Nogger's Blog

Chicago Corn And Beans Crash Ahead Of Weekend, Wheat Little Changed

12/07/13 -- Soycomplex: The soybean market closed sharply lower to end the week, but still managed to post weekly gains. Profit-taking ahead of the weekend was probably the most likely reason for today's crash. Sunday night's latest weather forecasts may decide where we go to start next week. A slightly cooler and wetter outlook in this afternoon's forecasts was all that was needed to get traders to take some money off the table. Jul 13 contracts went off the board in a fittingly volatile fashion. Jul 13 beans, which closed just over USD16/bu last night traded in a range of around 75 cents, from an intra day high of USD16.10 to a low of USD15.34 1/2 before expiring at USD15.63 1/4, down 38 cents on the day. New front month Aug 13 closed at USD14.29, down 43 cents, Nov 13 beans closed at USD12.57 1/4, down 33 1/2 cents. Jul 13 Soybean Meal closed at USD535.50, up USD9.80, yet new front month Aug 13 closed USD15.10 lower at USD442.90. Jul 13 Soybean Oil closed at 46.09, down 40 points, Aug 13 closed at 46.22, down 31 points. For the week Nov 13 beans gained 29 cents and Aug 13 meal finished USD19.60 higher.

Corn: If I told you that the USDA today announced a sale of almost a million tonnes of US corn to China (it was 960 TMT to be precise) and that this was the eighth largest reported US corn sale of all time, then I guess that you'd expect the market to close higher, right? Not today my friend. Ever heard the expression buy the rumour, sell the fact? The sale appeared to confirm rumours from earlier in the week that China's state-owned Sinograin had bought 1 MMT of US corn (some say up to 1.3 MMT) to replenish government stocks. On a jittery Friday, where about to expire Jul 13 had already gained 32 cents on the week and Dec 13 had added 35 3/4 cents, heavy fund selling and profit-taking ahead of the weekend saw corn prices give up around half of those gains. The Commitment of Traders report shows managed money increasing their short position in corn for the week through to Tuesday night to almost 56k lots. The market will be watching Monday night's crop condition report to see if the US corn crop has made any improvement in the past week. Last week had good/excellent at 68%. Jul 13 Corn closed at USD7.01 1/2, down 15 1/4 cents; New front month Sep 13 Corn closed at USD5.45 1/2, down 15 1/4 cents; Dec 13 Corn closed at USD5.09 1/4, down 17 3/4 cents. For the week Dec 13 corn was 18 cents higher.

Wheat: Wheat closed little changed on all three exchanges, which wasn't a bad performance given the thrashing dished out to beans and corn. Wheat appears to be setting itself up to recreate it's position as maintaining a healthy premium over corn, with the USDA standing by their forecast for a huge US crop of the latter later this year. They cut world wheat stocks sharply in yesterday's WASDE report, much more so than the trade anticipated. Even whilst doing so they held steady on their forecast for a Russian wheat crop of 54 MMT and an Indian one of 92 MMT. They are probably at least 2 MMT, and possibly more like 4 MMT, too high on the former and around 5 MMT too high with the latter. That's another 7-9 MMT that may also disappear in future reports. The Commitment of Traders report shows managed money decreasing their short position on CBOT wheat for the week through to Tuesday night by around 2,300 contracts. They still sit on a short of around 48k lots however. China's Stats Bureau forecast the winter wheat crop there at 115.67 MMT, up 1.3% on last year. Many think that this is deliberately too high. Jul 13 CBOT Wheat closed at USD6.75 1/2, down 3 3/4 cents; Jul 13 KCBT Wheat closed at USD7.12 3/4, up 1 1/4 cents; Jul 13 MGEX Wheat closed at USD7.96 1/4, down 1/4 cent. For the week that puts CBOT wheat up 19 1/2 cents, with Kansas rising 36 1/4 cents and Minneapolis up 35 cents.

EU Wheat Lower On The Day, Higher On The Week

12/07/13 -- EU wheat finished lower on the day, but still managed to post weekly gains. Paris rapeseed took another mauling however, with Aug 13 finishing EUR5.25/tonne lower at EUR392.50/tonne, the lowest close in the contract's history.

Nov 13 London wheat ended the day GBP1.25/tonne lower at GBP169.75/tonne and with Jan 14 also closing down GBP1.25/tonne to GBP170.95/tonne. Nov 13 Paris wheat fell EUR1.50/tonne to close at EUR197.75/tonne. For the week Nov 13 London wheat was up GBP3.20/tonne and Nov 13 Paris wheat gained EUR3.00/tonne.

The German Farm Cooperatives Association estimated the wheat crop there at 24.07 MMT, up 7.5% on last year. That's higher than the USDA's forecast of 23.70 MMT from yesterday and marginally more than the 24.01 MMT that they estimated a month ago.

They forecast the German rapeseed crop at 5.58 MMT, a leap of over 16% on last year. Again that is higher than the USDA's 5.45 MMT and the 5.43 MMT that the Association predicted in June.

The German winter barley harvest is now underway, 10-14 days later than normal, and will total 8.23 MMT, also more than 16% up on last year. Spring barley production will fall however to 1.88 MMT, they said. Germany's corn harvest will also decline, down 17% to 4.55 MMT due to lower plantings and too much spring rain, they added.

The Italian soft wheat crop will fall 12% this year to fractionally under 3.0 MMT, according to the local Ag Ministry. Reduced plantings and lower yields due to too much rain are also to blame, they said.

The French winter barley harvest is also underway, if late, at 5% complete (this time last year when the harvest was early 50% of the crop had already been cut), say FranceAgriMer. Corn planting is 98% complete, and presumably won't now get any higher than that.

Winter wheat crop conditions were unchanged from a week ago at 69% good/excellent. Winter and spring barley good/excellent both fell one point from last week to 66% and 71% respectively. Corn good/excellent was unchanged from last week at 56%, although that's well behind 75% this time a year ago.

A farmer survey conducted by a UK company on behalf of the German Kleffmann Group, who specialise in agricultural market research, estimated the UK winter rapeseed area that will make it through to harvest at only 545,000 ha. Abandonment rates were as high as 27% in Yorks/Humber and the East Midlands, and averaged 22% nationally, the survey found.

They say that a lot of the lost area would be left fallow, although a significant number intended on switching to spring barley, with others opting for other crops (including spring rapeseed). The USDA estimated the UK all rapeseed harvested area at 610,000 ha yesterday.

Chicago Closes Higher, Although USDA Report Bearish Beans And Corn

11/07/13 -- Soycomplex: The USDA report came in bearish for beans, but the market closed higher. What does that tell us? Maybe that the market doesn't believe the USDA? It wouldn't be the first time and it sure won't be the last. Or maybe the market is an ass? Time will tell. US soybean carryout at the end of the current season will be 125 million bushels, the same as last month and the month before that. That's what the USDA insist anyway. The trade was expecting a reduction (nobody at all was expecting an increase), but it's no great surprise that they didn't get it given that the USDA have clearly decided that 125 million bushels is as far into their comfort zone as they are prepared to eat. For 2013/14 the trade was expecting a small increase in US ending stocks versus last month, from 265 million bushels to 270 million. Instead the USDA came in at 295 million. The US 2013 soybean crop was forecast at a record 93.08 MMT, up from 92.26 MMT last month and up 13.4% on last year. Brazilian soybean production in both 2012/13 and 2013/14 was left unchanged from last month at 82.0 MMT and 85.0 MMT respectively. Argentine output was trimmed slightly in both crop years, from 51.0 MMT to 50.2 MMT in the case of the harvest just ended (2012/13) and from 54.5 MMT to 53.5 MMT for the crop that hasn't yet been planted (2013/14). World ending stocks for both crop years were increased slightly, to 61.5 MMT in 2012/13 and to 74.1 MMT in 2013/14. China's import requirement in 2013/14 was left unchanged at a record and ambitious looking 69.0 MMT. In other news, weekly export sales were negative 70,900 MT for old crop beans and 410,800 MT for new crop beans versus trade expectations of 150-500 TMT. Jul 13 Soybeans closed at USD16.01 1/4, up 9 1/2 cents; Nov 13 Soybeans closed at USD12.90 3/4, up 6 cents; Jul 13 Soybean Meal closed at USD525.70, up USD5.20; Jul 13 Soybean Oil closed at 46.49, down 49 points.

Corn: The corn market closed higher too, helped by strong weekly export sales of 392,000 MT of old crop and 657,800 MT of new crop, versus trade forecasts for sales of only 300-600 TMT. In addition the USDA announced another 120 TMT of new crop sales to China under the daily reporting system. The USDA lowered slightly their estimate for US 2013 corn production twixt either side of the magical 14 billion bushel mark, from 14.005 billion to 13.95 billion. The latter would still comfortably be a record output and represent a 29.4% increase on production last year. Old crop ending stocks were not cut quite as much as expected, trimmed from 769 million bushels to 729 million, which was 7 million more than the average trade guess. The large 2013 crop however sees 2013/14 ending stocks estimated 10 million bushels higher than last month at 1.959 billion bushels versus the cut to 1.874 billion that the trade was expecting. There were no changes to Brazilian or Argentinian corn production for either 2012/13 or 2013/14. World corn ending stocks for both marketing years came in a little below expectations, but only marginally so. China's 2013/14 corn crop was lowered 1 MMT, from 212 MMT to 211 MMT, with their import requirement left unchanged at 7 MMT. I guess that the market now goes back to trading the weather and fretting over a US corn crop, much of which was planted all in the same week, all pollinating at the same time and whether or not weather conditions will be conducive to producing a near 14 billion bushel crop. We won't have long to wait to find out as this is likely to happen around the end of the month/first week in August. In other news Taiwan bought 60 TMT of Brazilian corn for Sep/Oct shipment, and another Taiwanese buyer passed on a US corn/soybean tender saying that the prices quoted were too high. Jul 13 Corn closed at USD7.16 3/4, up 7 cents; Dec 13 Corn closed at USD5.27, up 5 1/2 cents.

Wheat: The wheat market was mixed, with Chicago higher and Kansas and Minneapolis a little lower. Weekly export sales of 1.47 MMT comfortably outstripped expectations of 600 TMT to 1 MMT and included 1 MMT to China. The USDA raised their projection for Chinese wheat import by much more than was anticipated by most, from 3.5 MMT to 8.5 MMT, a 166% increase on imports in 2012/13 and the highest since 1995. Chinese feed usage was raised by a corresponding 5 MMT, and carry-in from 2012/13 was lowered by 4.6 MMT from last month. Elsewhere though they raised a few eyebrows by leaving both Russian and Indian production unchanged for 2013/14. Just about everyone else, apart from the local Ministry, are seeing Russian wheat production in the 50-52 MMT region, but the USDA left their forecast unchanged at 54 MMT. The USDA's own FAS this week pegged the Indian crop at 87 MMT, but the USDA themselves held steady at 92 MMT. They also left production in Ukraine the same as last month at 19.5 MMT, an increase could have been justified here. Kazakhstan's potential was cut 0.5 MMT to 14.5 MMT. They pegged the US 2013 all wheat crop a bit higher than the market expected at 57.52 MMT. One of the largest surprises came with regards to world inventories. Global wheat ending stocks in 2012/13 crop were cut 5.37 MMT and those for 2013/14 shrank 8.87 MMT to 172.38 MMT, the lowest since 2008/09. US wheat stocks for 2012/13 were cut from 746 million bushels to 718 million, well below trade forecasts of 745 million and below the lowest trade estimate. US carryout in the 2013/14 crop year also was also cut far more than anticipated, from 659 million bushels last month to 576 million versus the average trade guess of 624 million. Jul 13 CBOT Wheat closed at USD6.79 1/4, up 7 1/4 cents; Jul 13 KCBT Wheat closed at USD7.11 1/2, down 1/2 cent; Jul 13 MGEX Wheat closed at USD7.96 1/2, down 1 cent.

EU Wheat Higher Heading Into USDA Report

11/07/13 -- EU grains were mixed but mostly firmer, although Paris rapeseed took another bath, falling around EUR5-7/tonne. The rest of market sat on its hands for most of the day waiting for the release of the USDA's WASDE report at 5pm London time.

London wheat closed with front month Nov 13 GBP1.00/tonne firmer at GBP171.00/tonne and Nov 13 Paris wheat ended EUR1.75/tonne higher to finish the day at EUR199.25/tonne. This was the highest close on London wheat for a month, and almost, but not quite, the same for Paris wheat.

Brussels confirmed that the 2013/14 marketing year is off to a fair start, issuing 166 TMT of soft wheat export licences, along with 142 TMT for barley and 149 TMT for corn in the first full week of the season. That takes soft wheat licences to 291 TMT already this year.

Egypt said that they only had half a million tonnes of imported wheat left on hand to blend in with lower quality domestic stocks - said to be of 3 MMT. Reports suggest that a deal has been done with UAE, Saudi Arabia and Kuwait who have offered Egypt USD12 billion in aid to tide them over the current political and financial crisis. Buying wheat and oil is said to be their number one priority, so we can maybe expect them to be back in the international tender market before long.

Libya bought 50 TMT of Russian wheat in a tender, and Algeria was said to have bought 4-500 TMT of optional origin (most likely French) wheat for Sep/Oct shipment.

The Czech Republic's Stats Office said that they expect a grain harvest this year of 6.53 MMT, up 15.7% on last year. Wheat yields are forecast up 25% and rapeseed yields to rise by 13%. The 2013 wheat crop is estimated at 4.4 MMT versus 3.5 MMT last year. The rapeseed crop is seen rising from 1.11 MMT to 1.31 MMT, whilst barley output will fall from 1.62 MMT to 1.57 MMT, they said.

The Russian wheat harvest rumbles on, producing 18.8 MMT of grains so far off 12.8% of the planned area, with yields said to be up 27% at 3.23 MT/ha. The harvest so far is mostly winter wheat, spring sown crops are said to generally be in a pretty poor state and will likely yield much lower.

MDA CropCast today cut their forecast for 2013 Russian wheat production by 1.2 MMT from last week to 50.5 MMT. That puts them in a similar area as SovEcon, IKAR and Lanworth. They also cut 1.0 MMT off Australia's wheat potential this year to 22.3 MMT.

As the EU market was closing the USDA came out with their July numbers, they didn't see the need to alter their Russian estimate leaving it unchanged at 54.0 MMT, whilst they actually raised Australia by 1.0 MMT from last month to 25.5 MMT.

Wheat production in Europe was also raised, although this was largely due to the inclusion of Croatia in the new EU-28. There were however small tweaks higher elsewhere, including raising UK output from 11.55 MMT to 11.75 MMT. Production in the EU-28 is now forecast at 138.6 MMT.

World wheat production in 2013/14 was revised upwards to a new record 698 MMT, although consumption is also seen at an all time high 700 MMT. One of the most significant changes was the upgrade of China's wheat import needs from 3.5 MMT to 8.5 MMT, which was more than most expected, even if still below Rabobank's recent 10 MMT forecast. Either number would be the highest since 1995.

World wheat ending stocks for 2013/14 were cut sharply, from the 181 MMT estimated last month to 172 MMT - the lowest since 2008/09.

USDA WASDE Report Summary

11/07/13 -- The USDA's eagerly awaited raft of important numbers are out. For wheat they left Russian and Indian output unchanged at 54 MMT and 92 MMT respectively, when a drop may have been in order. They did however raise Chinese wheat imports in 2013/14 from 3.5 MMT to 8.5 MMT.

Here's a selection of some of them, with a few more to follow, I'm typing as fast as I can you know, and there's only me.....

EU Rapemeal Prices

11/07/13 -- Rapemeal prices on the continent are mostly a bit firmer, chasing gains in CBOT soymeal values last night. It's likely to be a quiet day as traders sit tight ahead of this afternoon's USDA report.

The Czech Stats Office estimate rapeseed yields there up 13% this year at 3.13 MT/ha.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:

Morning News Headlines

11/07/13 -- The overnight Globex grains are generally firmer, particularly on the nears (although remember that all these Jul 13 contracts go off the board tomorrow and are a bit technical).

The first thing to catch my eye this morning, apart from the lady with the substantial chest out jogging on my way into the office this morning, is news that Chinese think tank CNGOIC have raised their estimate for wheat imports in 2013/14 from 3.5 MMT to 5.0 MMT. They say that's a 73% increase on last season. It's certainly 1.5 MMT more than the USDA said last month, and may still prove to be only the first increase of several. Let's see what the USDA have to say later.

Also catching the eye this morning is NYMEX crude creeping stealthily on to currently stand at above USD107/barrel, a level last visited 16 months ago. Data yesterday revealed the biggest two-week decline in US crude stockpiles on record. The Egyptian situation is also buoying prices.

Other news throws up a variety of business/tenders for wheat, including Iran buying 450 TMT of Russian/Baltic material and Jordan (the country, not the woman with the big jugs, stop going on about funbags will you?) tendering for 150 TMT of wheat. I somehow suspect that they won't be passing on this one due to price as they did consistently a month or so ago. Then again, the USDA might decide to change all that this afternoon.

Talking of the USDA (I am tempted here to get my third "tits" reference into three of the last four paragraphs in a row here), I wonder if we will get a clue as to whether this afternoon's report is bullish or bearish in the half hour or so leading up to the WASDE report's release at 5pm London time?

That's what happened last month, and not for the first time either. Although the numbers are given to the various news agencies prior to the official release time to the market to enable them to push them out onto the wires within seconds after the embargo is lifted, the people involved write them up under very strict conditions I understand. Like in a locked room, with all mobile phones etc taken off them.

I find it hard not to believe that in the modern era, with Google Glass etc and all the money that's at stake that someone hasn't found a way around this problem. "Mobiles, laptops, dongles, pagers, iPads on the table please ladies and gentlemen. Nah, you're all right mate you can take the pigeons in..."

Elsewhere, the German wheat harvest will be underway in 2/3 weeks, only a week later than normal after the recent spell of warm, dry and sunny weather has accelerated crop development markedly, according to a report on Reuters.

MDA CropCast have cut their Russian wheat production estimate by 1.2 MMT from last week to 50.5 MMT "due to recent dryness in spring wheat areas." They also trimmed their outlook on Australia by 1.0 MMT to 22.3 MMT on dryness issues.

Egypt's stocks of imported wheat have dwindled to just 500,000 MT, which is barley enough to feed a Sphinx cat, I also read this morning. They say that they've bought 3.7 MMT of (insert words "fairly crappy") local wheat since the domestic harvest began, and have 3.0 MMT of that in stock, they say.

The latest numbers from Defra out this morning show that the UK milled 505 TMT of wheat in the 4 week period through to April 27, a 7.5% increase on the same period in 2012. Home grown wheat used in the grist was almost 316 TMT, down 24% versus last year, whilst the proportion of imported wheat grew 256% to 189 TMT.

For the crop year to date total wheat milled comes in at just under 5.5 MMT, up 11.6% year-on-year. Home produced wheat accounts for 4.2 MMT of that (down 5%), with imported wheat at 1.36 MMT (up 137%).

Total UK barley usage in 2012/13 to the end of April is just under 1.5 MMT, almost exactly the same as a year previously.

Breaking news on Twitter from the Public Ledger are reports that the EU's 2013 rapeseed harvest may be higher than expected, according to Oil World. No, hang on that isn't breaking news, I told you about that on Tuesday.

Another newsworthy item via Twitter is a plea for any Welsh speaking vets looking for a job to get in touch. They don't say where the job is, but my money is on East Anglia.

Elsewhere in Twittersphere we get this from the Farmer's Weekly: "Teat tampering probe launched at Great Yorkshire Show" (that's 4 tit mentions so far in this report). It's not quite as amusing as the Phoenix Night's Crimewatch spoof featuring the headline "Police probe Leed's woman's snatch" but it's a fair effort before the 9 o'clock watershed.

Chicago Market Mixed Ahead Of USDA Data Due Tomorrow

10/07/13 -- Soycomplex: For once old crop beans performed the worst, although they do go off the board on Friday so some erratic trade to close the last few days of a contract with very thin open interest is maybe only to be expected. Customs data revealed that China imported 6.93 MMT of soybeans in June, an increase of 36% versus a month previously. The US weather forecast is far from ideal. Potentially heavy rains in the Eastern Corn Belt, caused by tropical disturbance Chantal, may be a mixed blessing further delaying the wheat harvest and thwarting any lingering double planting with soybean hopes. Meanwhile the Western Corn Belt remains hot and dry, whilst northern states are turning cooler. "A Canadian air mass has begun descending into the US heartland dropping morning temperatures in North Dakota into the lower 50's F," said Martell Crop Projections. The trade is expecting the USDA to cut US old crop soybean ending stocks to 121 million bushels tomorrow, even though they've doggedly refused to go below 125 million in previous reports. New crop 2013/14 carryout is expected to come in near 263 million bushels, down slightly from 265 million in June. On a global level, for beans the average guess for 2012/13 world ending stocks is 60.94 MMT versus 61.21 MMT in June, and in 2013/14 they are forecast at 73.56 MMT versus 73.69 MMT last month. Trade estimates for tomorrow's weekly export sales report for soybeans are 150-500 TMT. Jul 13 Soybeans closed at USD15.91 3/4, down 21 1/2 cents; Nov 13 Soybeans closed at USD12.84 3/4, up 8 1/2 cents; Jul 13 Soybean Meal closed at USD520.50, down USD0.30; Jul 13 Soybean Oil closed at 46.98, down 10 points.

Corn: The corn market maintained the recent theme of old crop strength. Reuters reported that the corn basis in Cedar Rapids was now USD1.75 over CBOT futures as opposed to just 25 cents a year ago. Weekly US ethanol production rose to 881,000 barrels/day from 863,000 the previous week. The USDA reported the sale of 120 TMT of new crop corn to China. South Korea bought 120 TMT of optional origin corn at USD241.17 C&F for December shipment. IKAR forecast the Russian corn crop at 9.2 MMT, with exports at 2.7 MMT. FranceAgriMer estimated French 2012/13 corn exports at 6.78 MMT, down 1.7% on a year previously, with ending stocks up 15.8% to 2.82 MMT. Hotter temperatures in the Central US this week are a mixed blessing, say Martell Crop Projections. "Shallow rooted corn and soybeans, planted very late, are subject to decline as topsoil moisture is depleted. Better established crops with deeper roots are tapping into subsoil moisture, benefiting from the heat and sunshine and putting on good growth," they commented. In tomorrow's WASDE report the trade is looking for 2012/13 US corn ending stocks to come in at 725 million bushels, down from 769 million in June. The 2013/14 carryout is expected to come in near 1.895 million bushels, down from 1.949 in June. The range of estimates is for that is split by a whopping 720 million bushels. Dock workers at the Brazilian port of Santos began a 24 hour strike today in protest over a plan to privatise port terminals. Port authorities said that the strike disrupted containerised traffic, but that bulk cargoes were loading relatively normally. Trade estimates for tomorrow's weekly export sales report for corn are 300-600 TMT. Jul 13 Corn closed at USD7.09 3/4, up 5 3/4 cents; Dec 13 Corn closed at USD5.21 1/2, down 1/4 cent.

Wheat: The wheat market finished mixed. There are signs of a pick up in international demand on the recent price slump. Iran are said to have bought around 450 TMT of wheat this week, split 250 TMT of Russian origin and 200 TMT from the Baltic. Algeria bought 50 TMT of optional origin wheat overnight for September shipment. Jordan are tendering for 150 TMT of wheat for delivery between November and February. Japan are tendering for 120,000 MT of feed wheat, and 200,000 MT of feed barley. For once wheat isn't expected to be consigned to play only a minor role in tomorrow's USDA report. The market is expecting a cut to US HRW wheat production, tempered by a potential raise in SRW wheat output. The bottom line is for US all wheat production in 2013/14 to come in at 2.070 billion bushels, down slightly from the June estimate of 2.080 billion but down sharply from 2012 levels of 2.269 billion. US 2013/14 wheat ending stocks are expected to come in at 632 million bushels versus 659 million in June. World 2012/13 wheat carryout is estimated at 179.34 MMT versus 179.87 MMT in June. World 2013/14 wheat ending stocks are seen at 180.29 MMT versus 181.25 MMT last month. It will be interesting to see what, if anything, they do with Russian and Indian production and exports along with Chinese imports. The Russian grain harvest is said to currently stand at 16.7 MMT, with average yields up 26% at 3.27 MT/ha. The Ukraine grain harvest is at 11.85 MMT with yields up 37% at 2.68 MT/ha. Trade estimates for tomorrow's weekly export sales report for wheat are an impressive 600 TMT - 1 MMT. Jul 13 CBOT Wheat closed at USD6.72, down 3 1/2 cents; Jul 13 KCBT Wheat closed at USD7.12, up 5 1/4 cents; Jul 13 MGEX Wheat closed at USD7.97 1/2, down 1/2 cent.