CBOT Closing Comments
Soybeans
January soybean futures closed at USD10.53, down 1 ½ cents, December soymeal at USD326.50, up USD8.50 and December soy oil futures at 40.10 cents, down 0.47 points. The market opened heavily down following outside markets on concern over Dubai debt defaults, but quickly reversed those losses to close around unchanged. The USDA reported weekly soybean export sales of sales of 1,135,300 MT, robust but in line with expectations, China taking 859,800 MT of that. What the trade wasn't expecting however were shipments for the period November 13-19 of 2,434,500 MT, with a huge 1,835,500 MT going to China.
Corn
December corn futures finished the day at USD3.97 ¼, up 5 ¼ cents, and March corn futures at USD4.13 ½, up 5 ½ cents. Corn opened sharply lower, but was the catalyst to lead a strong grains recovery following much higher than anticipated weekly export sales, The USDA reported total weekly sales of 1,626,500 MT, well above trade estimates for combined sales of 500,000 and 700,000 MT. Of that 402,900 MT was for delivery in 2010/11, mostly for Mexico (352,600 MT). The USAD will report Monday night on corn harvest progress, last weekend only 68% of the US corn crop was in the barn, down from 94% normally at this time of year.
Wheat
December CBOT wheat futures closed at USD5.48 ¾, down 1 ½ cents, December KCBT wheat futures were at USD5.42 ¾, down 3 ¾ cents and December MGEX wheat futures at USD5.53 ¾, up 2 cents. Wheat export sales were 351,200 MT for 2009/10 delivery and 42,400 MT for 2010/11 delivery, in line with trade estimates of 350,000 to 450,000 MT. First notice day for December wheat is Monday, it's possible that there might be heavy deliveries against that next week, which would weigh on prices. The USDA will report on planting progress Monday. Last week Illinois SRW wheat sowings were at 89% versus 100% normally, whilst Indiana was 90% against 99% normality. Missouri was only 61% done compared to 92% usually at this time of year.
EU Wheat Ends Narrowly Mixed
EU wheat futures closed narrowly mixed Friday with Paris January milling wheat futures up EUR0.25 at EUR131.25/tonne and London March feed wheat down GBP0.20 at GBP110.15/tonne.
Considering the air of nervous uncertainty in the global financial markets on talk of possible Dubai debt defaults, it was a very respectable performance by wheat.
The dollar was stronger across the board as it usually is in such times, which helped EU wheat.
The markets were however pretty thin with the US CBOT only open to trade a shortened session Friday afternoon. Many participants were likely missing from their desks on the other side of the water following Thursday's Thanksgiving Day holiday.
We may get a more clearer direction next week when things return to normal, once we get past first notice day and month-end on Monday. On Monday night the USDA will also report on US soybean and corn harvest progress, together with winter wheat plantings.
The EU granted export licenses for 310,000 MT of soft wheat for the week ended Nov 24th, bringing the total volume of licenses granted to 7.1 MMT, 26% down on the 9.6 MMT exported at the same time last year.
Cumulative grain imports however are also sharply down at 4.1 MMT, 29% lower than the 5.8 MMT imported during the 2008/09 marketing year.
News coming out of Australia suggests that yields and quality this season will be down on what was expected a month or two back. A combination of a September freeze, a November heatwave and recent heavy rains are likely to produce a crop of 21 MMT, say the National Australia Bank, that's 2 MMT below their October prediction.
eCBOT Close, Early Call
The overnights closed sharply lower pressured by the fallout from the Dubai jitters. That said, grains did manage to close off their lows with beans down around 22 cents, wheat down 13 or so and corn around 10 cents lower.
Crude oil is around USD4 lower and the dollar higher on the usual "flight to safety" that accompanies a severe dose of the Ertha Kitts.
It's a shortened trading session today, and with many participants missing PLUS the Dubai uncertainty anything could happen this afternoon.
It wouldn't take too much selling to see the market limit down, neither though would it surprise me to see it close in positive territory. Indeed when the fallout settles and things get back to normal next week that is where I think things are headed.
Weekly corn export sales were much larger than anticipated, whilst bean and corn sales were in line with expectations. Weekly soybean shipments however were gigantic at almost 2.5 MMT, with China alone taking more than 1.8 MMT of that.
When the dust finally settles these are the sort of things that the market will be concentrating on.
Early calls for this afternoon's CBOT session: corn called 5 to 10 lower; soybeans called 20 to 25 lower; wheat called 10 to 15 lower.
USDA Weekly Export Sales
A day later than normal due to the Thanksgiving Day holiday, the USDA have reported the following weekly export sales and shipments for the period November 13-19, 2009:
Corn
Net 2009/10 sales of 1,223,600 MT - a marketing-year high - were up noticeably from the previous week and from the prior 4-week average. The main homes were Mexico (664,400 MT), Japan (286,400 MT) and South Korea (119,000 MT). There were also net sales of 402,900 MT for delivery in 2010/11 which were mostly for Mexico (352,600 MT). That gives us total weekly sales of 1,626,500 MT, well above trade estimates for combined sales of 500,000 and 700,000 MT.
Corn exports were 627,900 MT with Japan (248,300 MT) and Mexico (122,100 MT) the leading destinations.
Soybeans
Net sales of 1,135,300 MT were down 16 percent from the previous week, but up 23 percent from the prior 4-week average. The primary destinations were China (859,800 MT), Turkey (109,000 MT), Germany (75,200 MT), France (62,000 MT), Egypt (60,000 MT), and the Netherlands (56,400 MT). Trade estimates were for sales of 800,000 to 1,100,000MT.
Actual exports of a stunning 2,434,500 MT were up 41 percent from the previous week and 53 percent from the prior 4-week average. The primary destination was China with a huge 1,835,500 MT.
Wheat
Net sales of 351,200 MT were in line with the prior 4-week average. The main homes were the Philippines (100,200 MT) and Japan (85,700 MT), but also of interest was 36,500 MT to Spain. There were also net sales of 42,400 MT for delivery in 2010/11 to the Philippines. That gives us total weekly sales of 393,600 MT, in line with trade estimates for combined sales of 350,000 and 450,000 MT.
Exports of 416,100 MT were down 15 percent from the previous week and unchanged from the prior 4-week average. The primary destinations were Nigeria (59,000 MT), Iran (54,300 MT), South Korea (40,900 MT), Taiwan (40,100 MT), Mexico (31,100 MT), and Cuba (27,500 MT).
National Australia Bank Cuts Wheat Crop Estimate
The National Australia Bank has cut it's wheat crop estimate by 2 MMT to 21 MMT, citing frost damage in September followed by a more recent heatwave.
Extreme heat in November, and recent heavy rains also look like affecting quality as well as quantity this year.
Torrential rain in eastern Victoria to central NSW yesterday will have stalled harvest progress for a few days. Meanwhile a Severe Thunderstorm Warning is currently in place for much of southern SA, with potential for damaging wind gusts and large hail, forecasters say.
EU Rapemeal Prices
EU rapemeal prices continue their recent steep incline, regardless of what is going on in Dubai. Latest prices basis FOB Hamburg/Lower Rhine in euros/tonne;
Dec 148,00
Jan 146,00
Feb/Apr 141,00
May/1st h Jly 126,00
Aug/Oct 10 124,00
Nov/Apr 11 133,00
Asian Flu? Or January Sales Come Early?
The world markets appear to have caught a cold overnight, as fear spread from the stock market into just about everything else, including agricultural commodities. Even gold has had a bad case of the jitters this morning, down 4% at one stage.
Shares in Asia fell sharply overnight on concerns over exactly what the implications are, particularly for the banking sector, of Dubai World being unable to meet its financial commitments.
It seems that everybody was assuming that Dubai World were underwritten by the Government of Dubai and Sheikh Mohammed Al Maktoum, Dubai’s billionaire ruler. Now it looks as if things maybe aren't quite that straightforward.
It won't come as a huge surprise to hear that Credit Suisse estimate that European banks are exposed to half of Dubai's $80 billion debt. And British banks are likely to be holding the lion's share of that.
Consequently UK banking shares took a GBP14 billion hit in their value yesterday.
Overnight Tokyo's Nikkei fell 3.2% to 9,081.52, a new four-month closing low. Hong Kong's Hang Seng index closed down 4.84% at 21,134.5.Crude oil is USD4/barrel lower at just under USD74/barrel, and the overnight eCBOT market is also sharply weaker with soybeans down the thick end of 30 cents, wheat down almost 20 cents and corn 13 cents easier.
The pound is also taking a pasting at 1.6360 against the dollar and just under 1.10 against the euro.
Is all this just a knee-jerk reaction? It could be that, in the cold light of day, investors will come to the conclusion that sticking their money into agricultural commodities is a safer bet than equities. On recent evidence it's certainly better than money in the bank!
In case you missed it yesterday, the Chinese government effectively put a floor in their domestic soybean and corn market by saying they'd support the rural sector by buying all the soybeans and corn they want to sell, at prices equivalent to a generous USD548 and USD220/tonne respectively.
In the UK, whilst Chicago might be down, the pound has fallen 3.65 cents against the dollar since midnight on Wednesday. That will more than compensate for any movements in Chicago.
Meanwhile the nearby fundamentals are tight. The rapemeal market has moved up a tenner in a week, but even at that it still looks cheap with hipro soya nudging GBP300/tonne, and the wheatfeed market is up thirty quid in a month.
European shares have only opened fractionally lower this morning, having already done most of their falling yesterday, when the FTSE 100 suffered its worst one-day fall since March. On the FTSE 100 today Lloyds and RBS are amongst the mornings biggest gainers on bargain hunting, and it's not even the January Sales yet!
EU Wheat Ends Quietly Mixed
EU wheat futures closed mixed in a quiet trading session with the US markets closed for Thanksgiving. London wheat closes with January up GBP0.10 at GBP107.60/tonne, and Paris January milling wheat down EUR2.25 at EUR131.00/tonne.
Tomorrow will be interesting. Chicago trades a shortened session due to Thursday's holiday. The USDA are out with their weekly export sales report, and I for one expect soybean sales to be larger than trade expectations once again. The stock market has the jitters over Dubai, and China has announced that they will buy domestic soy and corn stocks at or around current market levels.
Gold hit another new all-time high as well. The dollar is weak, but the pound weaker still. There's quite a few conflicting influences there, pulling the market this way and that.
On the fundamental front, the IGC today said that they expect global 2009/10 wheat production to come in at 668.3 MMT, 1.5 MMT up from it's previous estimate. They also said that they see 2010/11 plantings down 1.5 million hectares, and cut their Australian 2009/10 production estimate to 22 MMT.
Widespread reports now suggest that the Australian crop has had a very poor finish, hit by 30-35C temperatures and heavy rain and high winds. The crop their is estimated to be around 40% harvested.
For all the rhetoric from grain merchants about the recent price rise being a God-given selling opportunity, one trader I know today told me that he'd had the Devil's own job just trying to even get a price on UK wheat delivered on a 24 month forward contract.
If anyone reading this thinks that's complete rubbish, give me a call or email tomorrow with a guaranteed firm offer on a load a week of feed wheat for Dec09-Dec11 delivered to the Preston area. We are awash with the stuff after all!
Scandanavian Harvest Wrap-Up
The Danish statistics office estimates that this year’s grain crop in Denmark will total 10.2 MMT, 12% up from the 9.1 MMT harvested last year. Wheat output was up 20% to 6.0 MMT (from 5.0 MMT), barley production up only slightly to 3.4 MMT (from 3.3 MMT) of which 2.5 MMT was spring barley, they say.
The Swedish National Board of Agriculture estimate that the 2009 wheat crop was 2.3 MMT, which is slightly up from the 2.2 MMT harvested last year. Barley production was unchanged at 1.7 MMT of which almost all (1.6 MMT) was spring barley, they add.
Finland’s agriculture ministry estimates this year’s grain crop at 4.3 MMT compared to last year’s 4.2 MMT. Barley production is estimated at 2.2 MMT (from 2.1 MMT) and wheat output is seen at 888,000 MT (up 12.7% from 788,000 MT last year), including 824,000 MT of spring wheat, they say.
Torrential Rain Hits Australian Grains
Huge thunderstorms are bringing heavy rains and damaging winds to large areas of southeastern Australia. Some places have picked up 50mm+ totals in 24 hours, with Heidelberg in Melbourne's northeast seeing 18mm in just half an hour this afternoon. Of that total 12mm fell in 10 minutes, leading to flash flooding and causing temperatures to drop 10 degrees in 10 minutes.
More widespread storms are set for tomorrow, bringing with them high winds and also the chance of damaging hail.
Local reports suggest that prices for quality wheat have moved up strongly in the last couple of days, as fears mount that what had looked like being a great crop only a few weeks ago, is now mostly going to end up in the feed bin.
Local prices have been depressed following a surging Australian dollar, leading many growers to opt to delay wheat sales hoping for higher prices later on.
These latest delays to harvesting, and the potential downgrading of wheat quality coupled with a lack of farmer selling is tightening up the spot cash milling wheat market, and exporters are now struggling to fill vessels lining up at the ports.
For a look at the latest 24 hour precipitation forecast go here.
Quiet Day Ahead
In what promises to be a relatively quiet day with the US on Thanksgiving duty, gold has moved to fresh all-time highs again in early trade.
Gold is everybody's darling at the moment, reports that Sri Lanka bought 10 MT from the IMF and rumours that India might buy more of the yellow metal have propelled it to new highs overnight.
The dollar is weaker (although the pound is even weaker), plumbing to 14-year lows against the yen and 15 month lows against the euro. Russia's Central Bank says it will buy Canadian dollars instead to reduce it's exposure to the declining greenback.
The pound is down across the board on reports that British bank's exposure in Dubai is a worry after the country's largest corporate debtor, Dubai World, is looking to delay the repayment of some of it's USD59 billion liabilities.
The US Energy Department said yesterday that crude oil inventories rose 1 million barrels last week, a bit less than had been expected, even so that was to a four-week high of 337.8 million barrels. Crude oil is around a dollar/barrel weaker this morning.
Palm oil is at fifteen week highs overnight on expectations that exports will outpace production this month.
London wheat has opened with March up GBP1.00/tonne on follow through support from last night's strong CBOT performance and a sharply weaker sterling.
Egypt bought mostly Russian wheat in yesterday's tender, although French wheat did manage to get a look in, with Glencore selling them 60,000 MT at USD201/tone.
Ukraine's grain harvest is just about finished and will total 48 MMT they say, 10% down on last year's 53.3 MMT.
Chinese Govt To Start Buying Soybeans/Corn
Having recently announced the suspension of it's weekly soybean and corn auctions, the Chinese government has now said it will begin buying supplies of both from domestic producers beginning Dec 1st.
It will buy soybeans at the equivalent of 3,740 yuan/tonne (around USD548) and corn at around 1,500 yuan/tonne (USD220), in a program set to run until the end of April says the government-backed China Oils Network website.
Although both levels are close to where domestic prices have been running of late, effectively the move puts a floor in the market. That should be supportive for both Chinese and US soybean prices.
The average price for imported soybeans this month has been running at around 3,700 yuan (USD542).
Chinese soybean futures for the most active month September 2010 closed 1.9% higher Thursday at 3,960 yuan.
CBOT Closing Comments
Soybeans
January soybean futures closed at USD10.54 ½, up 8 ½ cents, December soymeal futures at USD318.00, up USD2.60 and December soy oil futures at 40.57, cents, up 0.87 points. The soybean harvest is wrapping up and export demand remains healthy. Export sales will be announced on Friday due to the Thanksgiving Day holiday, trade estimates for export sales are 800,000 to 1,100,000MT. The last four week's have averaged 1.6 MMT so don't be surprised if we come in above the trade estimate yet again.
Corn
December corn futures close at USD3.92, up 16 cents and March corn futures at USD4.08, also up 16 cents. Trade estimates for Friday's export sales range between 500,000 and 700,000 MT, although recent sales have been disappointing. With almost a third of the US corn crop still left to be harvested as of Sunday, US growers will have been working flat out again all week - even if it means bringing the crop in at high moisture levels. The weather is set to be reasonably favourable until Tuesday when more rain moves into Illinois and surrounding states.
Wheat
December CBOT wheat futures closed at USD5.50 ¼, up 17 ¼ cents, December KCBT wheat futures at USD5.46 ½, up 17 cents and December MGEX wheat futures at USD5.51 ¾, up 11 ¾ cents. Private Exporters announced 100,000 MT of HRW wheat sold to Iraq, Japan also bought US wheat although the US once again missed out on Egypt's tender. Trade estimates for Friday's weekly export sales are between 350,000 and 450,000 MT. US soft red wheat potential has been curtailed by too much rainfall in the Mid South that flooded farms and delayed planting. Soft red winter wheat was rated 48% good, 40% fair and 12% poor on the November 21 condition report, the last of the season, say Martell Crop Projections.
EU Wheat Edges Higher
EU wheat futures edged higher Wednesday, with January London wheat closing up GBP0.25 at GBP107.50/tonne, and Paris January milling wheat up EUR1.50 at EUR133.25/tonne.
US futures were steadier, as too were outside markets such as gold and crude oil.
Egypt bought 300,000 MT of mostly Russian wheat in it's tender, only 60,000 MT coming from France. Four 60,000 MT cargoes of Russian wheat came from Aston, Valars, Venus and Alexandria Grain, all at USD198.75/tonne - what an amazing coincidence!
They also bought one cargo of 60,000 MT of French wheat from Glencore for USD201.00/tonne. Not an enormous gap, and one that will continue to narrow as Russian wheat up to Egypt's exacting standards continues to disappear.
Jordan appear not quite so fussy, booking 150,000 MT of Ukraine wheat yesterday. Unlike Russia, wheat of any quality will soon be disappearing there with exports running ahead of last season's pace despite a sharply reduced crop.
Wheat yields and quality are declining in the southern hemisphere. Very heavy rains and flooding have hit southern Brazil and Uruguay recently, whilst Australia has seen a combination of 30-35C temperatures and heavy rain affect later maturing crops.
eCBOT Close, Early Call
The overnight grains closed firmer going into the last session before Thanksgiving with wheat around 10-12 cents higher, beans up 7-9 cents and corn 7-8 cents firmer.
Crude oil is modestly firmer ahead of this afternoon's Energy Dept stocks data. Yesterday crude fell almost 2% after the American Petroleum Institute said US crude inventories rose by 3.4 million barrels last week.
The dollar is lower again, and gold has set another all-time high. US jobless claims came in at 466k, better than the 500k expected.
Japan bought 106,000 MT of wheat in its regular tender, with 85,000 MT of it US wheat. Jordan have reportedly bought 150,000 MT of Black Sea origin wheat. Egypt are tendering for wheat today, the results of that will be interesting as reports circulate of them maybe having to cast their net a little wider.
Availability of Russian first grade milling wheat meeting Egypt's strict max 1% bug damage criteria seems to be tightening. In Ukraine it probably didn't ever exist this season.
US wheat hasn't got a look in with Egypt since September, but the USDA has today announced a sale of 100,000 MT of wheat to Iraq.
South American wheat yields and quality also look like they are being adversely affected by weather, the same can also be said of Australian grain.
The USDA's weekly export sales report will be delayed until Friday because of the holiday. It would be of no surprise to see large soybean sales and shipments to China once again.
Illinois corn harvesting was 5-6 weeks late at just 60% finished, the USDA said Monday. Iowa corn harvesting advanced to 78% complete and in Missouri it was 76%. Extremely wet corn that has slowed down harvesting may be evidence of freeze damage, says Gail Martell of Martell Crop Projections.
The next three days will see rain and snow miss the wet areas of Missouri and Illinois, unfortunately December heralds in another round of rain set to hit these soggy states Tuesday, says QT Weather's Allen Motew.
Early calls for this afternoon's CBOT session: corn called 5 to 7 higher; soybeans called 8 to 10 higher; wheat called 8 to 12 higher.
EU Soymeal/Pellet Prices
Basis CIF Rotterdam/Amsterdam in USD/tonne unless otherwise stated:
Brazil pellets 48%
Afloat 440,00
Dec 438,00
Jan/March 411,00
May/Sep 357,00
Argentine pellets 44/45%
Afloat 429,00
Dec 432,00
Jan/March 411,00
May/Sep 346,00
Dutch Hipro 49%
Nov 457,00 FOB
Dec 457,00 FOB
Jan 457,00 FOB
Feb/Apr 438,00 FOB
May/Jul 375,00 FOB
May/Oct 378,00 FOB
Argentine Hipro 49%
Afloat 453,00-447,00
Nov 447,00
Dec 446,00
Jan/March 428,00
May/Sep 365,00
World's Oldest Sheep Dies
That's right, it's not all about USDA crop estimates and Chinese soybean consumption on here you know.
Have a bit of compassion for the death of the world's oldest sheep, who has sadly died at the ripe old age of 23, according to the Farmer's Guardian.
Soaring Australian temperatures have got a lot to answer for if you ask me, firstly they cut the size of this year's wheat crop and now this. I can baaarly hold back the tears for poor Lucky, a Polwarth-Dorchester cross.
She must have been sweating her little wotsits off: do you want to take that jumper off luv?
Lucky, ironically, shared her name with the other sheep story in the news recently. The one that was killed by a wayward golf ball: It was mutton to do with me
Nutreco Gets Green Light To Acquire Cargill's Spanish And Portuguese Operations
Nutreco, the international animal nutrition and fish feed company, says that it has been given the go-ahead by the European Commission anti-trust authorities in Brussels for the acquisition of the animal nutrition business of Cargill in Spain and Portugal.
The agreement in principle was announced on 28 July 2009. The acquisition includes Cargill's 12 compound feed production facilities, with a production volume of around 700,000 metric tonnes, annual sales of approximately EUR 240 million, say Nutreco.
Abnormal Weather Hits Australian Grain
Blazing heat mixed with heavy rain seems to be taking the shine off what was promising to be a pretty decent grain crop Down Under.
As of Monday morning, the average maximum temperature for November across Victoria was 6.3 degrees above normal. A fortnight or more of successive days with temperatures 30-35C has seen crops losing quality and quantity at disturbing rates, say agronomists.
Quality of grain is becoming an issue with growers who's crops were green during the heat wave having been tipped and therefore the grain that in that part of the head will become pinched, they say.
Another factor affecting production this year is that growers have really tightened their purse strings after the past few tough seasons. A majority of growers have gone with the cheaper method and only applied Map/Dap at sowing which has this year shown to not be enough within continuous cropping enterprises, they add.
The Victorian Farmers Federation said that both the heat and rain had hurt this season's harvest. He said hot weather had pinched grain in barley and wheat crops and the rain had brought harvest to a standstill. Follow-up rain later this week was of even greater concern.
"We don't want another 25mm now on top of what we've already got," they said.
Heavy rain over western NSW and Victoria overnight and will continue to spread east during Thursday. Some areas could see their heaviest totals since around March with up to 40mm expected, say Elders Weather.
EU Rapemeal Prices
Basis FOB Hamburg/Lower Rhine in euros/tonne:
Nov 141,00 +6,00
Dec 139,00 +4,00
Jan 138,00 +3,00
Feb/Apr 135,00 +3,00
May/1st h Jly 122,00 +1,00
Aug/Oct 10 119,00 unch
Nov/Apr 11 128,00 unch
The Locusts Dinner?
The Argentine government are to scramble air force planes to combat a plague of locusts that are threatening to devour the nation's wheat crop, say Bloomberg (here).
Drought, floods, now locusts. They must have really upset someone in a former life mustn't they? Yes, me the dirty cheating hand of God buggers.
Let's hope that the air force pilots can make it to the planes OK, without tripping over theatrically, rolling over and over before eventually making it to the penalty area clutching their faces like they've been hit with a baseball bat.
Still, they're overdue to win a war against somebody. Brilliant idea! Maybe we could send them that thing with the light-up eyes that they used to wheel out at the Adelphi Locust Dinner every February for a bit of target practice? That already looked like it had been hit by a couple of exocets in it's time.
And another thing, they'd better get their skates on, the Argentine wheat crop is already the smallest since 1977.
And another, 'nother thing: Jose, my man in Uruguay, tells me that very heavy rains are causing yield and quality problems for wheat in Uruguay and Brazil too.
Ukraine Grain Exports Up Despite Lower Crop
Cheap and cheerful Ukrainian grain exporters have been busier than a Cockermouth street cleaner recently. Already they have exported 10.4 MMT of grains by November 19th, up 4.5% on year ago levels, despite a sharply reduced crop this year.
That takes them more than halfway past their target level of 20 MMT (25.2 MMT in 2008/09) for the full marketing year, only 20 weeks into the campaign.
Wheat volume is up at 5.4 MMT (from 5.2 MMT a year ago), barley at 3.37 MMT (4.0 MMT) and corn at 1.5 MMT (0.7 MMT).
Rapeseed exports are down by a third on last season to 1.2 MMT.
CBOT Closing Comments
Soybeans
January soybean futures closed at USD10.46, up 4 cents; December soymeal futures at USD315.40, down 0.20 points and December soy oil futures at 39.70, cents, up 0.30 points. Soybeans certainly seem to be the strongest leg of the 'holy trinity' of beans, corn and wheat. Export demand is simply stunning, and keeps on coming, at just eleven weeks into the US 2009/10 marketing year, the USDA have reported soybean sales this season of 26 MMT, 72% of the entire years export target of 36 MMT.
Corn
December corn futures closed at USD3.76, down 11 ¼ cents, March corn futures at USD3.92, also down 11 ¼ cents. Corn sales have been nowhere near as robust as soybean sales recently. Traders are positioning themselves for first notice day, the holiday and end of the month accounting. With the late wet harvest vomitoxin concerns have been rearing their head for corn, so far the US authorities say that this won't be a problem this season.
Wheat
December wheat futures closed sharply lower at USD5.33, down 24 ¼ cents. Wheat planting increased only 3 points from last week to 93% and the date has passed for crop insurance, so it is possible that farmers have planted all the wheat they will for this year. Despite that futures ended sharply lower ahead of Thursday's holiday. US wheat remains a little behind competitiveness in Europe, so must content itself to pick up the scraps elsewhere. Spec funds increased their shorts, selling an estimated 4,000 wheat contracts today.
EU Wheat Closing Comments
London wheat closed Tuesday with January down GBP0.75 at GBP107.25/tonne, and Paris January milling wheat down EUR2.50 at EUR131.75/tonne.
Pressure came from a lower US market winding down ahead of Thursday's Thanksgiving Day holiday. Outside influences like weaker crude oil also weighed on prices today.
Egypt are again tendering for wheat later in the week. Despite reports that Russia and Ukraine are the cheapest shops in the street, which they are, they are also Poundland but if you want a bit of quality then you may have to look elsewhere.
Russian first grade milling wheat with a 1% maximum bug damage prices rose USD5/tonne on the week, as supplies of this top quality grain diminish. Quality conscious buyers seem to be shifting towards buying a bit of better grade wheat to mix with Poundland wheat from the Black Sea.
The unfortunate bankruptcy today of high profile Rotterdam-based, and seemingly apparent 'blue chip' feed company, Schouten Ceralco has sent a shudder around the European grain and feed trade. This has created a vacuum of uncertainty, which may lead to some short-term availability difficulties.
In Europe, everybody seems to have their cautious head on at the moment, and who can blame them?
Russian Grain/Oilseed Prices
Latest known guide prices basis FOB Novorossiisk in USD/tonne:
GRAINS
------------------------------------------------------
First grade milling wheat 1% bug damage 196,00 +5,00
First grade milling wheat 2% bug damage 185,00 unch
Maize 170,00 +5,00
------------------------------------------------------
OILSEEDS
------------------------------------------------------Sunseed 345,00 +15,00
Sunseed oil 860,00 +27,00
Soybeans 452,00 +37,00
------------------------------------------------------
eCBOT Close, Early Call
The overnight grains were down but off session lows, with corn and wheat 1-2 cents easier and beans down 4-5c.
Crude oil USD77.37/barrel, down 19 cents. The dollar is a smidgen lower and stocks are doing nothing.
The market already has a slow slide into Thanksgiving holiday mode look to it.
Enjoy the peace and quiet, I suspect that there will be fireworks pretty soon after the market re-opens after the break.
Early calls for this afternoon's CBOT session: corn called 1 to 3 lower, soybeans called 3 to 5 lower, wheat called flat to 2 lower.
Schouten Ceralco File For Bankruptcy
Rotterdam-based Schouten Ceralco have filed for bankruptcy with effect from today, according to a brief statement on the company's website:
Here
The company were major traders in grains, pulses, oilseeds and by-products with a head office located in Rotterdam and a subsidiary office in Gdynia, Poland.
EU Rapemeal Prices
Basis FOB Hamburg/Lower Rhine in euros/tonne:
Nov 135,00
Dec 135,00
Jan 135,00
Feb/Apr 132,00
May/1st h Jly 121,00
Aug/Oct 10 119,00
Nov/Apr 11 128,00
Soybean Number Crunching
We are currently just eleven weeks into the US 2009/10 marketing year, yet already the USDA have reported soybean sales this season of 26 MMT, 72% of the entire years export target of 36 MMT.
This time twelve months ago sales were less than half that at only 11.32 MMT.
With weekly sales over the past four weeks averaging 1.6 MMT/week, the US only needs to continue selling at that rate between now and the end of the year to have hit the USDA's 2009/10 target before we even enter 2010!
Of the 26 MMT sold so far, China are confirmed as the buyer for almost 16 MMT, and likely also account for a fairly sizable chink of the 3.6 MMT sold to 'unknown' too. That might possibly taking their US purchases so far as high as 19 MMT, the same amount that they bought in the whole of 2008/09.
That is one hell of a set of numbers whichever way you look at them.
Is Chinese growth really that impressive, or are they simply so keen to get rid of their dollar reserves that they'll buy as many soybeans as the US can supply?
Either way, it's a bloody good job that the US do have a record crop on their hands. It also emphasises the point that large output from South America in 2010 is more likely to be a necessity than a burden.
These Are The Things That Amuse Me
A great quote on a Reuters newswire today discussing the possibility of India having to import wheat. One analyst says:
"I am absolutely not gung-ho on India importing wheat," to which I desperately want the reporter to ask: "OK, so which one of the Indian seven dwarfs are you then?"
But sadly he doesn't. It made me laugh though.
Chinese Crop Estimates Grossly Overstated
A very interesting report on Agrimoney.com this morning (here) suggests that official estimates for Chinese corn and wheat production this year have been grossly overstated.
The 2009 corn crop could in reality be 13 MMT less, and the wheat crop 9 MMT less, than China's National Grains and Oil Information Centre (CNGOIC) are currently saying, says the report.
These are significant numbers when one considers that China alone are set to account for around a third of the world's 2009/10 wheat and corn ending stocks, according to current USDA estimates.
And if roughly 10% of this season's Chinese crops aren't really there, what about previous years, and the cumulative effect of those being overestimated might have on real global stocks right now? Scary thought eh?
Nah, I'm only kidding, there's plenty of wheat to go round - we all 'know' that don't we? And anyway, even if China was lying we could always rely on the rest of the world to tell the truth couldn't we? Let me see now, just to reassure myself, besides the US who's the world's next largest holder of wheat stocks outside China? Yikes, it's India!
Has anyone ever read the Emperor's New Clothes?
There's Nothing Happening - Is There?
The funds have packed up and gone to visit the folks back home for Thanksgiving by the looks of things. After surging sharply higher early in the session yesterday (20c up beans & wheat and 15c higher corn), fund buying fell away and futures slipped to close in slightly negative territory.
After the close the USDA pegged the corn harvest at 68% done, in line with what was expected, albeit well behind normal. The soybean harvest is finally limping over the finishing line, and wheat planting still lags in the SRW states of Illinois, Missouri and Indiana.
Large, non-commercial spec traders reduced their wheat shorts significantly this past week, according to CFTC data, from 35,144 contracts to 24,872 contracts.
Soybean export inspections were huge, at just shy of 74 million bushels.
This morning the overnight markets look apathetic to that news, continuing to drift slightly lower.
The CBOT is closed Thursday for Thanksgiving and will only trade an abbreviated session Friday. That also means that this week's export sales report will be delayed until Friday. For soybeans, they could well be monster again.
On the weather front, southern Brazil remains very wet - particularly Rio Grande Do Sul where twelve to sixteen-inch rain totals are indicated over the next two weeks, according to QT Weather. That may shortly give rise to some concern.
Welcome heavy rainfall last week eased drought in the Argentina grain belt and will boost soybean planting, although the western rim of the grain belt got only 0.5 inch or less, say Martell Crop Projections.
Whilst some beans will start to get harvested in northern areas of Brazil before too long, they will have to sacrifice yield losses for early beans. The main harvest won't kick off for a few months yet, that still leaves China knocking on America's door for its soybean requirements for a while longer yet, and boy are they knocking loudly.
With gold continuing to make record highs on a seemingly daily basis, I get the feeling that we might be in for a sharply higher retrospective move once we get Thursday's holiday out of the way.
Will it come Friday? That depends on whether the funds are still sat on the in-laws sofas stuffed with turkey or not. If they have dragged themselves into the office, then a shortened trading session might be just the ticket to generate a few fireworks.
If not, Monday/Tuesday could be interesting.
They Don't Muck About In China
The official Xinhua news agency reports that two men have been executed for their part in the infamous melamine in infant formula scandal.
Zhang Yujun was executed for the crime of endangering public safety by dangerous means, and Geng Jinping was put to death after being convicted of producing and selling toxic food.
Zhang was found guilty of selling more than 600 tonnes of melamine-laced protein powder from July 2007 to August 2008.
Geng was convicted of selling more than 900 tonnes of milk tainted with protein powder to the now-defunct Sanlu Group.
Sanlu's former general manager, Tian Wenhua, escaped the death penalty for her part in the scandal.
USDA Crop Progress
Monday night's USDA crop progress report said that only 68% of the US corn crop was now in the barn, down from 94% normally at this time of year.
Harvesting has been proceeding at a record slow pace, because of wet field conditions and high content in kernels, say Martell Crop Projections.
The soybean harvest has however caught up well at 94% done, versus 97% normally.
Winter wheat plantings are at 93% compared to 97% normally. Illinois SRW wheat still lags at 89% versus 100% normally, whilst Indiana is 90% against 99% normality. Missouri is only 61% done compared to 92% usually at this time of year.
CBOT Closing Comments
Soybeans
January soybean futures finished at USD10.42, down 4 cents; December soymeal futures finished at USD315.60, down USD1.50; December soy oil futures finished at 39.40 cents, down 31 points. Soybeans started the session sharply higher with a weak dollar and firmer crude and outside markets. Maybe this can be attributed to this weeks Thanksgiving, as the USDA reported soybean inspections for the previous week at 73.787 million bushels, well above trade estimates ranging 50 to 61.5 million bu. Demand for US beans is simply phenomenal at the moment, and although you might normally expect the market to put in seasonal lows around this time, this year could be different.
Corn
December corn futures settled at USD3.87 ¼, down 3 ¾ cents. A sharply lower US dollar and higher crude oil gave bullish outside market support to corn futures, but as with beans that ran out of steam later in the session. Corn inspected for export for the previous week was 25.562 million bushels, said the USDA, that fell below trade estimates ranging 28.5 to 33 million bu.
Wheat
December wheat futures closed at USD5.57 ¼, down 2 ½ cents. Everything from firmer gold to a weak dollar got wheat futures off to a flyer, surging to 20 cents higher in early trade. However a sell off in the other pits spilled over into wheat with futures closing in slightly negative territory at the end of the day. Large, non-commercial spec traders reduced their net short positions in CBOT wheat futures and options to a total of 24,872 contracts combined as of Nov. 17, down from 35,144 the previous week.
EU Wheat Closing Comments - Monday
EU wheat futures closed higher Monday with London January feed wheat ending up GBP1.25/tonne at GBP108.00/tonne, and Paris January milling wheat up EUR1.25/tonne at EUR134.25/tonne.
Firmer US markets, fund buying and outside influences helped push EU prices higher, but this has nothing to do with the fundamentals, we are awash with wheat - at least that's what most people are saying.
World wheat consumption will be a record large 648 MMT in 2009/10, say the USDA. There are already question marks over 2010 output in the world's top two producing nations of China and India.
Production in Argentina looks set to be the lowest since 1977, and output in Australia is also getting downgraded. Planting in America is behind schedule, and 60% of the newly planted Ukrainian wheat crop is rated no better than satisfactory.
In the UK, we have new demand kicking in from Ensus on Teesside in January, plus Vivergo later in 2010. In addition to that, Hovis have announced that they will be switching their entire 1.4 MMT/year of wheat milling to 100% home-grown grain in 2010. UK market leader Wharburton's have said that they will also be launching a loaf made from 100% UK wheat by March 2010. Hovis and Wharburton's account for 56% of UK bread sales.
Egypt split last week's wheat tender three ways between France, Germany and Russia. Russian and Ukrainian wheat is starting to run out of favour due to significant bug damage, and the Russian winter is about to kick off in earnest. That will bring a new whole host of logistical problems to physically export Russian wheat.
Erm, there's one or two fundamentals in there I think you might find.
eCBOT Close, Early Call
The overnight markets closed strongly with beans around 20 cents higher, wheat up around 11-12 cents and corn 4-6 cents firmer. Jan soybeans finally broke back above USD10.50 in overnight trade.
Outside markets are supportive again with gold hitting new all-time highs and crude oil around a dollar firmer. Bullish news from China is that year-on-year imports of everything from soybeans to coal were sharply higher in October.
Fund buying has been a feature the last few Mondays, it would be no surprise at all to see that trend continue today.
Argentina's wheat crop is getting smaller now estimated at only 7 MMT by the Ag Ministry, corn acreage there is also falling, which means that bean area is rising - but that won't be much use to China for some time yet.
There seems to have been a subtle shift in attitude in the market, from fearing a large South American soybean crop to needing one.
The USDA will report tonight on the progress made with wrapping up the US soybean harvest and turning into the home straight on the corn front. The corn harvest was 54% complete as of Sunday 15th Nov.
They will also let us know how much progress has been made with winter wheat plantings, Illinois in particular will be under scrutiny, which was only running at 45% as of Sunday 15th, with 92% normal for this time of year.
Early calls for this afternoon's CBOT session: corn up 4-6, beans up 15-20, wheat up 10-12.
EU Soymeal/Pellets Shipping List
Brazils Argy's ETL/Sailed ETA Destination
Double Rejoice 10000 43000 19-21 Nov etd Rotterdam
Crimson Mercury 25000hp 21-24 Nov etd Amsterdam
Glorious Sakura 10000 44000 23-25 Nov etd Rotterdam
Sea Prince 42000 23-25 Nov etd Amsterdam
Lucky Sunday 40000+hp 23-27 Mov etd Amsterdam
Growth Ring 10000 39000 25-27 Nov etd Rotterdam
Double Prosperity 43000 4-Nov 25-Nov Rotterdam
Cielo di Savona 22000 5-Nov 27-Nov Ghent
Forestal Esperanza 20000+hp 17-Nov 5-Dec Amsterdam
United Challenger 40000+hp 17-Nov 5-Dec Amsterdam
Grain Harvester 34000+hp 18-Nov 6-Dec Amsterdam
Mary Georgia 43000 hp 15-Nov 7-Dec Rotterdam
Dyna Voyager 40000 23-Nov 8-Dec Amsterdam
Silver Pegasus 20000 18-Nov 9-Dec Rotterdam
Globulus 30000 22-Nov 9-Dec Rotterdam
Malaspina Castle 15000hp 28-Nov 15-Dec Amsterdam
Aquitania 40000+hp 1-Dec 16-Dec Amsterdam
Hamburg 15000+hp 2-Dec 17-Dec Amsterdam
Agios Makarios 15000+hp 2-Dec 19-Dec Amsterdam
Selinda 25000 30-Nov 22-Dec Amsterdam
Eden Maru 49000 30-Nov 22-Dec Rotterdam
Lucija 9000 30-Nov 22-Dec Rotterdam
Bread Wars - Food For Thought
There's nothing quite as thoroughly British as a loaf of Hovis is there? Well, what their iconic "we went to't shops me Mam and me" TV ads didn't point out was that a large percentage of the 1.4 MMT of wheat Rank Hovis mills every year is imported from Canada.
Whilst you or I probably realised that, your average housewife in the queue at Tesco's probably didn't have a clue did she? So full was her head of shoes, Sean Bean's six pack and whether to vote for Jedward again this Saturday.
Premier Foods-owned Hovis has an estimated 26% of the UK bread market, putting it second in the market to only Warburton's with 30%.
How significant is it then that Hovis say that they are about to switch from being heavily reliant on Canadian wheat, to going 100% British across it's entire range after successful trials growing Canadian red wheat here?
Keen not to be caught napping by the competition, Wharburton's have also just announced that they will be launching a 100% all-British loaf by March 2010.
British cereal growers will be fancying a slice of that action.
Cadbury's Shares Hit Record High
Shares in national institution Cadbury's have hit a record high 817 pence today, as potential suitors put on their best Armani suits and slick back their hair.
Having given Kraft's hostile bid the chocolate finger, Cadbury's board of directors are believed to be more receptive to 'friendlier' approaches from US-based Hershey's or Italian giants Ferrero.
Switzerland's Nestle are also said to be considering a move.
Krafty Kraft's bid, which valued Cadbury's shares at 723 pence, now looks woefully short of the mark, but don't be surprised to see them come back in with a higher offer.
Overnight Grains Sharply Higher
It's back to "as you were" at the start of last week, with the overnight grain markets sharply higher following gold hitting another all-time high in the Far East on strong demand.
Crude oil is best part of a dollar higher at USD78.34/barrel, and the dollar is down on concerns about inflation.
eCBOT soybeans are around 15-16 cents higher, with corn up 6 cents and wheat 7-8 cents higher.
Official figures just out show that China imported 2.52 MMT of soybeans in October, 18% up on a year ago. November imports are expected to climb to around 3.5 MMT and December/January 4 MMT each. Almost all of that looks set to come from the US, although some very early soybeans are expected to be harvested in Brazil Christmas Day.
It's not just soybeans that China are buying: October coal imports jumped 220 percent year-on-year to 11.1 MMT; refined copper imports were up 31%; Crude oil imports climbed 20 percent from a year ago.
China's National Petroleum Corporation said it is taking urgent steps to meet the rising demand for gas caused by falling temperatures and heavy snowfalls, which are causing logistical problems for movement of all grains, according to reports.
The Philippines might need to buy up to 3 MMT of rice next year, double their normal requirement, after typhoons wiped out a large part of their crop. India, normally a net exporter, may also be in the market to import 3-5 MMT, analysts say after their crop was slashed by summer drought.
Thousands of Spanish farmers marched on Madrid at the weekend in protest at their falling incomes. One of the things they are complaining about is the size of the country's wheat imports, which they say is undermining their own grain trade.
It never rains etc is particularly apt in western and southern Argentina at the moment. Already expecting the smallest wheat crop since 1977, the lack of adequate treatment due to the credit crisis has caused locusts to be a real problem this year. According to Bloomberg, up to 2 million acres of mostly wheat crops are under threat unless the government stumps up some emergency aid immediately.
Things You Might Have Missed Over The Weekend
The Indian government have decided, in their infinite wisdom, that they won't be dropping the price of their wheat to local flour millers after all.
That leaves millers forced to stump up the equivalent of around USD292-USD365/tonne to what is pretty much the only seller in town. They aren't going to be very happy about that, with the price of wheat on the global market around USD100/tonne less than that.
Of course the Indian government also set the ridiculously tight phyto-sanitary and quarantine rules, which effectively prevent local millers from importing cheap foreign wheat in bulk.
Argentina's Ag Ministry, remember them? They've not published any crop estimates since February, so you'd be forgiven for thinking that they'd shut up shop, but no they're still going.
They came out with some production and acreage numbers late on Friday, pegging this season's wheat crop at just 7 MMT, that's a million less than the USDA's latest guess and the smallest crop since 1977.
They didn't put a number on next season's soybean crop yet, but they did peg planted area at a record 18.5 million hectares, saying that the crop is currently 27% sown.
Production estimates for next year still vary widely, with the Rosario Grain Exchange and Oil World at 47 MMT and 48 MMT respectively, yet the USDA saying 53 MMT and some private analysts going even higher than that.
The Ministry estimate that corn plantings will total 3 million hectares, 12% down on last year, whereas the Buenos Aires Grain Exchange see a much steeper decline - saying that only 1.875 million hectares will go into corn production this year. So far 61% of planned area has been planted, say the Ministry.
The Ministry pegged sunflower area at 1.79 million hectares, saying that just over half of that had been planted so far. That would be a reduction of 8.5% from last season. Again the Buenos Aires Grain Exchange see a much steeper decline - down by a third to 1.49 million hectares.
CBOT Closing Comments
Soybeans
January soybean futures finished at USD10.46, up 7 cents December soymeal futures finished at USD317.10, down USD1.30 December soy oil futures finished at 39.71 cents, up 26 points. Lower crude oil and weakness in some of the other outside markets, and a firmer dollar capped gains ahead of the weekend. Unprecedented Chinese demand, coupled with the lack of soybeans in South America until the new year, leaves the US as pretty much the only shop in town.
Corn
December corn futures settled at USD3.91, down 4 cents. News that Mexico bought 734,000 MT of US corn was supportive, as too is the continuing delays to the US harvest. The USDA will report on Monday night how much progress has been made from last Sunday's 54% complete. The outside markets, which have buoyed the agri futures recently, had a consolidation day Friday which weighed on prices a little. Will the funds be back in on Monday? That has been the pattern for the last few weeks.
Wheat
December CBOT wheat futures closed at USD5.59 ¾, down 2 ¾ cents. Wheat was also in consolidation mode Friday. The USDA will report Monday night how much progress has been made with winter wheat plantings. SRW seedings in Illinois continue to run well behind schedule. The Argentine Ag Ministry pegged wheat production there at just 7 MMT this season, that's a million tonnes less that the USDA's current estimate, and the smallest output since 1977. The US will be hoping that that means Brazil will be looking north for supplies in 2010, they could do with the sales.
EU Wheat Closing Comments
EU wheat closed with November London feed wheat up GBP0.10 at GBP104.75/tonne and January Paris milling wheat down EUR0.50 at EUR133.00/tonne.
The EU market continues to find support from the US, and fund buying. Soft red winter wheat plantings in the US are well behind schedule, with progress in leading SRW producer Illinois only 77% complete as of last weekend, compared to 98% normally.
Emergence in Illinois was only running at 45% as of last Sunday, with 92% normal for this time of year.
This has pushed wheat futures in Chicago, where SRW is traded, to an unusual premium over it's higher protein cousin HRW wheat traded on the KCBT.
Argentina's Agriculture Ministry said Friday that this season's wheat crop will only amount to 7 MMT, that would be their smallest crop since 1977, and show a reduction of almost 17% even on last year's drought-ravaged output.
Neighbouring Brazil has also had a smaller than expected wheat crop this year, and looks like it will be forced to buy from outside it's normal procurement area of the Mercosur bloc.
Australia are midway through their wheat harvest, and lower than expected yields are being reported, leading several analysts to trim their production estimates this week.
Egypt split it's tender this week three ways, booking French and German wheat as well as a Russian cargo. Whilst Russia, as always, remain the "team to beat" they might not quite be holding all the aces on quality. Logistics could also come into play once winter takes a hold, the Russian rail network became grid locked last winter on the approaches to Novorossiysk port on the Black Sea.
