Chicago Little Changed Friday
06/12/13 -- Soycomplex: For once, neither beans, corn nor wheat finished with anything other than minor changes. Nothing much has altered this week for beans, with very strong nearby demand tempered by the prospect of a huge South American crop around the corner. Around the corner isn't now though is it? The USDA announced the sale of 189,150 MT of US soybeans for 2013/14 delivery, and just for good measure threw in an additional 195,000 MT for 2014/15 shipment. Yesterday's weekly export sales mean that the US already had 95% of the target for the entire 2013/14 season on the books already. Brazil's soybean crop is 93% planted, up 5 points on the week, with some now pegging production in excess of 90 MMT versus the current record crop 82 MMT harvested earlier this year. There are reports that they'll be harvesting the first of the early soybeans in Brazil's top producing state of Mato Grosso by New Year's Day. There are some reports circulating that some Mato Grosso growers may plant a second soybean crop straight after this harvest. Normally they'd plant second crop corn, but current price differentials suggest that some may try a new approach. This may only provide short-term gain for long-term pain. Oil World note that the lack of crop rotation in Brazil and Argentina is already raising disease risk and curbing yields. Meanwhile the current Brazilian caterpillar infestation is spreading at an "alarming rate" they note. The Buenos Aires Grain Exchange said that soybean planting in Argentina is 58% complete, up from 49% a week ago and versus 54% this time last year. Rumours that Argentina may be about to temporarily reduce their soybean export tax to stimulate farmers to release the large volume of old crop stocks that they are sitting on have been denied by the Ministry. Cynics say that the government need the revenue too much to contemplate such a move, but 15-25% of something is surely better than 35% of nothing? Jan 14 Soybeans closed at $13.25 1/2, down 2 1/2 cents; Mar 14 Soybeans closed at $13.10 1/2, down 1 1/4 cents; Dec 13 Soybean Meal closed at $447.30, up $1.20; Dec 13 Soybean Oil closed at 40.28, down 10 points. For the week that puts beans down 11 cents, meal down $9.30 and oil 6 points higher.
Corn: The corn market ended around a cent or so higher on the day. Considering that China continues to reject some US corn shipments, on the grounds of them containing traces of the un-approved MIR 162 variety, the market has performed quite well this week. That's probably down to the fact that fund money appears more inclined to bank profits and cover in existing sales heading into the year end than establish fresh short positions, which is understandable. The Chinese are said to be continuing to evaluate the situation with MIR 162. The US are saying "hey, even the Europeans let this one in, so what's the problem?" Talk that some Brazilian growers might give up on second crop corn could provide a bit of support going forward. The Buenos Aires Grains Exchange said that corn planting in Argentina is 47% complete, up only a little from 44% a week ago and versus 55% done this time last year. There still seems to be some mileage in notion that South America's corn plantings and production for the 2014 harvest may fall below current area estimates. "Although 'mid-season' corn may be planted through to the end of February, it also produces a much lower yield. Full season varieties are far more productive," said Martell Crop Projections. Brazilian analysts Conab are due out on Tuesday with their latest production estimates. Last time they gave us a 2013/14 total corn crop estimated at 78.5-79.2 MMT and 2013/14 corn exports at 18.0 MMT. Both could be revised lower next week. Also due out on Tuesday is the December WASDE report from the USDA. This is not likely to include revisions to US corn production this year, that is usually left until the January report. This will include however the latest world production and demand estimates. We will also get the latest US and global ending stocks numbers. The trade is expecting an average Argentine corn production estimate of around 25.6 MMT versus 26 MMT last month, with a Brazilian crop of around 70.4 MMT versus 70 MMT in November. US 2013/14 corn ending stocks are forecast at an average 1.871 billion bushels versus 1.887 billion previously, and world ending stocks at 163.3 MMT, down 1 MMT from last month. The French corn harvest is making heavy weather of it (literally), at 85% done versus 99% a year ago. Dec 13 Corn closed at $4.24, up 1 1/4 cents; Mar 14 Corn closed at $4.34 1/4, up 3/4 cent. For the week Dec 13 corn was up 8 3/4 cents, with Mar 14 9 3/4 cents firmer.
Wheat: Wheat futures closed steady to 3 cents lower, but with losses of anywhere from 8 to almost 24 cents for the week across the three exchanges. Whilst there seems to be a pick-up in global interest in wheat, with Tunisia, Algeria, Libya, Morocco, Iran, Japan and Taiwan all buying this week, very little of that was thought likely to come from the US. Yesterday's disappointing weekly export sales, and much higher production numbers out of Canada and Australia than the trade expected this week have knocked market confidence. The fact that Brazil failed to show up at this week's export party has Benson Quinn posing the notion that "Brazil’s new crop seems to have arrived in better shape than many had feared and large scale imports of US HRW don’t appear imminent." This sees traders having second thoughts about predicting that the USDA will increase exports and lower ending stocks by 25 million bushels in the supply and demand report next week. Conab are due out with their Brazilian December supply & demand estimates on Tuesday. Last month they forecast the 2013/14 wheat crop at 4.81 MMT with imports estimated at 6.7 MMT. Argentina would normally supply much of that requirement. The Buenos Aires Grains Exchange said that the wheat harvest there is approaching 30% done, up from 20% a week ago and versus 23% this time last year. They stood by their production estimate of 10.35 MMT, which is considerably higher than some other forecasts recently thrown into the ring. A severe winter storm, stretching from the Texas/Mexico border all the way through to the Ohio Valley is seen possibly causing some damage to US winter wheat, although weekly crop condition reports from the USDA have now been discontinued until the spring. US and European winter wheat largely seems in pretty good condition versus 12 months ago. The Russian Ag Ministry said that the country has planted 12.23 million hectares of winter wheat, and will add a further 13 million to that in the spring, taking the total wheat acreage to in excess of 25 million hectares, similar to the area harvested in 2013. Tuesday's USDA report normally only deals with US demand and world production, not US production. We should see upward revisions to output in Canada and Australia, and probably a downwards tweak for Argentina. Dec 13 CBOT Wheat closed at $6.37 1/4, down 3/4 cent; Dec 13 KCBT Wheat closed at $7.05 1/4, up 1/4 cent; Dec 13 MGEX Wheat closed at $6.63, down 3 1/4 cents. For the week CBOT wheat down 17 3/4 cents, with KCBT losing 8 cents and MGEX shedding 23 3/4 cents.
EU Grains Range Bound, Strong Exports Support
06/12/13 -- EU grains closed mostly a little lower in generally range bound trade. The strong pace of EU wheat exports continue to provide underlying support, but the global crop keeps getting bigger.
Jan 14 London wheat ended up GBP0.45/tonne at GBP164.70/tonne, although other old crop months were lower. Jan 14 Paris wheat finished EUR1.75/tonne weaker at EUR210.00/tonne, Jan 14 Paris corn closed EUR0.25/tonne lower at EUR180.25/tonne, whilst Feb 14 Paris rapeseed fell EUR3.00/tonne to EUR374.50/tonne.
For the week that puts Jan 14 London wheat the princely sum of GBP0.20/tonne higher. Paris wheat gained EUR0.25/tonne, corn added EUR2.50/tonne and rapeseed fell EUR3.50/tonne.
Generally sideways trade remains the order of the day. London wheat now hasn't closed outside the EUR163-166/tonne range for 36 trading sessions.
Brussels confirmed that they'd issued 572 TMT of soft wheat export licences this past week, bringing the 2013/14 cumulative total to 11.8 MMT, up 47.5% versus this time a year ago. Corn imports in the same period meanwhile are down nearly 16% at 3.2 MMT.
Algeria bought 300 TMT of optional origin, most likely French, milling wheat at around USD311-314/tonne C&F for Jan shipment. Tunisia bought 100 TMT of wheat and 75 TMT of barley for Jan/Feb shipment, whilst Morocco is said to have bought around 500 TMT of wheat in the past 3 weeks (probably mostly French) after import duties on wheat were temporarily suspended.
Libya has bought 35 TMT of Mexican durum wheat this week, and Iran is said to have bought at least 300 TMT of mixed origin (probably some German) wheat in the past 3 weeks after Western sanctions were lifted. They are also said to be in the market for Australian wheat and Mexican durum too.
The French corn harvest advanced from 73% to 85% done in the week through to Dec 2, according to FranceAgriMer. That's still well behind last year when 99% of the crop was in.
French winter wheat is 95% sown, versus 91% a week ago and 97% this time last year. Maturity is advanced, with 39% of the crop in the early tillering stage versus 32% a week ago and only 17% this time last year. Winter barley is 61% at the tillering stage versus 55% last week and 34% a year ago.
FranceAgriMer rated 79% of winter wheat as being in good/very good condition, a 2 point drop on a week ago, but well ahead of 63% this time in 2012. Winter barley good/very good was unchanged on last week at 81%, and versus 84% this time last year.
Strong demand from North Africa and the Middle East would appear to offer some modest upside potential for EU milling wheat across the winter months, especially with now only very limited availability of quality wheat out of the Black Sea. Competition from the US, Canada and Australia is seen limiting gains though. India are also likely to remain something of an wheat exporting wild card in Q1 of 2014, by the end of which they should have begun harvesting another bumper, and possibly record, crop of their own - the first major wheat harvest of the year in the northern hemisphere.
Chicago Mostly Lower - Led By Wheat
05/12/13 -- Soycomplex: Beans finished the day narrowly mixed. Weekly soybean export sales of 805,200 MT for delivery in 2013/14 were pretty strong given that this was in a holiday-shortened week. There were also net sales of 355,600 MT for 2014/15. Total net commitments are now 95% of the USDA forecast for a season only 3 months old. That compares to around 78% this time last year and the 5 year average of 69%. In addition, the USDA reported 110 TMT of 2014/15 soybeans sold to China under the daily reporting system. There was a small 11,200 MT cancellation to China and a 60 TMT switch from China to Thailand, but no sign of the heavy cancellations that have been rumoured of late. Chinese soybean prices on the Dalian Exchange are said to be close to the equivalent of USD20/bushel. The FAO raised their forecast for the world soybean crop from 282 MMT to 286 MMT, some 2 MMT higher than the USDA's current estimate. MDA CropCast cut their Argentine sunflower production forecast by 360 TMT from last week and added 1.41 MMT to their Canadian canola estimate. Brazilian analysts Agroconsult raised their forecast for soybean production there in 2013/14 from 86 MMT to a new record 90.7 MMT. That's a jump of an impressive 10.6% on what was already an all-time high production in 2012/13. Output in Argentina is also likely to be at record levels in 2013/14. Weather conditions in South America remain mostly favourable for crop development. There's also now talk of Argentina temporarily lowering its export tax on soybeans from the current 35% to maybe around 25%. The idea behind that is to encourage farmers to release some of the estimated 12 MMT of old crop soybeans that they are said to be holding onto as a hedge against inflation and the weak peso. The spectre of a gigantic South American crop coming along in the first half of 2014, and fund money still sitting on a sizable CBOT soybean long, a long liquidation sell-off as we head towards the end of the year may be on the cards. Jan 14 Soybeans closed at $13.28, down 1 1/2 cents; Mar 14 Soybeans closed at $13.11 3/4, down 1/2 cent; Dec 13 Soybean Meal closed at $446.10, down $1.80; Dec 13 Soybean Oil closed at 40.38, up 24 points.
Corn: The corn market finished around 2-3 cents lower after weekly export sales disappointed. They came in at 593,600 MT for the 2013/14 marketing year versus the 850-950 TMT that the trade was expecting. Weekly exports topped 1 MMT however, with over half of that (587,900 MT) heading for China. Will it get unloaded in a timely manner when it gets there, given the recent spate of rejections of non-approved GMO US corn? Total US corn commitments are now at 73% of the USDA target for the season versus 68% a year ago and the 5 year average of 50%, so all is not lost just yet even if the bearish news still keeps coming. The FAO raised their forecast for the world corn crop from 994 MMT to just over a billion tonnes for the first time in history. That's a 14.4% increase on last year's 875 MMT and 38 MMT more than the USDA's current estimate. They see 2013/14 ending stocks at 180 MMT versus 177 MMT previously, 134 MMT last year, and the USDA's 164 MMT. Brazilian firm Agroconsult raised their forecast for the 2013/14 corn crop there from 75.7 MMT to 76.1 MMT, and far higher than the USDA's current 70 MMT estimate. MDA CropCast cut their Brazilian corn production forecast by 0.5 MMT from last week to 72.7 MMT. They also trimmed 0.7 MMT of Argentine production to 24.2 MMT. There are a few question marks over China's demand for corn in 2014. China’s CNGOIC estimated their 2013 corn crop at a record 217.5 MMT, up from 208 MMT in 2012. Imports were forecast at 4.5-5.0 MMT versus 5.2 MMT last year and a previous estimate of 7 MMT. They said that Chinese Jan/Oct feed production was down 9.4% versus 12 months previously, as pig numbers fell 6% and poultry output by 17% due to bird flu. Dec 13 Corn closed at $4.22 3/4, down 2 3/4 cents; Mar 14 Corn closed at $4.33 1/2, down 3 cents.
Wheat: Wheat closed lower for a second day, ending with losses of around 4-9 cents across the three exchanges. Weekly export sales of a marketing year low of 229,200 MT set the tone. That fell well short of the 450-550 TMT that the trade was anticipating. Thailand (65,700 MT) was the top home, there was no sign of China and Brazil only featured taking a minuscule 1,300 MT. The FAO raised their estimate for the world wheat crop from 708 MMT to a record 711 MMT, up 51 MMT (or 7.7%) versus last year. This came despite them using low ball estimates for both the Canadian (33.2 MMT) and Australian (24.5 MMT) crops compared to the numbers released by Stats Canada (37.5 MMT) and ABARES (26.2 MMT) earlier in the week. They forecast the Russian wheat crop at 53.6 MMT, up 42% on last year. MDA CropCast raised their forecast for Canadian wheat production by 2.1 MMT from last week, upping Australian output by 0.7 MMT to 34.9 MMT and 25.2 MMT respectively. Egypt apparently cancelled their 60 TMT purchase of Romanian wheat made earlier in the week due to "problems with the documents presented by the seller" - according to Reuters. Iran is said to have bought at least 300 TMT of wheat in the past few weeks since Western sanctions were temporarily lifted. Algeria were said to have bought a similar volume of wheat in a tender for 100 TMT. Iraq are shopping for 50 TMT of US, Canadian, or Australian wheat. Taiwan is looking for 35 TMT of US milling wheat for Jan-Feb shipment. South Korea and Australia are said to have reached an agreement to eliminate import tariffs on certain agricultural products, including wheat. Dec 13 CBOT Wheat closed at $6.38, down 9 1/4 cents; Dec 13 KCBT Wheat closed at $7.05, down 4 1/4 cents; Dec 13 MGEX Wheat closed at $6.66 1/4, down 6 1/4 cents.
EU Wheat Falls As Bearish Data Mounts
05/12/13 -- EU grains closed lower across the board, with bad news for wheat coming thick and fast this week it's been pretty impressive to see Paris wheat post its best close since May yesterday - even with EU exports holding up very well.
The session ended with Jan 14 London wheat down GBP0.95/tonne at GBP164.25/tonne, Jan 14 Paris wheat was EUR1.25/tonne easier at EUR211.75/tonne, Jan 14 Paris corn was down EUR1.50/tonne at EUR180.50/tonne and Feb 14 Paris rapeseed fell EUR0.575/tonne to EUR377.50/tonne.
We've already had ABARES increase the size of the Australian wheat crop to levels well above those expected by the trade on Tuesday, followed by Stats Canada doing likewise yesterday. Today we had further bearish news in the form of the FAO raising their forecast for the world wheat crop in 2013 to a record 711 MMT from 708 MMT previously and up 7.7%, or 51 MMT, on a year ago.
There were increases also for global corn and soybean production. The world cereal crop was estimated at an all-time high of almost 2.5 billion tonnes (including milled rice), up 8.4% on a year ago and 6% above the previous global record output achieved in 2011. Ending stocks were forecast up 68 MMT, or 13.4%, at 572 MMT which is 9 MMT more than a month ago.
It is also worth noting that these figures were formulated using a Canadian wheat crop of "only" 33.2 MMT and an Australian one of 24.5 MMT - both figures being significantly lower than this week's latest updates from Stats Canada (37.5 MMT) and ABARES (26.2 MMT). That may indicate that the FAO's next forecast (not due now until February) could be even higher.
They pegged the EU-28 wheat crop at 143.3 MMT, similar to the USDA's current forecast, and 7.3% more than a year ago.
Further bearish news today came from the USDA reporting weekly US wheat export sales at a marketing year low of only 229,200 MT versus the 450-550 TMT that the trade was expecting.
HSBC said that the price of UK wheat could fall to GBP150/tonne next year. A year ago they correctly forecast that UK wheat prices would fall to GBP165/tonne in 2013 (in fact as we now know they fell close to GBP150/tonne), at a time when you could have sold the Nov 13 and Jan 14 futures short in the GBP190-200/tonne region.
Ukraine's grain harvest is almost over at 99% done, producing a record near 63 MMT crop to date. That includes a record 29.3 MMT of corn off 97% of plan.
Chicago Closing Comments - Wednesday Night
04/12/13 -- Soycomplex: The market closed higher, but is still trying to reconcile strong nearby demand for US beans and meal against projected record South American production getting ever closer. There's some talk that rains in Brazil's leading soybean state of Mato Grosso might be too much of a good thing. Abiove estimated the Brazilian soybean crop at 86.6 MMT versus a previous estimate of 86.0 MMT. That's a record, although towards the low end of current trade forecasts. They see Brazil's 2013/14 soybean exports at 44 MMT, similar to the USDA. Dr Cordonnier left his Brazilian soybean production estimate unchanged at a record 90 MMT, but raised his forecast for Argentina by 1 MMT to an also record 56 MMT. Brazilian growers are said to have only been relatively light forward sellers of their 213/14 soybean crop. On a national level Safras e Mercado say that 33% of the 2013/14 Brazilian soybean crop is sold versus 48% a year ago. Stats Canada forecast the Canadian canola crop at a record 18 MMT, up sharply from 13.9 MMT last year and the 16 MMT estimated in October. That was right at the top end of trade estimates of 16.6-18.0 MMT. Oil World estimated China’s 2013/14 soybean imports at 69.7 MMT versus a previous estimate of 69.0 MMT and 59.9 MMT in 2012/13. Some are thinking that tomorrow's weekly export sales for soybeans may come in around the 1 MMT mark, others point to the fact that this would be in a holiday shortened week, so they may in fact come in a bit lower than that. Jan 14 Soybeans closed at $13.29 1/2, up 9 3/4 cents; Mar 14 Soybeans closed at $13.12 1/4, up 7 3/4 cents; Dec 13 Soybean Meal closed at $447.90, up $1.80; Dec 13 Soybean Oil closed at 40.14, up 24 points.
Corn: The corn market closed around 4-5 cents higher, shrugging off reports that China was continuing to reject some US corn consignments due to them containing traces of the non-approved MIR 162 variety. Almost 94% of China's Jan/Oct corn imports came from the US, according to Reuters. The USDA announced 165,750 MT of US corn sold to Mexico, split 132,600 MT for 2013/14 delivery and 33,150 MT for 2014/15 delivery. Stats Canada pegged the 2013/14 corn crop there at 14.194 MMT versus an average estimate of 13.3 MMT. That's up sharply from their previous estimate of 12.942 MMT and compares favourably with the 2012/13 crop of 13.06 MMT. Dr Cordonnier estimated the 2013/14 Brazilian corn crop at 68.5 MMT, unchanged from previous estimate. He estimated the 2013/14 Argentine corn crop at 24.0 MMT down 1 MMT from his previous estimate of 25.0 MMT. The US Energy Dept reported weekly US ethanol production at 913,000 barrels/day, down from 927,000 bpd last week, but above the level of around 900,000 bpd required to hit the USDA target for the season. Funds were said to have been decent net buyers on the day, covering in an estimate 9,000 contracts of their hefty short position in CBOT corn. There's a feeling that this trend will continue as we head towards year end. Estimates for tomorrow's weekly export sales report are around 850-950,000 MT which may be ambitious. Dec 13 Corn closed at $4.25 1/2, up 3 1/2 cents; Mar 14 Corn closed at $4.36 1/2, up 5 1/4 cents.
Wheat: The wheat market crashed lower, following the news from Stats Canada that this year's wheat crop there was a bin-busting 37.5 MMT. Not only is that a record by some distance, it is also far higher than the average trade guess of 33.8 MMT, and well above even the highest estimate in the ring (35.3 MMT). Canadian barley production was also pegged above the top end of trade estimates at 10.24 MMT. The Canadian wheat crop last year was only 27.1 MMT and barley production was 8 MMT. The news was bearish, especially following a similar surprisingly bullish wheat production report from Australia's ABARES only yesterday. Weakness in the Canadian dollar will also help their exports to the detriment of US wheat. China is seen buying 3-4 MMT of Australian wheat in 2013/14, limiting sales from the US. The trade will now be monitoring an Arctic air blast set to send temperatures plunging across almost the entire US during the next week, although some are now saying that things may not be quite as cold as was forecast yesterday. MDA Weather Services say that about 5% of the US HRW wheat crop is at risk from winterkill. Russia's winter grains plantings (mostly wheat) stand at 14.7 million hectares versus 15.8 million in 2012 and 15.9 million in 2011. Informa yesterday forecast the 2014 Russian wheat crop at 48.5 MMT. Trade estimates for tomorrow's weekly export sales report for wheat are around 450-550 TMT. Dec 13 CBOT Wheat closed at $6.47 1/4, down 6 1/2 cents; Dec 13 KCBT Wheat closed at $7.09 1/4, down 2 1/2 cents; Dec 13 MGEX Wheat closed at $6.72 1/2, down 12 1/4 cents.
EU Wheat Claws Higher Despite Record Canadian Production
04/12/13 -- EU grains closed mostly higher with Jan 14 London wheat ending up GBP0.95/tonne at GBP165.20/tonne and Jan 14 Paris milling wheat settling EUR1.50/tonne firmer to close at EUR213.00/tonne. Feb 14 Paris rapeseed rose EUR0.75/tonne to EUR378.25/tonne, whilst Jan 14 Paris corn closed EUR0.50/tonne higher at EUR182.00/tonne.
Whilst Paris milling wheat may be clawing it's way gradually higher, front month London wheat hasn't closed outside the GBP163-166/tonne range since Oct 18.
To close higher at all was impressive, considering that Stats Canada came out with an all wheat production estimate there of 37.5 MMT this year. That is a record volume by some considerable distance, way above the 33 MMT forecast in October and also much higher than the range of trade estimates of 33.3-35.3 MMT.
They also reported a 2013/14 Canadian barley crop of 10.24 MMT versus trade expectations of around 9.4-9.5 MMT and the 8 MMT estimated in October.
The news comes hot on the heels of a surprisingly large forecast for Australian wheat production yesterday from ABARES. US wheat futures fell a little, but not a great deal in the wake of the Canadian news. A wheat market that doesn't move down, or not by much, in the face of such overtly bearish news is interesting.
There's trade talk of possible damage to US winter wheat is keeping US price losses to a minimum. "The coldest winter temperatures in several years are predicted in the United States expected to last for at least a week. Arctic air sinking into the US heartland will drop temperatures into the single digits F in Kansas and -10 on Colorado feed lots," said Martell Crop Projections. Some traders see maybe 5% of the winter wheat crop as being vulnerable to winterkill this week.
Robust EU exports also underpin the market. FranceAgriMer said that Q1 soft wheat exports (Jul/Sep) were 4.2 MMT, up from 3.2 MMT in 2012/13. Barley exports also rose from 1.4 MMT to 1.8 MMT. French commercial wheat stocks as of Nov 1 were 12.1 MMT, some 1 MMT down on a year previously despite a rise in output this year. Commercial barley stocks were also down, by 1.4 MMT to 4.0 MMT, they said.
A large/close to record fund short position in US wheat and corn futures heading into the year end is seen as supportive to the market in the near term, They are expected to close out some of these positions for profit-taking and book squaring purposes over the next few weeks, leading to increased buying regardless of the fundamentals.
Russia bought 19,169 MT of intervention grains today in their twice weekly purchase. The total volume bought to date this season is only 443 TMT out of their originally declared intention to buy 2-3 MMT by the end of the calendar year. They will do well to buy that volume before the end of the season at this rate.
The Russian harvest may now exceed the Ministry forecast of 90 MMT in clean weight, their head said today. They've currently harvested a grain crop of 95.3 MMT off 95% of the planned area. Wheat accounts for 54.1 MMT of that total.
Ukraine's harvest is 99% complete at a record 62.8 MMT, versus only 46.2 MMT a year ago.
Tunisia bought 100 TMT of wheat and 75 TMT of barley for Jan/Feb shipment, both of optional origin. Algeria purchased 100 TMT of wheat for Jan shipment. French wheat is thought likely to supply both countries.
EU Rapemeal Prices
04/12/13 -- Rapemeal prices on the continent are little changed today, with the exception of the nears which are displaying their usual sign of seasonal tightness in availability that we often get at this time of year.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Dec13 |
Unq
|
n/a
|
| Jan14 |
245.00
|
+3.00
|
| Feb/Apr14 |
236.00
|
unch
|
| May/Jul14 |
220.00
|
-1.00
|
| Aug/Oct14 |
210.00
|
+1.00
|
| Nov14/Jan15 |
212.00
|
unch
|
| Feb/Apr15 |
213.00
|
-1.00
|
The Morning Vibe And It Might Nearly Be Time To Root Them Old Boots Out
04/12/13 -- The overnight Globex market trades with corn a couple of cents weaker, wheat up 1-2 cents and beans 3-6 cents firmer. Chinese rejections of US corn is the big story, although at only a couple of cents lower the market currently seems relatively relaxed about the issue at the moment. More relaxed than I'd be if I was a shipper with a boat load of US corn on the way to China.
A report on Reuters suggests that there's almost 2 MMT of US corn en-route to China right now. They've apparently rejected a total of around 180 TMT of US corn since they first found traces of the non-approved MIR 162 variety in shipments from the US last month.
At the very least this is going to cause delays in unloading US corn consignments as they are held up pending customs clearance. The issue would appear to provide Ukraine, Brazil and Argentina with a window of opportunity - not that the latter appears to have much corn left to sell ahead of new crop.
It might also provide an opportunity for someone like South Korea if they can take in a couple of corn boats at short notice.
It's not the sort of news that the US corn market needs, not on the back of a record 14 billion bushel harvest. The bulls/US corn growers will be hoping that the fact that ethanol production margins in the US are very robust will underpin prices. The US Energy Dept will probably report another big week for ethanol production, and therefore corn usage, later this afternoon.
I suspect that the reason that we aren't seeing corn slumping to fresh lows on this latest Chinese news is that we are now heading into year end, and fund money is sitting on a very large short position in CBOT corn. Hence some significant fund buying is likely to take place during the month of December, maybe even it's already started, as they bank some profits and square off a few positions.
In other news, soybean growers in Parana state have just about got all their soybeans for the 2013/14 harvest planted, and 98% of the crop is said to be in good condition with 11% of the crop already flowering, according to Dr Michael Cordonnier.
Despite that, growers only have 20% of their anticipated 2013/14 soybean crop forward sold versus 35% a year ago.
New crop prices being not as good as they were last year, and at a substantial discount to old crop values, would appear to be the reason for that. Even so, current new crop prices are in excess of the equivalent of $13/bu, which is still pretty reasonable.
The situation is mirrored in Mato Grosso where farmers are 44% sold versus 64% this time last year. On a national level Safras e Mercado say that 33% of the 2013/14 Brazilian soybean crop is sold versus 48% a year ago - and that is only up one percentage point in a month.
To me this suggests that the potentially huge Brazilian crop on the way could be met with a large wave of spot selling once the harvest is underway. Brazilian growers infamously don't have a lot of "stick it in the store and wait for a better day" options open to them.
That could put the market under pressure in early the new year. "Remind me again, when do we often see a dip in the soya market, Nogger?" I hear you ask. Erm, that would be February based on historical data going back 30 years.
Here's a little chart I created last week for somebody, showing the highs and lows in Chicago soymeal across the last four years: CBOT Meal 2010-13
Of course it can't be as easy as that every year, that would just be like going into the bookies and knowing that your horse was already in the winners enclosure before you put your bet on. Where's the fun in that? I want a bit of a run for my money. "And as they enter the final straight its Don't Tell The Missus from That Git Piggot followed by I Bleedin Knew It and half a length back to Come On You Beauty...."
So you will note immediately of course that Feb 2011 was entirely the wrong time to be buying soymeal, but that was the year that a severe drought cut production in Brazil and Argentina very sharply. In the other 3 years putting your name on some meal sometime in the Jan/Mar period would have been a very smart move. And I'd settle for backing three winners in four.
On the basis that as things stand it looks like another bumper year for South American soybean production early in 2014, and that Brazilian growers could be fire-sale sellers at harvest time, I'd be currently thinking about rummaging under the stairs for them old boots and a shovel across the Christmas shut-down, in readiness for an opportunity early in 2014.
Another factor to consider is that by Apirl/May, and possibly even March, we will almost certainly be starting to see logistical problems manifest themselves in Brazil. This has to be especially likely with a potentially record 88-90 MMT crop, given all the problems that they had earlier this year and that availability from the US will be much tighter by then.
Also don't forget that a major fire at the Brazilian port of Santos on Oct. 18 wiped out one of the world's largest sugar terminals. The sugar that would of been exported from here is now being handled by various facilities, potentially piling further pressure on the ones that also handle the shipment of grains. Brazil's 2013/14 sugar cane crop is forecast at record levels too.
Disclaimer: What happened in the past has no relation whatsoever to what is going to happen in the future. That's what me old mate Confucius told me. When I asked him if I was doing the right thing by marrying MrsN#2.
