Chicago Soy And Wheat Post Yearly Declines, But Corn Rises Slightly
30/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.98 1/2, up 11 cents; Mar 12 Soybeans closed at USD12.07 3/4, up 10 3/4 cents; Jan 12 Soybean Meal closed at USD309.40, up USD2.80; Jan 12 Soybean Oil closed at 52.09, up 95 points. For the week beans were up 35 1/2 cents, meal up USD12.40 and oil up 113 points. On the year overall beans were down almost USD2.00/bushel, or 14%. Meal declined by more than sixty dollars, or 16%, and oil fell 565 points or nearly 10%. The USDA reported weekly export sales of 662,700 MT for 2011/12 and a token amount for 2012/13 - better than the 300 to 600 thousand MT that the trade was expecting. South American weather remains in the spotlight. Whilst scattered heavy rainfall is predicted in South Brazil in the coming week, there's not much moisture at all in store for Argentina, according to Martell Crop Projections.
Corn: Mar 12 Corn closed at USD6.46 1/2, up 8 1/2 cents; May 12 Corn closed at USD6.54 3/4, up 8 1/2 cents. Corn put on 27 cents for the week and actually ended the year 17 1/2 cents firmer, or almost 3% higher, than it began it. Weekly export sales were a slight disappointment at 318,800 MT for 2011/12 and 26,400 for 2012/13 compared to expectations of 400 to 600 thousand MT. Parana, Brazil's number one corn producing state, may get an inch of rainfall in the coming week although this is around half an inch lower than it would normally expect at this time of year, say Martell Crop Projections. Domestic demand for corn in the US remains strong ahead of the removal of the ethanol blenders' tax credit. Ethanol production last week reached a record 962,000 barrels/day, up 19,000 from the previous week.
Wheat: Mar 12 CBOT Wheat closed at USD6.52 3/4, up 7 1/2 cents; Mar 12 KCBT Wheat closed at USD7.17, up 19 cents; Mar 12 MGEX Wheat closed at USD8.49 1/2, down 5 3/4 cents. Chicago wheat was up 30 3/4 cents on the week but down 141 1/2 cents on the year. The USDA pegged weekly export sales at 431,200 MT - better than the 200 to 350 thousand MT expected. Weekly shipments of 413,700 MT fell slightly short of the 427,400 MT/week needed to reach the USDA's 2011/12 export target. Chicago wheat continues to derive benefit from short-covering. The latest data from the CFTC shows money mangers reducing their net short position by almost a third in the past week ended Tuesday. Spillover support from corn and soybeans on the back of South American dryness are also boosting wheat prices.
Right, pass me a beer...
EU Wheat Year End Closing Comments
30/12/11 -- EU wheat finished mixed but mostly higher on the last trading day of the year with Jan 12 London wheat up GBP0.75/tonne to GBP152.25/tonne and Jan 12 Paris wheat falling EUR0.75/tonne to EUR202.50/tonne.
Despite the recent mini-rally London wheat finished 2011 GBP46.75/tonne, or 23.5%, lower than it began it. The closing high for the year was GBP217.50/tonne set in April and the closing low was GBP141.00/tonne set earlier this month.
Paris wheat put in a slightly better performance, aided by the weak euro. It closed 2011 EUR50.00/tonne, or 19.8%, lower than it was twelve months previously. The high of the year was EUR278.50/tonne established in February and the low EUR178.50/tonne set on the last day of November.
Both performances were worse than US wheat which "only" fell by 18% in Chicago, Kansas wheat declined by 15% and Minneapolis wheat by just 2.6%.
To offer some crumb of comfort this was the highest front month close for London wheat in two months, with Paris wheat ending just below yesterday's more than three month high.
As we approach the new year there are still plenty of conflicting balls in the air to decide market direction in 2012.
On the bear side we have world wheat stocks running at their highest levels in more than a decade, and within 2 MMT of their highest in history. We also have the albatross that is the European debt crisis and signs of a slowdown in Chinese growth.
For the bulls there's drought in South America and rising tensions in the Middle East as Iran threatens to close the Strait of Hormuz which carried more than a third of all seaborne crude oil this year.
We also have the not insignificant matter of around 2.5 million of Ukraine's 8 million hectares of winter grains needing replanting in the spring and an unusual winter drought developing in the Dakotas, Minnesota, Iowa and northeast Nebraska.
There are a few unknown factors to consider too like whether fund money will decide to get back into grains in 2012.
Four months ago non-commercial funds had a net long position of over 270,000 Chicago corn contracts. Last week's Commitment of Traders report showed those same funds are now long less than 45,000 contracts.
It's never easy this game is it? Best wishes to all for a healthy, happy and prosperous 2012.
Chicago Close
29/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.87 1/2, down 10 3/4 cents; Mar 12 Soybeans closed at USD11.97, down 11 cents; Jan 12 Soybean Meal closed at USD306.60, down USD3.50; Jan 12 Soybean Oil closed at 51.14, down 64 points. Funds sold an estimated 7,000 soybean contracts as weather forecasts put some more rain in for southern Brazil and Argentina a week from now. The market is nervous as European jitters remain and could easily over-ride South American weather issues in the New Year. Trade estimates for tomorrow’s weekly export sales report range form 300 to 600 thousand MT.
Corn: Mar 12 Corn closed at USD6.38, down 4 1/2 cents; May 12 Corn closed at USD6.46 1/4, down 4 cents. Funds sold an estimated 5,000 contracts as corn put in it's first down day in nine sessions. An improved weather outlook for Brazil and Argentina combined with profit-taking ahead of the year end saw sellers outnumber buyers. With another long weekend looming many will probably be content to sit it out now until Tuesday and see what the revised weather forecasts bring then. Trade estimates for tomorrow’s export sales report range from 400 to 600 thousand MT.
Wheat: Mar 12 CBOT Wheat closed at USD6.45 1/4, down 6 cents; Mar 12 KCBT Wheat closed at USD6.98, down 1 1/4 cents; Mar 12 MGEX Wheat closed at USD8.55 1/4, down 7 3/4 cents. Wheat was a follower of corn and beans in light volume. Funds sold an estimated 2,000 Chicago wheat contracts on the day. Weekly export sales tomorrow will be interesting with the trade only expecting a modest figure of 200 to 350 thousand MT. Weekly shipments will also catch many an eye. They now need to be 427,400 MT/week to reach the USDA's 2011/12 export target of 24.5 MMT, but they've only managed that three times in the past eleven weeks.
EU Wheat Rally Continues
29/12/11 -- EU grains ended with Jan 12 London wheat up GBP0.50/tonne to GBP151.50/tonne and Jan 12 Paris wheat EUR2.75/tonne higher at EUR203.25/tonne.
London wheat has now put on GBP10.50/tonne, or 7.4%, since the lowest close of the year set on December 10th. Paris wheat has gained EUR24.00/tonne, or 13.4%, in the same three week period.
European wheat is faring better much than it's UK counterpart partly due to the continued weakness of the euro, which fell to a more than 15 month low versus the dollar today after a disappointing Italian bond auction.
Italy raised a total of EUR7.5 billion in four auctions today, less than the EUR8.5 billion on offer and had to pay almost 7% on EUR2.5 billion of ten-year bonds. That's lower than last month but still close to unsustainable levels.
The ailing Mediterranean nation needs to refinance EUR330 billion worth of debt in 2012 alone, that's the equivalent of almost EUR6.5 billion each and every week next year. What could possibly go wrong?!
The weak euro should however help European wheat stay competitive on the export stage. Even so, the lion's share of yesterday's 250,000 to 300,000 MT optional origin wheat purchase by Algeria is expected to come from South America rather than it's normal favourite supplier - France.
Argentina has been making a bit of a name for itself as the world's cheapest supplier of wheat recently and it's expected that most if not all of yesterday's wheat may end up coming from there.
The markets remain in thin holiday mode, so it may be dangerous to conclude that we've finally broken out of the downwards trend that's been in existence now since April.
European leaders have been "on holiday" for much of this recent mini-rally, let's see what happens when the bickering resumes again in 2012.
EU Rapemeal Prices
29/12/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 188.00 | +1.00 |
| Feb12 | 176.00 | +2.00 |
| Feb/Apr12 | 171.00 | +2.00 |
| May/Jul12 | 165.00 | -1.00 |
| Aug/Oct12 | 150.00 | unch |
| Nov12/Jan13 | 155.00 | unch |
| Feb/Apr13 | 158.00 | -1.00 |
Early Call On Chicago
29/12/11 -- The overnight grains were mostly lower with beans around 8-10 cents easier, wheat down 3-4 cents and corn a half higher on old crop to 1 1/2 lower on new crop. Crude oil is slightly firmer and the US dollar is also steadier.
The market got a little reminder that far from being out of the woods, Europe is still lost somewhere in the thick of it. Italy managed to auction off EUR7 billion of three-year and 10-year bonds but still had to pay almost 7% to do so.
That saw the euro slump to its lowest in more than 15 months against the dollar.
The South American weather forecasts offer some encouragement a week from now, but not much in the way of precipitation prior to that.
Tomorrow is first notice day on Jan CBOT soy complex contracts, which means that anyone still long on the front month risks taking delivery on Friday. If they don't want to do that then they need to exit their position today.
Weekly export sales data from the USDA is delayed until tomorrow due to Monday's holiday.
After eight sessions higher, it could be time for a little money to be taken off the table this afternoon prior to year-end.
Early calls for this afternoon's CBOT session: beans 8-10 cents lower, wheat down 2-4 cents, corn flat to 1 cent higher. Apart from that de do do do, de da da da is all I've got to say to you.
The Morning Vibe From Joe Cocker
29/12/11 -- It's me, Joe Cocker here, filling in form Nogger who is taking a well earned rest. London and Paris wheat continue their push higher this morning, I see. Love lift wheat up where it belongs, where the eagles cry on a mountain high...
There's a potential cyclone on the cards for southern India at the end of the week, which may cause a few problems for standing rice and corn, where the clear winds blow.
Elsewhere, despite the rain Western Australia state is expecting to bring in it's second largest grain crop on record this season, and more than double last year's production. Yes, yes, yes.
Some say who knows what tomorrow brings, but I disagree, it brings the one day delayed USDA weekly export sales report. You can leave your hat on that with a little help from your friends.
Later, the early call on Chicago from Sting, who's currently doing some research among the fields of barley.
Chicago Closing Comments
28/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.98 1/4, down 1 1/2 cents; Mar 12 Soybeans closed at USD12.08, down 1 1/2 cents; Jan 12 Soybean Meal closed at USD310.10, up USD2.40; Jan 12 Soybean Oil closed at 51.78, down 6 points. South American analyst Michael Cordonnier cut his Brazilian soybean production estimate by 1 MMT to 74 MMT and that in Argentina by 0.5 MMT to 53 MMT. Even so, at a combined 127 MMT that is still the same as the latest USDA forecasts and the highest in history for those two countries, so it's hardly a disaster just yet.
Corn: Mar 12 Corn closed at USD6.42 1/2, up 9 1/4 cents; May 12 Corn closed at USD6.50 1/4, up 9 cents. This was the eighth higher close in a row for corn on the back of the weather in South America with funds buying an estimated 8,000 contracts on the day. Although private analysts are trimming corn production estimates for Brazil and Argentina they are generally still both at all time high levels. The next decent chance of rain for southern Brazil and central Argentina is 7-14 days away yet, so this issue is likely to rumble on into the new year at the very least.
Wheat: Mar 12 CBOT Wheat closed at USD6.51 1/4, up 6 1/2 cents; Mar 12 KCBT Wheat closed at USD6.99 1/4, up 3 1/2 cents; Mar 12 MGEX Wheat closed at USD8.63, up 1/2 cent. Funds were said to have bought around 2,000 Chicago wheat contracts on the day, even so they still have a sizable short position which continues to underpin the market. Algeria bought 250,000 to 300,000 MT of optional origin milling wheat in a tender for 50,000 MT. None of that is likely to come from the US though. Weekly export sales from the USDA are delayed a day this week and will be out on Friday.
EU Wheat Extends Rally
28/12/11 -- EU grains extended their recent rally with Jan 12 London wheat climbing GBP4.00/tonne to GBP151.00/tonne, Jan 12 Paris wheat rising EUR3.50/tonne to EUR200.50/tonne.
It was a largely hot and dry Christmas in Brazil and Argentina that propelled London wheat to the best close in almost eight weeks and Jan 12 Paris wheat to the highest close since September.
London wheat was playing catch-up after Chicago wheat was around 20-22 cents firmer last night and Paris wheat closed EUR2.00/tonne higher.
Whilst coming too late to damage wheat production the recent heat wave and dry spell are seen potentially trimming corn and soybean output in South America.
Local analysts there such as Michael Cordonnier now peg corn production in Brazil at 60 MMT and in Argentina at 27 MMT, whilst these estimates are lower than the USDA currently say (by 1 MMT and 2 MMT respectively) they are still both all time highs.
Elsewhere Russia’s Ag Ministry pegged the 2011 grain crop at 93.8 MMT in clean weight, a 54% increase on 2010, reiterating the potential to export 25 MMT in 2011/12.
Early Call On Chicago From Bob Marley
28/12/11 -- The overnight grains closed mixed with beans down 5-7 cents, corn up 2-3 cents and wheat 3-4 cents higher. Crude oil is fractionally weaker, fighting on arrival, fighting for survival.
There may be a bit more of a chance for rain in Argentina and Brazil in the 7-14 day timeframe, so ev'rything's gonna be alright. Even so 7-14 days away is less likely to come to pass than tomorrow, don't shed no tears.
QT Weather see two more weeks of dryness for Central Argentina, meanwhile "above normal" temperatures remain on the cards they add. Woy yoy yoy yoy, yoy yoy-yoy yoy!
Any changes to the forecasts this afternoon may decide where we finish up tonight. Woy yoy yoy yoy, yoy yoy-yoy yoy! (Again).
Private analysts are cutting their estimates for corn and soybean production in both Brazil and Argentina, although not by huge amounts just yet. "We're trimmin, we're trimmin, we're trimmin, not slashin, we're trimmin in the name of the Lord," said one leading analyst based in the government yard in Trenchtown.
Chicago wheat looks like remaining supported by the still weighty fund short in it, ee little darlin, he added.
Early calls for this afternoon, according to my spirit guide from beyond the grave: "beans down 5-7 cents, corn up 2-4 cents, wheat 3-5 higher. Let's get together and feel all right. Whoa, whoa, whoa, whoa...."
EU Rapemeal Prices
28/12/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 187.00 | +2.00 |
| Feb12 | 174.00 | +2.00 |
| Feb/Apr12 | 169.00 | +3.00 |
| May/Jul12 | 166.00 | +1.00 |
| Aug/Oct12 | 150.00 | +2.00 |
| Nov12/Jan13 | 155.00 | +2.00 |
| Feb/Apr13 | 159.00 | +4.00 |
The Morning Vibe And 2012 Predictions
28/12/11 -- That's another bout of rampant festive consumerism over and done with I'm pleased to report. There's just enough time left to pop down to the sales before we start planning our 2012 summer holidays. Before that there's New Year, Valentines Day, Easter and the Queen's Jubilee Wotsit to get over. I don't know how we are going to fit it all in to be honest. We might not get chance to watch the Christmas Dr Who on catch-up until August at this rate.
So, what's been going on besides Bates getting sent down and Lady Mary coming clean about that dead Turk that was found in her bed in Downton Abbey? Quite a lot actually.
The Septics and the Frogs were both open for business yesterday, with Jan 12 Paris wheat finishing EUR2.00/tonne higher and adding another EUR2.75/tonne to that so far this morning. Paris rapeseed was EUR4.00/tonne higher yesterday, enthused by Chicago soybeans rising around 35-37 cents last night.
As you might have guessed by now, the market is calling the holiday weekend rains "disappointing" in South America.
Chicago wheat was around 20-22 cents firmer last night and corn up 13-14 cents on old crop months.
As mentioned on Friday, which seems like a very long time ago now, it is interesting to note that Chicago wheat has risen more than corn or beans in this recent rally despite this weather issue being by far potentially the least damaging for wheat. This is clearly down to the large fund short that has been in place for some time now.
Fears over European debt seem to have put on the back burner, at least for now.
So where are we heading from here? New Year is after all a time for predictions. I'm tempted to suggest that we may be going modestly higher on UK wheat for the first quarter of 2012, with the market maybe likely to peak around March/April at say GBP160.00/tonne.
After that, barring of course an unpredictable weather disaster, I think that the only way is down.
Flicking through old records and charts over the Christmas break I noted that in 22 of the last 28 years London wheat has peaked during the first half of the calendar year, so those hoping for a back-end rally are backing the 4/1 outsider in a two horse race.
For the low of 2012 I'll plump for GBP120-125/tonne to occur around September.
If you're interested this time last year I went for "London wheat peaking around May at GBP225-230/tonne," which wasn't too far off the mark with the high of the year of GBP217.50/tonne set on April 20th.
Chicago Close - Friday
23/12/11 -- Soybeans: beans were higher for the seventh session in a row, even if only marginally on this occasion. It was a predictably thin day with Jan 12 beans ending 3/4 cent higher at USD11.63/bushel for a gain of 33 cents, or almost 3%, on the week. Jan 12 meal closed USD1.40 lower at USD297.00 and Jan 12 oil closed at 50.96, up 51 points. South American dryness supports as does a weaker US dollar, although how long either will continue like that is unknown.
Corn: March corn ended up 2 cents at USD6.19 1/2 a bushel; May corn ended up 1 3/4 cents at USD6.28 a bushel. March corn was up 36 1/2 cents, or 6%, on the week. Hot and dry weather in southern Brazil and Argentina is seen as more damaging for corn than wheat at this stage. Some reports of abandoned corn are already filtering through. In Argentina an estimated 40% of the crop is at the maximum water usage tasseling stage.
Wheat: Mar 12 CBOT Wheat closed at USD6.22, up 1/4 cent; Mar 12 KCBT Wheat finished at USD6.75, up 2 1/1 cents; Mar 12 MGEX Wheat was up 3/4 cent at USD8.44 1/2. On the week overall Chicago wheat gained 38 1/4 cents, or 6.6%, curiously more than corn despite South American weather posing only a minimal threat to the wheat crop in the region. The large fund short in wheat is probably the explanation for that. The USDA reported the sale of 120,000 MT of hard red winter wheat to Nigeria.
Best wishes to all.
EU Wheat: Is The Glass Half Full Or Half Empty
23/12/11 -- EU grains ended a holiday-shortened session with Jan 12 London wheat up GBP1.25/tonne to GBP147.00/tonne and Jan 12 Paris wheat down EUR0.25/tonne to EUR195.00/tonne.
For the week as a whole London wheat gained GBP5.00/tonne and Paris wheat EUR11.50/tonne. It was a predictably low volume day with very little of note to report.
So as we near the end of what has been another volatile year in which London wheat has fallen over a quarter since the end of 2010, and by almost a third from the highs of the year set in April, I thought that a quick flick back through the record books might be of interest.
Despite the temptation to kick the cat because the price of wheat doesn't begin with a two any more, it is worth considering that it's only ever been higher than today's close on Christmas Eve twice before, according to my records which go back to 1984.
Those years were of course last year when it closed at GBP197.50/tonne and in 2007 when it was GBP166.25/tonne on the day before Christmas.
Once we get into 2012 the immediate market direction may depend on the longevity of the South American weather story versus the inevitable market refocus on the European debt issues.
Best wishes for Christmas to you all.
Chicago Close
22/12/11 -- Soybeans: Beans closed 7-9 cents higher, with meal around USD0.50 lower and oil 100 points or so higher. Weekly export sales were 653,400 MT for 2011/12 and 75,000 MT for 2012/13 - significantly better the anticipated 400-600,000 MT. Exports of 934,200 MT were primarily to China (599,400 MT). This was the sixth session in a row that beans have closed higher on the back of hot and dry conditions in South America. The outlook remains dry if somewhat cooler next week.
Corn: Corn closed with little change, a cent or so higher nearby and 4 cents weaker on new crop. Weekly export sales were robust at 715,000 MT for 2011/12 plus a further 238,000 MT for delivery in 2012/13 compared to the expected 450-650,000 MT. In addition weekly shipments of 1,300,800 MT were a marketing-year high. The trade is starting to factor in lower production numbers for Argentina, normally the world's second largest shipper of corn after the US. The USDA currently estimate that they will produce 29 MMT in 2012, the trade is now thinking more like 25 MMT.
Wheat: Chicago wheat was 3-5 cents higher with Kansas up 1-2 cents and Minneapolis mixed 2 cents up to 2 cents down. Weekly export sales of 362,300 MT were in line with the expected 300-450,000 MT. Funds continue to whittle away at their Chicago short position, covering in an estimated 2,000 contracts on the day. Weekly shipments want watching closely. They need to be 427,400 MT/week to reach the USDA's 2011/12 export target of 24.5 MMT, but they've only managed that three times in the past eleven weeks.
EU Wheat Close
22/12/11 -- EU grains ended with Jan 12 London wheat up GBP1.25/tonne to GBP145.75/tonne and Jan 12 Paris wheat EUR1.50/tonne higher at EUR195.25/tonne.
Defra issued it's final estimate of the 2011 UK wheat harvest which came in at 15.3MMT, an increase of 2.5% on 2010.
The highest domestic yields came in at 8.1 MT/ha from the North East and Yorkshire and the Humber. The lowest were 6.5 MT/ha from the North West and Merseyside. The Eastern region was the only one to see a decreased yield between 2010 and 2011, they added.
Barley production was pegged at 5.5 MMT, up 4.8% on last year and OSR output was said to be a record 2.8 MMT, a whopping 24% increase on 2010.
"On a regional basis, the highest yields for barley were in Yorkshire and the Humber with an average of 6.3 MT/ha. The lowest yield of 4.4 MT/ha was in the Eastern region, highlighting that the spring drought has had more of an impact on this region. Dry soils in the East of England earlier in the year led to poor tillering and delayed nitrogen uptake resulting in lower barley yields as barley has less ability to compensate for reduced tiller numbers later on in the season," they said.
"In England OSR production increased from 2.1 million tonnes in 2010 to 2.6 million tonnes in 2011. Winter sown production increased by 24% and spring sown increased by 35%. Winter oilseed crops established well in autumn 2010 and disease control continues to improve. Prices have also proved attractive for growers with an increased demand for biodiesel. Early indications from autumn 2011 plantings indicate this upward trend in oilseed production is set to continue," they added.
Early Call On Chicago
22/12/11 -- The overnight grains were little changed in a dull lifeless session with beans around 2 cents firmer, corn mixed and wheat unchanged to slightly lower. Crude oil and the dollar are also barely changed.
There was some overnight rain for Argentina, with more expected today, although the amounts involved aren't huge.
Bangladesh has bought Ukraine wheat, Japan has booked some Australian wheat and Jordan has bought 100,000 MT of wheat of unspecified origin - most likely from the Black Sea.
The USDA's weekly export sales and shipments were bullish for corn and soybeans and neutral to slightly negative for wheat.
Fresh news is thin on the ground. After several days of moving higher we may be in for a small consolidation day, but big moves either way today/tomorrow look unlikely.
Chicago operates normal trading hours tomorrow, is closed Monday and re-opens again Tuesday afternoon.
Early calls for this afternoon: beans up 2-4 cents, corn up 1-3 cents, wheat mixed.
EU Rapemeal Prices
22/12/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 181.00 | +1.00 |
| Feb12 | 172.00 | -1.00 |
| Feb/Apr12 | 167.00 | unch |
| May/Jul12 | 164.00 | -1.00 |
| Aug/Oct12 | 147.00 | unch |
| Nov12/Jan13 | 150.00 | -1.00 |
| Feb/Apr13 | 152.00 | -1.00 |
USDA Weekly Export Sales
22/12/11 -- The USDA's weekly export sales came in better than expected for corn and beans and in line with trade estimates for wheat.
Corn sales were 715,000 MT for 2011/12 plus a further 238,000 MT for delivery in 2012/13 compared to the expected 450-650,000 MT. There was one sale to China in amongst the 2011/12 volume. In addition weekly shipments of 1,300,800 MT were a marketing-year high.
Soybean sales were 653,400 MT for 2011/12 and 75,000 MT for 2012/13 against the anticipated 400-600,000 MT. Exports of 934,200 MT were primarily to China (599,400 MT).
Wheat sales of 362,300 MT were in line with the expected 300-450,000 MT. Shipments were only 399,900 MT - down 26 percent from the previous week. Exports need to be 427,400 MT/week to reach the USDA's 2011/12 export target of 24.5 MMT.
Chicago Close
21/12/11 -- Soybeans: Beans closed around 9 cents higher with meal up USD3-4 and oil up 5-7 points. This was five straight up days in a row for beans with funds buying an estimated 6,000 contracts on the day. A wetter forecast for Argentina saw the market open negative but a revised drier call later on saw the board turn green. Estimates for tomorrow's weekly export sales report for beans are 400-600,000 MT.
Corn: Corn closed around 9 cents firmer with funds buying an estimated 9,000 contracts on the day. Dryness concerns in southern Brazil and Argentina were the catalyst for the fourth day of gains in a row. Estimates for tomorrow's USDA weekly export sales report are 450-650,000 MT. A weaker dollar and firmer crude oil added support for corn.
Wheat: CBOT wheat closed with gains of 8-9 cents, with Kansas up 2-3 cents and Minneapolis mixed either side. Funds were said to have bought around 3,000 CBOT contracts on the day, buoyed by spillover support from corn and South American weather concerns. Weekly export sales for tomorrow are estimated at 300-450,000 MT.
EU Wheat Ends Mixed
21/12/11 -- EU grains ended mixed with Jan 12 London wheat down GBP1.30/tonne to GBP144.50/tonne and Jan 12 Paris wheat up EUR2.50/tonne to EUR193.75/tonne.
The pound climbed to its highest since January against a lethargic euro, closing above 1.20 on the day.
Fresh news was fairly limited, new crop London wheat gained on old crop with the differential between July and Nov narrowing to GBP6.00/tonne at the close.
More than one compounder I've spoken to in recent weeks questions why the 2011 harvest should command any sort of a premium over next year's harvest at all.
The market remains concerned over "drought" in South America, although other than that there are few bullish stories around.
Nov/Dec rains in the major HRW wheat areas of Kansas, Oklahoma and Texas have been 200-300% above normal, according to Martell Crop Projections. That should be highly beneficial for American winter wheat.
Early Call On Chicago
21/12/11 -- The overnight grains posted modest losses, reversing three to four days of gains with beans down 6-8 cents, corn falling 3-4 cents and wheat down 4-6 cents. Crude oil is steady, although little changed and the US dollar is likewise.
Rain is in the forecast tonight and tomorrow for Argentina, easing traders concerns there, although after tomorrow it's back to dry if at least a little cooler.
The Australian Bureau of Meteorology says that the current la Nina episode is near it's peak and will gradually decline in Q1 of 2012.
Chinese customs data shows Brazil leapfrogging the US as the biggest supplier of soybeans so far in 2011. To the end of November China imported 19.8 MMT of Brazilian beans compared to 18.75 MMT from America.
US shipments to China in November were 2.46 MMT, down 35% on year ago levels.
There's just a week and a half left to go before the US ethanol blenders' tax credit gets removed. Ethanol producers margins have already taken a sharp cut in recent weeks and they're about to have another 45 cents/gallon taken off them.
US hard red winter wheat conditions should have improved from the 13% poor-very poor on November 27, the last report from the USDA, aided by a decent shot of moisture since then.
Early calls for this afternoon's CBOT session: beans down 6-8 cents, corn down 3-4 cents, wheat down 4-5 cents.
EU Rapemeal Prices
21/12/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Dec11 | n/a | n/a |
| Jan12 | 180.00 | unch |
| Feb/Apr12 | 167.00 | -1.00 |
| May/Jul12 | 165.00 | -2.00 |
| Aug/Oct12 | 147.00 | unch |
| Nov12/Jan13 | 151.00 | -1.00 |
| Feb/Apr13 | 153.00 | -1.00 |
Chicago Rally Continues
20/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.44 1/2, up 7 1/2 cents; Mar 12 Soybeans closed at USD11.54 1/2, up 7 3/4 cents; Jan 12 Soybean Meal closed at USD295.20, up USD2.20; Jan 12 Soybean Oil closed at 49.38, up 33 points. Beans were higher for the fourth straight session in a row on widespread concerns over dryness and heat in southern Brazil and Argentina. Funds bought an estimated 5,000 soybean contracts on the day as beans rose to their highest in four weeks. Some forecasts are citing rain for Argentina later in the week, although there are conflicting reports over the amount involved.
Corn: Mar 12 Corn closed at USD6.07, up 6 cents; May 12 Corn closed at USD6.15 3/4, also up 6 cents. This was the highest close for corn in more than a month. Funds bought around 7,000 corn contracts on the day on the back of the South American problems which could be worse for corn than they are for soybeans. "Moisture stress is building in Brazil corn and soybeans due to sub-par rainfall since November 1. Dry conditions would not be damaging in Brazil crops if generous rainfall developed the remainder of the summer season. Yet with a moderately strong La Nina in effect, there may be a reason to worry about drought," say Martell Crop Projections.
Wheat: Mar 12 CBOT Wheat closed at USD6.07 3/4, up 8 cents; Mar 12 KCBT Wheat closed at USD6.68, up 9 1/2 cents; Mar 12 MGEX Wheat closed at USD8.39 1/4, up 12 cents. Wheat got dragged higher for the third day in a row on the back of the South American story. Crop conditions in the US southern Plains are improving for winter wheat. Russian grain exports are expected to be around 17.5 MMT by the end of the year, with wheat accounting for around 12.2 MMT of that. The Ministry there now say that they'd be comfortable with total grain exports of 25 MMT for 2011/12, which potentially takes them through to the end of March at the rate of around 2.5 MMT/month. Kazakhstan have more than enough wheat to take up the slack after that.
EU Wheat Ends Mixed As Year End Approaches
20/12/11 -- EU grains ended mixed with Jan 12 London wheat down GBP0.20/tonne to GBP145.80/tonne, Jan 12 Paris wheat rising EUR2.75/tonne to EUR191.75/tonne.
London wheat was higher early in the day but slid into negative territory late on as the pound rose close to 1.20 versus the weak euro. For Paris wheat this was the highest close for a front month in six weeks.
UK merchants report that farmer selling interest has increased as ex farm levels have risen back into the GBP140.00/tonne plus range for the new year.
As well as expecting a record wheat crop this year Australia is in for an all time high OSR harvest too. The Australian Oilseed Federation is estimating output at a record 2.95 MMT, up 37% on last year.
India is also set to establish a record of it's own, bringing in a wheat crop in early 2012 in excess of this year's all-time high 85.93 MMT, according to the Farm Secretary there.
Russia is also re-writing the record books, having just harvested new highs for rapeseed (1.1 MMT), soybeans (1.5 MMT) and sunflower seed (8 MMT). Whilst it's bumper grain harvest of 92 MMT isn't am all-time high it is up more than 50% on last year.
Neighbouring Kazakhstan has a record wheat crop of it's own to market, whilst Ukraine has an all-time high grain harvest led by corn production that is up 75% on last year.
Meanwhile the US is expected to plant a post-war record area of corn in 2012.
It seems therefore that maybe this mini rally in grains is more to do with year-end profit-taking and book squaring than anything else. Only time will tell.
Early Call On Chicago
20/12/11 -- The overnight Globex session saw grains extend recent gains with beans around 5 cents higher, corn up 2-3 cents and wheat adding 3-6 cents.
Crude oil is a couple of dollars higher and the US dollar a bit weaker, both adding a bit of support.
South American weather concerns are what has seen corn add 22 cents and beans 37 cents since the middle of last week.
Other than that and the poor state of Ukraine's winter wheat crop there isn't much other bullish news on the table.
A bit like the credit card bill, the market seems to be thinking that it will re-assess and worry about Europe in the new year. Meanwhile there's profits to be banked and positions to be squared ahead of the year-end.
The Russian Ministry have confirmed a clean weight grain harvest of 92 MMT, which they say will allow them to export 25 MMT this season. Of that 15 MMT has already been shipped by the end of November and a further 2.5 MMT is expected to go this month.
India's Food Secretary says that the country will probably bring in a wheat crop in excess of last season's record 85.93 MMT early in 2012. Harvesting of that will begin in three months time.
In the US, weather conditions "have grown progressively wetter in the southern Great Plains the past 6 weeks, easing drought in hard red winter wheat," say Martell Crop Projections.
"The subtropical jet stream has been unusually strong carving out a pronounced trough over the Southwest United States. Waves of showers keep spinning out of the trough into the Southern Great Plains. The GFS model indicates the persistent trough which has been dominant for over 3 weeks may eventually lift out of the southern United States after Christmas. Between now and then, there will more chances for beneficial rainfall in hard red winter wheat," they add.
Conflicting weather forecasts for Argentina this afternoon have the GFS model showing 0.5 to 1.25 inch rains between now and the end of the week, whilst the European model is still calling things relatively dry.
Early calls for this afternoon's CBOT session: beans up 4-6 cents, corn up 2-3 cents, wheat up 3-5 cents.
EU Rapemeal Prices
20/12/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Dec11 | n/a | n/a |
| Jan12 | 180.00 | unch |
| Feb/Apr12 | 168.00 | -4.00 |
| May/Jul12 | 167.00 | -3.00 |
| Aug/Oct12 | 147.00 | -2.00 |
| Nov12/Jan13 | 152.00 | -1.00 |
| Feb/Apr13 | 154.00 | -1.00 |
London Wheat Posts Biggest One Day Gain Since July
19/12/11 -- EU grains ended with decent gains for once with Jan 12 London wheat up GBP4.00/tonne to GBP146.00/tonne and Jan 12 Paris wheat EUR5.00/tonne higher at EUR188.50/tonne.
For both London and Paris wheat this was the highest close for a front month in just over a month. For London it was the biggest one day gain since July.
The catalyst for today's rally seems to be a combination of a developing dryness in South America storyline, plus a reversal from oversold conditions and year-end book squaring/profit-taking.
Whether this is a major change of direction remains to be seen. Nothing has changed on the European debt front which has been the main thing driving the market down from the highs set in April/May.
Things don't look too rosy for wheat production in Ukraine for 2012 and there's a question mark hanging over Argentina's ongoing wheat harvest.
"Wheat near Bahia Blanca received only 57% of normal rainfall in August through to November based on official weather reports. This was a key period in crop development, winter to spring, when southern Argentina wheat was tillering and jointing. Heavy rainfall finally developed in November, replenishing field moisture in Buenos Aires, but It was too late for wheat to recover," say Martell Crop Projections.
"Late in the growth cycle, heavy rainfall boosted grain-filling in wheat, but poor germination previously had reduced plant populations. In addition, growth was stunted from prolonged drought. Poor vegetation in early November confirmed wheat damage in southern Buenos Aires, the main area where wheat is intensively cultivated," they add.
In contrast however Australia is expecting it's second record crop in a row and increased production is also on the cards from Europe in 2012 if the weather plays ball.
To get things into perspective Argentina's wheat crop is less than half that of Australia's and Ukraine's is only a seventh of Europe's.
Early Call On Chicago
19/12/11 -- The overnight grains posted decent gains to build on Friday night's advances with beans up 15-17 cents, corn 10-12 cents higher and wheat adding 8-10 cents. Crude oil is around half a dollar firmer, although it's still around USD6/barrel down on a week ago.
The market seems to be buying into the building weather story in South America, even though there is rain in the forecast for most of the troubled areas a week from now.
European woes appear to have been put on the back burner for now. Short-covering, profit-taking and year-end book squaring all look likely to feature this week.
There's a near record fund short on CBOT wheat and the smallest fund long on corn for 17 months. Indeed, "non-commercial investors" have cut their corn length from over 350,000 contracts back in February to just 50,000 lots as of last Tuesday, according to Agrimoney.com.
There has been some talk over what the implications may be, if any, of the death of North Korea's Kim Jong-il. Unrest and rising tensions in the region? Or maybe they'd like to forge a closer relationship with the west, and buy some grain? Probably neither.
Reports that they test-fired a short-range missile into the Sea of Japan this morning initially raised a few eyebrows but is now being played down as a routine event and of no significance.
A US winter storm will today see rain and snow become steadier and heavier this morning across northern Texas, Oklahoma and southern Kansas, which will be beneficial for winter wheat in the region.
Early calls for this afternoon's CBOT session: Beans up 15 to 20 cents, corn up 10 to 15 cents, and wheat up 5 to 10 cents.
Russian Exports
19/12/11 -- According to RusAgroTrans Russia grain exports were 15 MMT in the Jul/Nov period. With December's exports forecast at 2.5 MMT (similar to November's) that means that they should stand around 17.5 MMT at the end of the year.
If they continue at that rate in the new year than they are scheduled to hit their supposed 24-25 MMT limit mid-March 2012.
Looks like Christmas is coming late for Kazakhstan this year.
I wonder if Egypt already has any Russian wheat bought for delivery after this date? And if they do, what is Russia going to do about it? They aren't going to pull the plug on the world's largest wheat buyer two seasons in succession surely? And if they did what would Egypt have to say about it when the Russians come calling again once they have the 2012 harvest in the bag? That could depress prices then if the Russians simply say, OK we might be a bit unreliable so how cheap do we need to be now to get the order?
Questions, questions...
Ukraine Crops
19/12/11 -- Ukraine's Ag Ministry report only 27% of winter grains to be in good condition, with 39% rated satisfactory and 34% looking weak or thinned. On the rapeseed front things are pretty much split three ways, with around a third of the crop placed in each of the three categories.
One of the zillions of useful things about the blog is it's not too difficult to go back and see how things looked a year ago. To save you my busy reader the time and effort of having to do so, here's how things looked pre-Christmas in 2010:
"21/12/10 -- The Ukraine Ministry report that less than 7% of winter crops are in poor condition....Winter wheat is rated an impressive 57% good and 37% satisfactory. Barley is rated 44% good and 46% satisfactory, with OSR pegged at 54% and 36% respectively."
To save you the trouble of reaching for the calculator or using your fingers to add it up, you bone idle lot, that tells us that 6% of Ukraine's wheat was in a "two and eight" a year ago versus 34% now, with 10% of the rape crop looking sicker than Kim Jong-il compared to 33% this year.
EU Rapemeal Prices
19/12/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Dec11 | 188.00 | +10.00 |
| Jan12 | 180.00 | +5.00 |
| Feb/Apr12 | 172.00 | +8.00 |
| May/Jul12 | 170.00 | +10.00 |
| Aug/Oct12 | 149.00 | +2.00 |
| Nov12/Jan13 | 153.00 | +3.00 |
| Feb/Apr13 | 155.00 | +4.00 |
The Morning Vibe
19/12/11 -- The markets have started the week in positive mode with Globex wheat up 5-7 cents, corn up 7-8 cents and soybeans extending Friday night's gains by a further 12-14 cents. London wheat is following suit, with front month Jan 12 up three whole pounds by 10.30 am London time.
South American weather is the main reason, although some forecasters are calling for rain towards the end of the week.
"Two week rain totals of 1-2+ inches in all but NE Argentina and extreme S Brazil. 10-20 inches crosses C Brazil! 3-4 inches in parts of Buenos Aires," say QT Weather.
The death of nuclear-armed North Korea's head honcho Kim Jong-il over the weekend has caused a few jitters as it raises a questions over stability in the region. The dodgy self-proclaimed "Great Leader" appears to have an assortment of potential successors amongst his sons born to a motley crew of ex-wives, dancing girls and concubines.
The European debt issue is an ever present millstone around the neck of commodities in general however. Data from the ECB today reveals investors pulling a net EUR4.2 billion out of the eurozone during September. It seems unlikely that trend will have done anything other than accelerated in the ensuing months of chaos and uncertainty.
It seems likely that we will be in for a low volume week, with short-covering ahead of the Christmas holidays and year-end possibly seeing a bit of a rebound in the grains sector.
Chicago Close - Friday
16/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.30, up 18 1/4 cents; Mar 12 Soybeans closed at USD11.39 1/2, up 18 1/4 cents; Jan 12 Soybean Meal closed at USD290.30, up USD7.40; Jan 12 Soybean Oil closed at 49.55, dup 57 points. Jan 12 beans were 23 cents higher on the week. The market is still talking about weather concerns in South America. "Rio Grande do Sul, Brazil’s southernmost farm state and a key producer of corn and soybeans has been dry for over a month," say Martell Crop Projections. Further north things are less critical. In Mato Grosso "soybeans have been under heat and moisture stress for over a month, but growing conditions have stabilized recently with increasing showers. Recurring thunderstorms are developing in a trough of low pressure that extends from Mato Grosso in the Brazil interior to Minas Gerais on the Atlantic coast," they add. Informa Economics estimated the 2012 US soybean acreage at 74.608 million, down from the 76.1 million they forecast in November.
Corn: Mar 12 Corn closed at USD5.83, up 4 cents; May 12 Corn closed at USD5.91 3/4, up 4 cents. Mar 12 corn was 11 1/4 cents lower on the week. Informa Economics estimated the 2012 US acreage for corn at 94.389 million versus 94.0 million last month, around 2.5 million up on 2011 and a post-war record. Even so the South American weather story and spillover strength from beans was enough to see corn post modest gains by the close. Funds were said to have bought around 5,000 contracts on the day, although that would still place them selling something like 10,000 on the week. Ukraine remain aggressive sellers of their record 2011 crop and they could up their plantings around 12-15% in the spring due to lack of emergence issues amongst its winter wheat crop. A below-normal rainfall forecast for Southern Brazil in the week ahead could cause some yield losses for corn as pollination here typically peaks in December, say Martell Crop Projections.
Wheat: Mar 12 CBOT Wheat closed at USD5.83 3/4, up 4 1/2 cents; Mar 12 KCBT Wheat closed at USD6.39 1/2, up 2 cents; Mar 12 MGEX Wheat closed at USD8.11 1/4, down 4 1/2 cents. Chicago wheat was 12 1/4 cents lower on the week. The Buenos Aires Grain Exchange increased their forecast for wheat production in Argentina to 13.6 MMT from 13.0 MMT previously. That is still 0.9 MMT lower than the 14.5 MMT that USDA currently say however. In complete contrast the Ag Ministry there now say that this season's crop will only come in at 12.0 MMT, giving us a pretty wide spread considering that harvesting there is around halfway done. Informa Economics estimate US winter wheat plantings at 39.833 million, down 813,000 acres from last year. Funds still hold a sizable short in Chicago wheat, which may continue to limit downside potential, even though world stocks are seen at multi year highs, and close to the highest on record, at the end of 2011/12.
London Wheat Stuck In GBP140-145 Range
16/12/11 -- EU grains ended mixed with Jan 12 London wheat down GBP1.00/tonne to GBP142.00/tonne, Mar 12 unchanged at GBP142.05/tonne and May 12 up GBP0.30/tonne to GBP144.00/tonne. Jan 12 Paris wheat was up EUR1.75/tonne to EUR183.50/tonne.
On the week as a whole Jan 12 London wheat was GBP0.25/tonne lower. Jan 12 Paris wheat managed to do a bit better, posting a gain of EUR4.00/tonne. Prices the other side of the Channel got support this week from the ailing euro against which the pound rose to its best levels since February.
At the risk of repeating myself we remain stuck in a very narrow range. This was the twentieth session in a row that London wheat has closed within the GBP140-145.00/tonne band.
The problems in Europe continue to hang over the market. Ratings agency Fitch downgraded six of the world's largest banks and are now switching their attention to entire countries, revising its outlook on France to "negative" from "stable". They added that downgrades were also being considered for Belgium, Spain, Italy and Ireland amongst others.
Harvesting in the southern hemisphere is ongoing. The Buenos Aries Grain Exchange estimate the Argentine wheat crop at 13.6 MMT, up from 13.0 MMT previously. Private estimates suggest that Australia's crop could top 29 MMT, beating last year's record output.
As we head into the depths of winter early indications are that the EU-27 2012 wheat crop will be around 3-4% higher than in 2011 by virtue of better yields in the west.
Russian wheat is said to be in decent condition overall, but much of Ukraine's crop will need replanting in the spring. That may see a further switch into corn production there for 2012.
Informa Economics now peg US winter wheat plantings at 39.833 million acres, down 813,000 acres from last year. Spring wheat plantings are however expected to at least partially offset some of this reduction. Corn sowings there this spring are now seen at 94.389 million, a post-war record.
Russian wheat exports have slowed up a little from their early season phenomenal pace, whilst Ukraine has concentrated its efforts more on shifting it's record corn crop. Kazakhstan is left stuck with it's own record wheat harvest waiting for some spare capacity to become available at ports on the Black Sea.
EU Rapemeal Prices
16/12/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Dec11 | 178.00 | +3.00 |
| Jan12 | 175.00 | +4.00 |
| Feb/Apr12 | 164.00 | +4.00 |
| May/Jul12 | 160.00 | +2.00 |
| Aug/Oct12 | 147.00 | +2.00 |
| Nov12/Jan13 | 150.00 | -1.00 |
| Feb/Apr13 | 151.00 | -2.00 |
Morning Has Broken
16/12/11 -- There's not a great deal to inspire this morning. Soybeans seem to have managed to maintain a bit of upwards momentum carried over from last night and currently stand around 5-6 cents firmer in overnight trade. Wheat and corn didn't have any momentum yesterday and neither do they so far this morning with both trading around unchanged.
Agriculture and Agri-Food Canada have increased their production and export estimates for wheat and rapeseed. They've upped their wheat production estimate by 1.1 MMT to 25.3 MMT and increased exports from 17.0 MMT to 17.2 MMT. The rapeseed crop there is now seen at 14.2 MMT from 12.9 MMT previously, with exports rising from 7.1 MMT to 8.0 MMT.
The President of the Russian National Union of Grain Producers says that the country had a 98 MMT in bunker weight grain harvest, or 92 MMT in clean weight. That matches SovEcon's assessment of things released yesterday. Wheat production is seen at 56 MMT by the former and 56.5 MMT by the latter.
Winter wheat has been sown on 16.5 million hectares in Russia and crop conditions are said to be quite favourable with no significant losses of winter crops expected.
Not so in Ukraine where the Ag Minister says 2.3-3.0 million hectares will need replanting in the spring.
Fitch have downgraded six of the world's largest banks including Golden Sacks and our very own Barclays I read on the Beeb this morning: Slash
France's official statistics agency says that it expects the country to be shown to be in recession now and in Q1 of 2012.
S&P's have downgraded ten Spanish banks and the head of the IMF has likened the current situation to the Great Depression of the 30's.
Christian Noyer, the governor of the Bank of France, is the latest frog to chuck in his unwanted two-europenneth and simultaneously eject more toys out of the pram saying that the markets should "start by downgrading Britain" - the ponce.
There's a French bloke lives down the road from me. He was out at the weekend creosoting the fence, and then I walked past this morning and he's out there doing it all again. I said "hey mate, you've only just done that last week, you don't need to do it all again that stuff lasts for a good few years." To which he replied "non monsieure, we French, we always like to retreat as soon as possible."
CBOT Close
15/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.11 3/4, up 11 3/4 cents; Mar 12 Soybeans closed at USD11.21 1/4, up 11 1/4 cents; Jan 12 Soybean Meal closed at USD282.90, up USD0.70; Jan 12 Soybean Oil closed at 48.98, up 58 points. Weekly export sales of 468,600 MT were in line with trade expectations. Shipments were 1,008,300 MT with China once again taking the vast majority at 772,100 MT. The market bulls are desperate to get a weather story going in South America. Oil World dropped their Brazilian soybean crop forecast to 72.8 MMT, which falls in the middle of the range of 71.3-75.0 MMT that we have from other analysts. Funds bought 6,000 soybean contracts on the day.
Corn: Mar 12 Corn closed at USD5.79, down 1 3/4 cents; May 12 Corn closed at USD5.87 3/4, down 1 1/2 cents. Weekly export sales of 504,700 MT plus a small amount of 2012/13 were in line with expectations. Funds sold an estimated 4,000 contracts of the only CBOT grain in which they still hold a significant long position. Ethanol margins have collapsed in the past couple of weeks. It will be interesting to see how domestic US demand for corn holds up once the tax credit is removed at the end of the year. Ukraine says it has just about finished bringing in it's biggest corn crop of all time by some considerable margin.
Wheat: Mar 12 CBOT Wheat closed at USD5.79 1/4, down 1 1/2 cents; Mar 12 KCBT Wheat closed at USD6.37 1/2, up 2 cents; Mar 12 MGEX Wheat closed at USD8.15 3/4, unchanged. Heavy rainfall in hard red winter wheat is improving crop prospects, say Martell Crop Projections. "Rainfall the past 2 weeks was particularly heavy in Kansas, Oklahoma and Texas, the top bread wheat states, and 2-4 times the normal amount. Typically, Great Plains rainfall tapers off late in the fall season, but conditions have been wet this season with an active subtropical jet stream," they add. Weekly export sales were fair at 318,400 MT, shipments of 539,300 MT caught the eye as being the best for six weeks.
EU Wheat Rises Slightly But Remains In Narrow Range
15/12/11 -- EU grains ended mostly higher with Jan 12 London wheat up GBP1.25/tonne to GBP143.00/tonne, Jan 12 Paris wheat rising EUR1.00/tonne to EUR181.75/tonne.
Wheat opened lower following last night's stumble in Chicago, but managed to claw back into mostly positive territory by the end of the day, even if only marginally.
Farmers don't want to sell at these levels. Buyers are relaxed about buying, pointing to the fact that prices have fallen around a third in the past 7-8 months, so why should they be in a hurry? So we remain stuck in a tight narrow range.
Strategie Grains are predicting a rebound in EU-27 wheat production for 2012 with a crop here of 142.4 MMT, a 3.6% increase on this year. They are forecasting a total EU-27 grain crop of 290 MMT, some 5 MMT up on 2011.
Wheat production will rise in western Europe in 2012, where crops in France, Germany and the UK were adversely affected by drought in the spring and early summer of this year, they forecast.
EU-27 barley production will rise 2.4 MMT to 54.5 MMT, whilst corn output will fall by a similar amount to 62.2 MMT, they add.
The EU issued 252 TMT of soft wheat export licences for the week to Dec 13th, whilst that is up on last week's very poor showing it's still pretty modest. That takes the year-to-date total to 6.9 MMT, 35% down on last year. Cumulative wheat imports of 2.8 MMT meanwhile are 130% up on year ago levels.
Ukraine confirmed a record 2011 clean weight grain crop of 56.4 MMT, of which 22.4 MMT is wheat (up 33% on last year) and 22.3 MMT is corn (+87%). They will be very aggressive marketeers of corn in particular in 2011/12 as this is easily the largest crop they've ever had and domestic consumption is less than 8 MMT.
Russian analysts SovEcon upped their estimate of 2011 grain production there by 2 MMT to 92 MMT, increasing their wheat crop number by 1 MMT to 56.5 MMT - a 36% rise on last year.
27-1-1-1=24
15/12/11 -- The Czech Republic and Hungary have thrown a couple of spanners into the not quite so cozy Merkozy deal by saying that they won't after all buy into the proposed treaty changes if it means giving up their independent tax policies.
Santa's latest dwarf Sarkozy must be spitting blood about now, he only posted them their Christmas cards this morning, that's another couple of stamps wasted.
Credit Agriclosed
15/12/11 -- In a sign of the times French bank Credit Agricole, who's very origins are based in finance for farming, says that it is stopping trading in commodities.
The bank also says it is pulling out of 21 of the 55 countries where it operates and announced 2,350 job cuts yesterday. On a brighter note though 850 of those losing their jobs will be French, so every cloud eh?
Elsewhere, Germany’s second-largest bank Commerzbank is said to be in talks with the government there for a potential state bailout early in the new year, says today's FT.
Late Call On Chicago
15/12/11 -- The overnight Globex session saw beans finish around 8 cents firmer, with wheat 3-5 cents higher and corn flat. Crude is around 30 cents higher following yesterday's rout.
There's a bit of calm around today, but we all know that this can change at a moments notice. Spain managed to auction off EUR6 billion of bonds without difficulty, and at better rates than previously.
The USDA reported wheat export sales of 318,400 MT, corn sales of 504,700 MT and bean sales of 468,600 MT plus a small amount of 2012/13 corn. All three were in line with expectations. China took 123,700 MT of the corn and 354,200 MT of the beans.
Wheat shipments were 539,300 MT, the best for six weeks, and for once beating the level required to meet the USDA's 2011/12 sales target of 24.5 MMT.
SovEcon raised their Russian grain production estimate this season by 2 MMT to 92 MMT, with wheat output increased by 1 MMT to 56.5 MMT.
Ukraine says that only a very small area of corn there is left to harvest. The ministry there is expecting a clean weight grain crop of a record 56.4 MMT, of which 22.4 MMT is wheat (up 33% on last year) and 22.3 MMT is corn (+87%).
Dryness in Brazil and Argentina is catching a few eyes, although it's very early days to call it a drought yet.
Early calls for this afternoon: corn flat, wheat up 3-5 cents, beans up 7-9 cents.
EU Rapemeal Prices
15/12/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Dec11 | 175.00 | n/a |
| Jan12 | 171.00 | +7.00 |
| Feb/Apr12 | 160.00 | +3.00 |
| May/Jul12 | 158.00 | +4.00 |
| Aug/Oct12 | 145.00 | +1.00 |
| Nov12/Jan13 | 151.00 | +3.00 |
| Feb/Apr13 | 153.00 | +3.00 |
The Morning Rant
15/12/11 -- My newest mate Lourens in Argentina emails me to tell me that there is "no reason to panic" over dryness issues there just yet. He sends me this link to prove it: Eth, eth, eth, eth, eth, Chris Waddle. Scorchio. Rainio.. Which is unfortunately a local weather forecaster speaking in Spanish. What's wrong with the Queen's English? All weather forecasts should be in English, no matter what country they are for. We invented the weather just like we invented football, cats eyes and the telly. It's ours and we only let other countries have it because they pay us for it, just like the Premier League.
It seems that a brolly would make a nice Christmas present for your disgraced incontinent Aunty in Argentina with rain expected around Christmas Day. "Hot and wet can be nice," says Louren. Just like incontinence.
Elsewhere I read that one of the reasons that world markets fell out of bed yesterday was Angela Merkel saying something along the lines of that there would be no quick fix for the European debt crisis. Specialist subject: the bleedin obvious, as Basil Fawlty would say.
Sarkozy continues to make himself look like an even bigger "piquer" (Google it if you have to) than he did last week by accusing David Cameron of behaving like "an obstinate kid" in refusing to go along with last week's treaty changes. I strongly suspect that your Dad isn't bigger than Willie Carson, let alone Cameron's Dad, so just leave it will you Sarkozy before you get the rich kicking that you deserve.
Bad Boy ratings agency Fitch continue to run around like Edward Scissorhands on acid, cutting the credit ratings on Frog banks Crédit Agricole and Banque Federative du Crédit Mutuel and also the Finnish Pohjola Group, Holland’s Rabobank and Denmark’s Danske Bank.
The Daily Bellylaugh reports today that property prices in Beijing fell a whopping 35% last month. Yes in one month compared to the previous one. In signs that even China can't buck the trend forever: China's epic hangover begins
Yields at a Spanish bond auction today were slightly lower than previously, and well subscribed by all accounts. Even so the euro still looks about as popular as piles this morning.
CBOT Closing Comments
14/12/11 -- Soybeans: Jan 12 Soybeans closed at USD11.00, down 18 1/2 cents; Mar 12 Soybeans ended at USD11.10, down 19 cents; Jan 12 Soybean Meal finished at USD282.20, down USD1.20; Jan 12 Soybean Oil closed at 48.40, down 85 points. This was a 14-month closing low for beans and the lowest we've seen meal since June 2010. There was a general sell-off in everything on more European woes which saw the dollar firm to it's best levels in a year against the single currency. Crude oil tanked more than USD5/barrel, with funds selling an estimated 8,000 soybean contracts on the day. The November NOPA crush came in lower than expected at 141.3 million bushels. Trade estimates for tomorrow’s weekly export sales report range from 400 to 600 thousand MT.
Corn: Mar 12 Corn closed at USD5.80 3/4, down 13 3/4 cents; May 12 Corn finished at $5.89 1/4, down 14 cents. This was a one year low for corn caught up in broad-based liquidation with funds dumping an estimated 11,000 contracts on the day. The European debt problems just keep getting worse with yields on Italian bonds rising to a fresh euro-era high today. Crude oil fell out of bed, dragging corn with it. Some reports suggest that talk of dryness in South America is being over-hyped. Trade estimates for tomorrow’s weekly export sales report range from 400 to 600 thousand MT.
Wheat: Mar 12 CBOT Wheat closed at USD5.80 3/4, down 19 3/4 cents; Dec 11 KCBT Wheat closed at USD6.25 3/4, down 24 cents; Dec 11 MGEX Wheat settled at USD8.46, down 5 1/2 cents. Wheat succumbed to a general commodity sell-off that saw everything from gold to crude oil fall sharply. Funds sold an estimated 3,000 CBOT contracts on the day. Trade estimates for tomorrow’s weekly export sales report range from 300 to 400 thousand MT. Of more importance may be weekly shipments which have fallen behind of late. The European debt malaise continues to dog the market.
