65 cents, meal up USD8.80 and oil up 69 points.
Corn: The USDA report was neutral to slightly friendly. Exports were cut 75 million bushels from 900 million to 825 million, few would argue with that. What surprised though was an increase of 100 million bushels in domestic feed usage. Demand from the ethanol sector was also left unchanged at 4.5 billion bushels despite the weekly grind consistently failing to match the level required hit this target and talk of at least one major producer looking to partially switch to wheat. That meant US ending stocks being left unchanged at 632 million bushels when the trade was anticipating a rise to 649 million. Brazilian production this year was also unchanged at 72.5 MMT, Argentine output wasn't cut by as much as expected - from 27.0 MMT to 26.5 MT versus the 25.6 MMT forecast by the trade. World ending stocks were trimmed from 118 MMT to 117.5 MMT versus the 117.87 MMT expected. FAPRI estimated 2013 US corn plantings at 96.9 million acres versus the USDA projection of 96.5 million and 97.2 million last year. Harvested area was seen at 88.8 million, the same as the USDA projection and up from 87.4 million in 2012 due to the high level of abandonment last year. Yields are seen rising to 161.8 bu/acre versus the USDA projection of 163.6 bu/acre, up 31% on 2012. That gives production of 14.37 billion bushels versus the USDA's projection of 14.53 billion and output of 10.780 billion in 2012. US ending stocks next
year were forecast at 1.638 billion bushels versus the USDA projection of 2.177 billion, but still up 160% on this season's 632 million from the USDA. Fund buying in corn was estimated at around 10,000 contracts on the day. Mar 13 Corn closed at USD7.25 1/4, up 13 3/4 cents; May 13 Corn closed at USD7.03 1/2, up 12 1/4 cents. For the week Mar 13 was 1 cent higher and May 13 fell 5 cents.
Wheat: The USDA report looked bearish, but strength in corn added support for nearby months. World 2012/13 wheat production was raised from 653.6 MMT to 655.5 MMT, including a near 1 MMT increase for India to a record 94.88 MMT. That helped raise world ending stocks from 176.73 MMT to 178.2 MMT versus the small reduction to 176.69 MMT that the trade was expecting. US export potential was cut from 1.05 billion bushels to 1.025 billion, increasing US carryout from 691 million bushels to 716 million, which was 3 million more than anticipated. Despite talk of increased demand for wheat due to expensive corn, the USDA didn't increase their domestic usage estimate. FAPRI estimated US wheat plantings for this year's harvest at 57.5 million acres versus the USDA's projection of 56.0 million and up 3.2% versus 55.7 million in 2012/13. Interestingly they have wheat harvested acres at 49.7 million, far higher than the USDA's projected 46.5 million. Whilst they have yields slightly lower than the USDA at 44.9 bu/acre versus 45.2 bu/acre from Washington, the sharp difference in harvested area means that FAPRI are predicting a US all wheat crop of 2.233 billion bushels and 133 million higher than the USDA's projection of 2.100 billion. That would equate to adding a further 3.6 MMT of output to the US this year than the USDA currently predict. Production in 2012/13 was 2.269 billion. FAPRI estimated 2013/14 US wheat ending stocks at 727 million bushels versus the USDA projection of 639 million and today's forecast of 716 million in 2012/13. Funds were thought to have maybe been net buyers in CBOT wheat to the tune of around 1,000 contracts. On the day Mar 13 CBOT Wheat closed at USD6.90, up 3 1/4 cents; Mar 13 KCBT Wheat closed at USD7.38 1/4, down 1 3/4 cents; Mar 13 MGEX Wheat closed at USD8.06 1/4, unchanged. For the week that puts CBOT wheat down 23 1/4 cents, with Kansas falling 17 3/4 cents and Minneapolis shedding 13 1/2 cents. For CBOT wheat this was the lowest close for a front month since June 2012 on the weekly chart despite today's modest gain.
EU Wheat Slumps To Multi-Month Lows
On the day, London wheat closed with Mar 13 down GBP0.75/tonne at GBP196.25/tonne and new crop Nov 13 GBP1.15/tonne higher at GBP182.75/tonne. Mar 13 Paris wheat was EUR4.25/tonne lower at EUR234.00/tonne, May 13 was EUR0.75/tonne easier at EUR230.25/tonne.
On the week, Mar 13 London wheat fell GBP7.25/tonne to the lowest level for a front month since August. New crop Nov 13 fared somewhat better, losing just under a fiver. Mar 13 Paris wheat slumped a hefty EUR16.00/tonne, an eight month low for a front month across the Channel.
Yet amazingly there is bullish news around. Brussels releasing almost 607 TMT of soft wheat export licenses this past week means that EU exports are now running 46% ahead of year ago levels at 13.7 MMT this season.
In addition the HGCA now place the English & Welsh wheat planted area as of Dec 1 at 1.394M ha, down 25% on Dec 2011 which is less that the 20% decline that most official estimates have suggested up until now. "However, some freezing conditions through the winter and drier weather in late February may have allowed further plantings – though in less than ideal conditions," they add.
In contrast they now suggest that winter OSR plantings in England and Wales were only down 1% although "crop abandonment will be higher than usual so the year-on-year decline in harvest area is likely to be noticeable," they note. Many would suggest that crop abandonment will be very high this year, particularly in the north.
The winter barley area is seen down 19% in England & Wales "a noticeable increase in the spring barley area is expected due to the wet autumn diverting land towards spring cropping," they add.
As the HGCA themselves noted though, just because UK production prospects look dim it doesn't necessarily mean that prices can only go up. The UK wheat crop accounted for less than 2% of global production last year, whilst we weighed in with 4.3% of global rapeseed output. Even if the UK wheat crop was to slump to disastrous 8 MMT this year it would be compensated for by the extra volume anticipated from Ukraine alone.
In other news, FranceAgriMer said that spring barley plantings there are 20% complete, up from only 7% a week ago, although still trailing last year's pace of 35%. French wheat crop conditions are unchanged from a week ago at 66% good/excellent, versus 68% this time last year. Winter barley rated good/excellent is up one point on last week to 67%, versus 61% a year ago.
The forecast very cold spell coming next week, with a hard freeze expected across the whole of northern Europe Tuesday through to Friday, could offer a threat to unprotected crops.
Trade Thoughts Ahead Of The USDA Report
08/03/13 -- Here's a little resumé of what the trade is expecting from the USDA tonight:
SOYBEANS
US ending stocks to be cut to 122 million bushels, from within a range of estimates of 107–131 million. The USDA's February estimate was 125 million, and 2011/12 ending stocks were 169 million.
The Argentine soybean crop average estimate is 51.0 MMT, from within a range of estimates of 48.5–53.0 MMT. The USDA's February estimate was 53.0 MMT, and the 2011/12 crop was 40.1 MMT.
The Brazilian soybean crop average estimate is 83.4 MMT, from within a range of estimates of 82.0–84.5 MMT. The USDA's February estimate was 83.5 MMT, and the 2011/12 crop was 66.5 MMT.
The world soybean ending stocks average estimate is 59.58 MMT, from within a range of estimates of 58.0–60.6 MMT. The USDA's February estimate was 60.12 MMT, and the 2011/12 carryout was 55.25 MMT.
CORN
US ending stocks to be raised to 649 million bushels, from within a range of estimates of 627–750 million. The USDA's February estimate was 632 million, and 2011/12 ending stocks were 989 million.
The Argentine corn crop average estimate is 25.6 MMT, from within a range of estimates of 24.0–27.0 MMT. The USDA's February estimate was 27.0 MMT, and the 2011/12 crop was 21.0 MMT.
The Brazilian corn crop average estimate is 72.6 MMT, from within a range of estimates of 71.6-73.5 MMT. The USDA's February estimate was 72.5 MMT, and the 2011/12 crop was 73.0 MMT.
The world corn ending stocks average estimate is 117.87 MMT, from within a range of estimates of 116.0–120.0 MMT. The USDA's February estimate was 118.04 MMT, and the 2011/12 carryout was 131.01 MMT.
WHEAT
US ending stocks to be raised to 713 million bushels, from within a range of estimates of 671–754 million. The USDA's February estimate was 691 million, and 2011/12 ending stocks were 743 million.
The world wheat ending stocks average estimate is 176.69 MMT, from within a range of estimates of 174.5-179.0 MMT. The USDA's February estimate was 176.73 MMT, and 2011/12 carryout was 196.54 MMT.
EU Rapemeal Prices
08/03/13 -- Rapemeal prices on the continent are unchanged to a little weaker today as buying interest remains light. A very tight nearby physical soymeal market is keeping spot material steady with crushers well sold. Little trade is expected with today's USDA report now resheduled for release as European markets close.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Mar13 | 283.00 |
unch |
| Apr13 | 276.00 |
-3.00 |
| May/Jul13 | 257.00 |
-2.00 |
| Aug/Oct13 | 211.00 |
unch |
| Nov13/Jan14 | 212.00 |
-2.00 |
| Feb/Apr14 | 214.00 |
unch |
| May/Jul14 | 214.00 |
unch |
HJMEWLOH
08/03/13 -- Cheshire feed manufacturers M E Waterhouse and H J Lea Oakes have joined foreces I hear. The new business is going to be called H J M E WaterLeaOakesHouse, or HJMEWLOH for short. Nah, it isn't, I made that bit up. Which got me thinking that would be a bugger of a hand in scrabble wouldn't it?
H J Lea Oakes date back to 1675, which they say makes them "perhaps the longest established independent animal feed manufacturer in Britain." There can't be many that could beat that. There is I am assured no truth in the rumour that they've had the same mill buyer all this time.
Watherhouse Feeds are mere whippersnappers by comparison, having only got going at this milling malarkey in 1883.
Chicago Market Positions Itself For USDA Report
07/03/13 -- Soycomplex: The choppy theme continues as we head into tomorrow's all important USDA report. Nearby beans remain well supported by heavy rains forecast for Southern Brazil in the week ahead which will delay harvesting, and possibly add to logistical problems too. Michael Cordonnier reports a 60km line of trucks waiting to unload soybeans at one of the three rail terminals in Mato Grosso. There are also reports that dock workers in Brazil will hold a one day strike on Mar 19, although negotiations between the unions and the government are still ongoing. Weekly export sales of 392,000 MT of old crop and 990,600 MT of new crop beat trade expectations. With more than 5 months of the season left to go that takes US commitments on soybeans to over 95% of USDA targets. The USDA attaché in Argentina estimated the soybean crop there at 50.0 MMT versus the USDA's February estimate of 53.0 MMT. CONAB cut their estimate on production in Brazil by 1.3 MMT to 82.1 MMT, although that's still a record. They also cut their soybean export estimate to 36.78 MMT from a previous estimate of 37.78 MMT. Macquarie estimated Brazil’s bean crop at 81.0 MMT and Argentina's at 48.9 MMT. The ongoing strong pace of US exports means the trade is expecting a cut in US ending stocks tomorrow, with the average trade guess at 122 million bushels, from within a range of estimates of 107–131 million, versus the USDA February estimate of 125 million. Fund buying was estimated at a net 3,000 soybean contracts on the day. Mar 13 Soybeans closed at USD15.03 1/2, up 19 cents; May 13 Soybeans closed at USD14.73 1/2, up 7 1/2 cents; Mar 13 Soybean Meal closed at USD436.00, up USD1.80; Mar 13 Soybean Oil closed at 50.40, up 34 points.
Corn: Weekly export sales were poor at net cancellations of 49,800 MT of old crop and sales of only 206,400 MT for new crop against expectations of a combined 500-700 TMT. South Korea cancelled a tender to import 55 TMT of optional origin corn for July shipment due to high prices. CONAB left their Brazilian corn production estimate unchanged at 76.1 MMT. Macquarie disagree, coming in at 68.0 MMT, saying that they expect lower "safrinha" - or second crop corn - yields. They have the Argentine corn crop at 24.5 MMT versus the USDA's 27.0 MMT. The FAO said that "prospects for the first 2013 maize crops in South America remain generally favourable." In Brazil they said "Planting progress for the second season crop is also satisfactory under the good moisture conditions and the area is expected to increase from last year’s level." Yesterday's Energy Dept numbers show 84.5 million bushels of corn used for ethanol production last week versus the 87.8 million required to hit the USDA's target of 4.5 billion bushels of demand from that sector this season. POET are said to be actively looking to buy US wheat due to the high corn price to use in the grist to make ethanol but they are limited on inclusion levels. MDA CropCast said that the world would produce 894 MMT of corn in 2013/14, an increase of 9.3%, led by a near 82 MMT (22.7%) recovery in US production to a record 341.4 MMT. None of that is even in the ground yet of course. The slow US export pace sees total commitments to date at only 63.4% of USDA projections. That has the trade anticipating a rise in US ending stocks in tomorrow's report to 649 million bushels, from within a range of estimates of 627–750 million, and the USDA February estimate of 632 million. Funds were said to have been modest net buyers of around 2,000 contracts on the day. Mar 13 Corn closed at USD7.11 1/2, up 3 1/2 cents; May 13 Corn closed at USD6.91 1/4, up 2 3/4 cents.
Wheat: Weekly export sales of 618,100 MT of old crop and 210,000 MT of new crop comfortably beat trade forecasts for sales of a combined 300-600 TMT. China was a featured buyer of 60,400 MT of the old crop. Net commitments are now 81.7% of the USDA target for a season that ends in May. Old crop sales now need to average 403 TMT/week to hit that target. The FAO forecast a 4.3% rebound in world wheat production for 2013/14 to 690 MMT, that would be the second highest crop on record. Taiwan bought 93,680 MT of US wheat for April/May shipment. Japan bought 133,057 MT of wheat for April/June shipment, of which US wheat accounted for 47,658 MT, with the rest going to Canada and Australia. Oman seeks 20 TMT of optional origin milling wheat for April shipment. Argentina’s Ag Ministry estimated the 2012/13 wheat crop at 10.1 MMT, down 28% from 14.1 MMT a year ago. The USDA currently estimate 11.0 MMT, so may revise that lower tomorrow. India announced their intention to release an additional 5 MMT of wheat for export over the next three months, although their price aspirations seem ambitious. India’s 2013 wheat crop is estimated at a near record 92.3 MMT. Russia’s Grain Union estimated their 2013 grain crop at 95.0 MMT up 34% from a year ago, producing a 2013/14 wheat exportable surplus of 20.0 MMT. POET potentially buying US wheat for ethanol production is supportive. That, and the high price of corn, could see the USDA raise domestic wheat consumption tomorrow. For now though the trade is anticipating an increase in US ending stocks to 713 million bushels, from within a range of estimates of 671–754 million, and the USDA February estimate of 691 million. Mar 13 CBOT Wheat closed at USD6.86 3/4, up 10 1/2 cents; Mar 13 KCBT Wheat closed at USD7.40, up 10 1/2 cents; Mar 13 MGEX Wheat closed at USD8.06 1/4, up 4 1/4 cents.
Paris Wheat Settles At 8-Month Low As 2013 Production Estimates Rise
07/03/13 -- EU wheat futures closed mixed, but mostly lower, as the BoE and ECB both left interest rates on hold and decided against any further QE measures just yet. Once again we had a major body, this time the UN's Food and Agriculture Organisation, suggest a strong rebound in world wheat production this year.
They came up with a 4.3% increase to 690 MMT, only 2 MMT away from ABARES forecast of 688 MMT earlier in the week, and the second highest on record. Both the FAO and the Australians have EU wheat production at 138 MMT this year, which the FAO say is "driven by an expansion in area in response to high prices" saying, despite developments here, that "weather conditions have been generally favourable so far."
Much improved prospects are noted for Russia and Ukraine where output is seen up around 40% and 26% respectively.
MDA CropCast were a little more guarded with their 2013/14 production estimates, but still forecast a global wheat crop of 680.3 MMT, up 45 MMT on last year. With the IGC recently issuing an estimate of 682 MMT, it seems that we have a general figure of 680-690 MMT to pencil in at this early stage for the coming season, if we chose to ignore yesterday's throw away comment for the USDA's chief economist, Joe Glauber, that world wheat output "could climb to record highs" in 2013/14. Record highs mean in excess of 2011's crop of 696.6 MMT which prompted Paris wheat to fall below EUR180/tonne, Chicago wheat to around USD5.75/bu London wheat to GBP140/tonne.
MDA CropCast forecast world barley production this year at 134.2 MMT, an increase of 5.7%, with the EU contributing 52.5 MMT of that which is broadly similar to last season's total. Ukraine, Russia and Canada will see large jumps in output with production there up 11.6%, 16.2% and 28.4% respectively, they said. The latter analyst was interestingly far less bullish on rapeseed production potential in the EU, forecasting a drop in output to 17.84 MMT, which is well below demand which is typically around 22-23 MMT and ABARES suggestion of a crop of 19.6 MMT on Tuesday.
News that grain shipments out of the leading French export hub of Rouen slumped 63% this week to 91,272 MT was a blow, although it has to be noted that last week's total was the highest in more than two years. Morocco was the largest destination taking 59,802 MT of that, with a tiddler of 1,800 MT heading for the UK.
The decline shouldn't be seen as the start of a trend however. Late news coming in suggests that Brussels issued a further 606,691 MT of soft wheat export licenses this past week, an increase of almost 57% on last week and which Bloomberg say is the largest weekly total since December, taking the marketing year total to 13.7 MMT.
India announced it's intention to ship an extra 5 MMT of wheat spread over the next three months, although that news was accompanied by them confusingly setting a minimum price of USD320/tonne FOB, which is around USD20-25/tonne over where current bids are lining up. They are said to currently have grain stocks (including rice) of 66 MMT and a 90-95 MMT wheat harvest on the way imminently.
Syria announced that it's wheat tender that closed on Monday had gone the way of the Black Sea. Jordan's wheat purchase of yesterday was said to be of Romanian origin.
Taiwan bought 93,680 MT of US wheat overnight, said to be it's first such purchase in 5 weeks.
US weekly export sales beat expectations at 618,100 MT of old crop and 210,000 MT of new crop. Unknown destinations (128,400 MT) and Egypt (116,500 MT) were the two largest old crop buyers. China also showed up taking 60,400 MT of the old crop too.
One large US ethanol producer is said to be looking to procure wheat as a feedstock due to tight corn availability and the unusual discount situation for wheat vs corn prices that has developed in recent days.
On the day London wheat closed with front month Mar 13 down GBP0.80/tonne to GBP197.00/tonne and with new crop Nov 13 up GBP0.90/tonne to GBP181.60/tonne. Mar 13 Paris wheat was down EUR3.00/tonne at EUR238.25/tonne, a lowest close for a front contract in 8 months.
07/03/13 -- If you still haven't got into the whole Twitter thing yet, can't see the point of it, or just plain don't understand what all the fuss is about and what use it could be to you then think again.
It's not all about kids talking about Justin Bieber's haircut, what Stephen Fry had for breakfast or rumours about which Premiership footballer is about to be "outed" as a chutney ferret you know. There are some serious business applications to it as well, many of which are highlighted in this collection of slides from a recent presentation about getting to grips with online marketing using social media:
What have you got to lose?
How did I find out about this presentation? I saw it on Twitter of course. Some of it is presented from the assumption that maybe you are a bit of a muppet and don't know what you are doing when it comes to computers, so that when sat down in front of a PC you look at it with wide-eyed bewilderment like someone just chucked a Neanderthal man an iPad.
"What is this internet thing of which you speak? I'm a simple Neanderthal man. Twitter, I know nothing of such wizardry."
I would never make such an assumption of course about you my dear, discerning reader. I KNOW that you are a bit of a muppet who doesn't know what he's doing when it comes to computers!
