EU Wheat Close
16/09/11 -- Nov London wheat closed GBP0.50/tonne higher at GBP161.75/tonne with Jan up GBP0.75/tonne at GBP163.75/tonne. Nov Paris wheat rose EUR0.25/tonne to EUR197.00/tonne with Jan also rising EUR0.25/tonne to EUR197.00/tonne.
On the week as a whole Nov London wheat was down GBP6.75/tonne (or 4%) whilst Nov Paris wheat fell EUR9.75/tonne (or 4.7%). On the month so far we have London wheat falling GBP9.00/tonne (5.1%), with Paris down EUR14.25/tonne (6.7%).
There's no great logical reason that I can come up with as to why London feed wheat should have fallen less than it's Parisian milling wheat counterpart. Strategie Grains have after all just decreased the proportion of milling wheat in this year's European crop by 3.1 MMT.
Whilst we know that French wheat is expensive relative to that coming out of Russia, as underlined again in this week's Egyptian tender, there's plenty of competition around for UK feed wheat too.
Maybe it's because there's a higher proportion of milling wheat around in the UK this year thanks to the dry spring/summer, and/or the narrow differential between feed wheat and barley. Or maybe it's simply because of the lack of liquidity in the London market?
On the political front, eurozone finance ministers have now agreed to delay the decision on releasing Greece it's next tranche of bailout funding until October. US Treasury Secretary Timothy Geithner meanwhile has criticised Europe's lack of unison over the debt crisis. Pot, kettle Mr Geithner surely.
Bored, Bored, Bored
16/09/11 -- The overnight trade is showing a modest reversal from last night's fairly steep declines. London and Paris grains have also opened a bit firmer on hopes that EU finance ministers will dig deep when US Treasury Secretary Timothy Geithner passes the Greek plate amongst his congregation once again this weekend.
A bit like the Mousetrap you have to wonder how much longer the whole bloody thing will drag on for.
A nameless company that I used to work for had a farm account that was always six months overdue, yet every time the rep came back with an order from Mr X the feed was always delivered. The attitude was always "well what else can we do, if we put him on stop he won't pay for all the other stuff he's already had."
Meanwhile, the ECB has teamed up with various other central banks including the BoE and Fed to conduct three US dollar liquidity-providing operations with a maturity of around three months taking us through to the end of the year.
Well, we've panned things out this long, so we might as well let it drag on a while longer yet. The patient(s) is/are still going to die, it just seems that he/they might just see one more last Christmas. Let's hope somebody gets a magic set from Santa.
Chicago Closing Comments
15/09/11 -- Soybeans: Nov 11 soybeans closed at USD13.58 3/4, down 24 cents; Jan 12 soybeans closed at USD13.70 1/4, down 23 1/2 cents; Oct 11 soybean meal closed at USD349.60, down USD9.20; Oct 11 soybean oil closed at 56.22, down 56 points. The much-hyped freeze threat proved to be a bit of a non-event. Disappointing weekly export sales and spillover weakness from corn added to the bearish feel, prompting funds to shed around 8,000 bean contracts on the day.
Corn: Dec 11 corn closed at USD7.01 down 23 1/4 cents; Mar 12 corn closed at USD7.14 3/4, down 23 1/4 cents. The lack of a killing frost prompted funds to dump around 25,000 contracts on the day, lightening the load a little but still leaving them soaked if not saturated with length. Export sales were better than expected, but even that didn't lend much support, with front month Dec coming perilously close to falling below the USD7/bu mark.
Wheat: Dec 11 CBOT wheat closed at USD6.96, down 8 1/2 cents; Dec 11 KCBT wheat closed at USD7.95 1/4, up 3 1/4 cents; Dec 11 MGEX Wheat closed at USD8.71, up 6 1/4 cents. Chicago wheat fell on spillover weakness from corn, with funds selling an estimated 3,000 contracts on the day. Weekly export sales were in line with expectations but hardly impressive. Another victory for Russian wheat in yesterday's Egyptian tender, where US wheat wasn't even offered for the second week running, highlights US uncompetitiveness to some destinations.
EU Wheat Close
15/09/11 -- EU grains finished sharply lower with Nov London wheat down GBP3.50/tonne to GBP161.25/tonne and Nov Paris wheat ending EUR5.25/tonne weaker at EUR196.75/tonne.
This was the lowest close for both in more than a month. Corn, rapeseed and malting barley also finished with hefty losses.
Another clean sweep for Russia in yesterday's Egyptian tender maybe highlighted the fact that they look set to continue to dominate the wheat export arena for some time yet.
The Russians have harvested 74.1 MMT of grain (in bunker weight) by Sept 13th off 69% of the planted area. That theoretically puts them on target for a final clean weight harvest of close to 100 MMT, much higher than current Ministry estimates and only 8 MMT shy of the post Soviet era record of 108 MMT set in 2008.
There was mixed news from French analyst Strategie Grains who cut their EU-27 soft wheat production estimate by 0.9 MMT to 129 MMT, they also reduced their estimate on milling wheat's share of the crop by 3.1 MMT to 83.5 MMT. That does however leave more feed wheat around to get rid of.
EU wheat export potential this season they only see at 15 MMT which is 1 MMT below the USDA and down by a third on last season.
Brussels confirmed weekly soft wheat export licences of 406 TMT during the past week bringing the year-to-date total to 2.93 MMT, 39% down on a year ago. In addition wheat imports are massively up on twelve months ago at 2.37 MMT, meaning that 11 weeks into the marketing year in reality we've only been a modest net exporter of little more than half a million tonnes of wheat. A year ago that figure was almost 4.5 MMT.
Strategie Grains also said that heavy summer rains had created "near perfect conditions" for the EU corn crop which is now forecast at a near record 61.7 MMT.
Early Call On Chicago
15/09/11 -- The overnight grains finished with wheat and corn 5-7 cents lower and beans down around 3-5 cents. Crude is half a dollar firmer.
Weekly export sales for 2011/12 came in at 413,500 MT for wheat (against expectations of 300 to 600 TMT), 1,127,300 MT for corn (400 to 700 TMT) and 351,900 MT for beans (400 to 600 TMT). There was also 41,100 MT of corn sold for delivery in 2012/2013 to Japan.
So corn sales were strong, wheat sales so so and bean sales a bit disappointing.
Frost did occur in the eastern Dakotas and Minnesota overnight, although crop damage is expected to be minimal.
US wheat was a "no show" for the second week running in Egypt's latest tender yesterday where prices were down around USD12/tonne on last week.
The trade feels somewhat lethargic today. There's a bit of optimism surrounding Greek debt and European stocks are higher yet grains look like they couldn't buy a rally at the moment.
Front month beans have lost almost 70 cents since the end of August, with corn down nearly 40 cents and wheat falling 45 cents in the same timeframe. The weight of length stacked up on corn in particular leaves the market vulnerable to further price corrections once sell stops start to get triggered.
"When it's obvious to everyone that corn can only go one way, then it's obviously time to get out."
Early calls for this afternoon's CBOT session: beans and wheat 4-6 cents lower, corn down 2-4 cents.
The Morning Vibe
15/09/11 -- London and Paris wheat have opened weaker, falling to their lowest levels in almost a month, with Nov Paris wheat slipping below EUR200.00/tonne for the first time since Aug 19th.
The reason seems to be apathy more than anything else. Egypt booked Russian wheat again yesterday, with French origin once more proving too expensive.
Strategie Grains have cut their EU-27 soft wheat production estimate for this season to 129 MMT, and reduced the milling wheat share of that to 83.5 MMT citing heavy rains in August in Germany, Poland, Scandinavia and the Baltic states as having an adverse affect on quality. Even so that's substantially more than the 69 MMT rated as milling grade last season.
Those same rains look like providing Europe with a bumper corn harvest this year though, with production rising to 61.7 MMT, the French analysts say. That's 700,000 MT more than the USDA's latest projection released on Monday.
The HGCA say that the UK wheat harvest is 96% complete and the spring barley crop is 77% done (although it's only at about the halfway point in Scotland).
Those useless muppets at Defra say that UK wheat plantings were 1.8 million hectares for this season's harvest, a record 660,000m ha for rapeseed and 615,000m ha for barley. They also said that they fancy England's chances for the 1966 World Cup.
Ukraine held 21.9 MMT of grain stocks as of September 1st, an increase of 20% year-on-year, according to the state statistics committee.
Greece says that it IS going to do what it promised to do but hasn't managed to do yet. It's been busy what with the kid being off and civil unrest and everything, it's all in hand so there's no need whatsoever to worry and can it have the next installment please. And no cheques either, a bank transfer this afternoon would be good. The market strangely seems reassured by that.
A man has been arrested in London over allegations of rogue deals, say the BBC. Mr Wenger says that he made those signings in good faith.
A 42 year old Dutch woman who called her "boyfriend" an average 178 times a day for a year (that's 65,000 times to save you the trouble) is to face charges of stalking, say the BBC. I didn't know that MrsN#2 was Dutch.
Chicago Close - Wednesday
14/09/11 -- Soybeans: Sep 11 soybeans closed at USD13.74, down 7 1/4 cents; Nov 11 soybeans closed at USD13.82 3/4, down 9 cents; Sep 11 soybean meal closed at USD357.90, up USD0.60; Sep 11 soybean oil closed at 56.75, down 41 points. Beans are still hungover from Monday's bearish USDA report. To add insult to injury the NOPA soybean crush for August came in at 118.8 million bushels, below the 119.7 million expected and 4.2 million down on August 2010. Trade estimates for tomorrows weekly export sales report are 400 to 600 thousand MT. Bulls are keen to focus on the frost threat for the Upper Midwest across the next couple of days.
Corn: Sep 11 corn closed at USD7.13, up 3 3/4 cents; Dec 11 corn closed at USD7.24 1/4, up 1 1/4 cents. Monday's report was mixed for corn, showing reduced US production but also lower consumption. There's talk of Argentina having a larger crop than the USDA currently estimate and of them authorising more exports from what is the world's biggest competitor to US corn. Trade estimates for tomorrows weekly export sales report are in the region of 400 to 700 thousand MT.
Wheat: Sep 11 CBOT wheat closed at USD7.01 3/4, up 13 cents; Sep 11 KCBT wheat closed at USD7.65 1/2, down 12 cents; Sep 11 MGEX Wheat closed at USD9.29, up 2 1/4 cents. The frost threat in the northern Plains is only a minor risk to wheat. Egypt bought Russian wheat once again in today's tender, underlining the uncompetitive nature of US wheat. Trade estimates for tomorrows weekly export sales report range from 300 to 600 MT.
EU Wheat Close
14/09/11 -- EU grains finished mixed with Nov London wheat down GBP0.50/tonne to GBP164.75/tonne and Nov Paris wheat ending EUR1.00/tonne lower at EUR202.00/tonne. There were some gains on new crop months (Nov 2012 onwards) for both London and Paris.
The euro was a little firmer, particularly against the pound, on hopes that German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou may be able to thrash out a solution to the Greek debt problem.
The pound stayed rooted below 1.58 against the dollar for much of the day on news of UK unemployment rising and union calls for mass strikes in protests over pension contributions.
The trade is still digesting Monday's USDA reports, in which they forecast amongst other things EU wheat exports in 2011/12 falling below those of Australia and Canada, placing us only fourth in the world's largest exporter of the grain this season, having been second on 2010/11.
Russia bought 420,000 MT of all Russian wheat in it's latest tender today at prices around USD278-279/tonne, that's some USD12/tonne or so lower than last week's purchases.
To me this kind of proves that whatever world prices do - up, down or sideways - whilst they still have wheat to sell Russia will just keep on undercutting things by ten dollars or so just to make sure that they get the business.
Exports from the Black Sea powerhouse are showing no sign of letting up any time soon, and it may take until the new year to see signs of any significant slowdown.
Early Call On Chicago
14/09/11 -- The overnight grains finished mixed with beans and corn around 4-6 cents lower and wheat flat to 2/3 cents firmer. Crude oil is half a dollar weaker.
European debt concerns haven't gone away, although there seems to be a degree of optimism about so far today. The French, German and Greek leaders are to apparently try and pull a rabbit out of the hat to calm the markets today.
EU Commission president Jose Manuel Barroso is advocating plans for the 17 eurozone nations to issue joint bonds, an idea that many (but not Germany) seem to like.
The chance of frost in the Upper Midwest is seen diminishing, there's also a decent shot at some rains for the dry southern Plains ahead of winter wheat planting.
The NOPA soybean crush for August came in at 118.8 million bushels, below the 119.7 million expected and 4.2 million down on August 2010.
The trade is awaiting the results of Egypt's latest wheat tender, the arrival of Kazakhstan on the scene is expected to keep a lid on recent Russian price rises.
The USDA have just confirmed the sale of 106,000 MT of US soybeans to China under the daily reporting system.
China's CNGOIC says that it will produce "more than 180 MMT" of corn this year, a record volume and 2 MMT more than the USDA said on Monday, but then again what else would you expect them to say?
No sooner do we have Monday's eagerly awaited production and S&D numbers than we find ourselves looking for direction again.
Early calls for this afternoon's CBOT session: wheat flat to 2 cents firmer, corn down 3-5 cents and soybeans down 4-6 cents.
Ukraine Latest
14/09/11 -- The grain harvest in Ukraine currently stands at 35.7 MMT off 75% of the planted area, say the Ministry there.
Effectively there's just the corn crop left to bring in to finalise grain harvesting. The wheat crop stands at 23.2 MMT and the barley harvest at 9.5 MMT. Both are higher than Monday's upwardly revised USDA forecasts, by 1.2 MMT and 0.5 MMT respectively.
The corn harvest is only just past the half million tonne mark, with final output now expected to be 18 MMT according to the USDA, an increase of more than 50% on last season.
My chum and man on the ground over there however, Mike Lee, is however "a little more reserved" with his optimism for a bumper corn crop. (See here).
The Morning Rant
14/09/11 -- The overnight markets are mostly a little lower, led by beans which are down around 10 cents, with corn 4-6 cents easier and wheat flat to down 3 cents. Crude is a dollar or so lower.
Note that September CBOT contracts go off the board today.
UK unemployment has just had its biggest quarterly rise in two years, coning in at 2.51 million, with youth unemployment now standing close to 1 million. It's not their fault, they're busy texting each other, Facebooking and looting shop windows. Then there's the giro to cash and everything, there simply aren't enough hours in the day to fit in work as well.
A winter of discontent is looming as Unison and the Public and Commercial Services Union call for mass strike action in the continued row over pension contributions. The gay, leftie pen-pushers. Bring back the birch and hanging I say.
Credit rating agency Moody's have downgraded French banks Credit Agricole and Societe Genrale citing their exposure to Greek debt. A third, BPN Parabis, is on review for sounding a little too much like the BNP.
The slippery Gyppos are back in the market tendering for wheat today, as you might guess Russia, Kazakhstan and Romania are the favourites.
Sarkozy, Merkel and the Greek PM Greek George Papandreou are apparently meeting today for what the media are calling "crisis talks." Sarkozy was sure that he put his Rolex on this morning, but it somehow seems to have disappeared. "It was like shaking hands with a big sweaty octopus," he said.
Chicago Closing Comments
13/09/11 -- Soybeans: Sep beans closed 6 1/4 cents lower at USD13.81 1/4, with Nov beans falling 4 1/2 cents to USD13.91 3/4. Sep meal was down USD2.80 to USD357.30 and Sep oil fell 9 points to 57.16. A firmer opening quickly turned negative with funds exiting 5,000 soybean contracts and 3,000 meal & oil on the day. Monday's surprisingly bullish increase in yields still hangs over the market. Good/excellent ratings Monday night were left unchanged when many had been expecting a one or two point decline. The potential for an early frost across this next couple of nights prevented beans from matching more extensive losses in corn and wheat.
Corn: Sep corn fell 25 cents to USD7.09 1/4 and Dec declined 22 1/2 cents to USD7.23. Funds dumped 15,000 contracts triggering sell-stops which maybe exaggerated today's declines a little. Corn good/excellent conditions were surprisingly raised one point to 53% last night when the trade had been anticipating a 1-2 point decline. Despite cutting their US corn crop estimate by a bit more than expected on Monday, the USDA also slashed consumption from the feed sector, exports and even ethanol usage. In addition although US production was cut 10.6 MMT from last month, increases in output from South America, the EU-27 and Ukraine and a fall in global demand saw world ending stocks raised by almost 3 MMT in 2011/12.
Wheat: Dec CBOT wheat fell 25 1/4 cents to USD7.02, whilst Dec MGEX was down 24 3/4 cents to 8.76 3/4 and Dec Kansas wheat fell 23 1/2 cents to 8.02 1/2. Funds were said to have jettisoned 5,000 Chicago contracts on the day in a broad-based grains sell-off. The USDA cut export potential for the US this season by 2 MMT on Monday as current levels combined with a firm flight to safety dollar price American wheat out of the market. Egypt is tendering again for wheat, as you may recall US wheat wasn't even offered against their last tender. Spillover weakness from corn was also a negative influence for wheat today.
EU Wheat Close
13/09/11 -- Nov London wheat closed GBP2.15/tonne lower at GBP165.25/tonne with Jan down GBP2.05/tonne at GBP166.85/tonne. Nov Paris wheat fell EUR5.00/tonne to EUR203.00/tonne with Jan declining EUR4.75/tonne to EUR203.50/tonne.
Customs data shows UK exports fell sharply in July compared with the same month in 2010, with wheat shipments down by 58%, barley exports falling 69% and foreign rapeseed sales down 25%.
Meanwhile domestic demand also remains slack with buying interest from the feed sector sluggish and rapeseed crushers across the EU reportedly more interested in selling seed than buying it due to poor margins.
Risk aversion is still a factor with European debt still high on everybody's worry list.
The market also still seems to be suffering a bit of a hangover from Monday's USDA reports which raised world wheat production by 6 MMT, but consumption by only 2 MMT in 2010/11, upping ending stocks to 194.6 MMT.
Those numbers included a 2.3 MMT increase in wheat output for the EU-27. Whilst there may be quality issues once again surrounding the German crop, volume there was seen benefitting from summer rains and increased by 800,000 MT.
EU Wheat Close
12/09/11 -- EU grains finished mixed with Nov London wheat falling GBP1.10/tonne to GBP167.40/tonne and Nov Paris wheat climbing EUR1.25/tonne to EUR208.00/tonne.
The eagerly awaited USDA reports were a mixed bag for corn, but a bit bearish for wheat and quite negative for beans. US corn yields and production were cut a bit more than anticipated, but these reductions were more than made up for by decreases in demand.
Usage was cut by 400 million bushels in total, with the livestock sector taking its smallest volume in 16 years at 4.7 billion bushels and even ethanol demand is seen falling slightly. US exports will also fall to a 9 year low, they added.
For wheat, world production was increased by 5.7 MMT for 2011/12 to 194.6 MMT, an output only beaten once in the last ten years, thanks to increases for Canada (up 2.5 MMT to 24.0 MMT) and the EU-27 n(up 2.3 MMT to 135.8 MMT).
Elsewhere Russia has harvested 71.5 MMT of grain to Sept 1st with a third of the harvest still to go, the agriculture ministry said Monday. Average yields are 2.45 MT/hectare, compared with 1.97 MT/ha in 2010.
That potentially still leaves the country on target to exceed the government's stated target of 90 MMT this year.
The USDA Numbers/Early Call
12/09/11 -- The long awaited USDA numbers are out, pegging US corn production this year at 12.497 billion bushels, a fraction under the 12.519 expected using a yield of 148.1 bu/acre which is again a little below the average trade guess of 149 bu/acre.
Soybean yields however are increased 0.4 bu/acre from last month's 41.4 bu/acre to 41.8 bu/acre, whereas the trade was expecting a 0.4 bu/acre decrease. This gives us a total crop figure of 3.085 billion bushels, 53 million above expectations.
As far as ending stocks go 2010/11 corn carryout is 920 million bushels, 20 million down from last month and 36 million below expectations. For 2011/12 ending stocks are 672 million bushels, versus 714 million last month, but higher than the 636 million expected.
Soybean ending stocks for 2010/11 are 225 million bushels (230m last time and 226m expected. For 2011/12 we have 165 million (155m; 151m).
The 2011/12 wheat ending stocks are raised from 671m bushels to 761m compared to the 663m expected.
On a global basis world corn ending stocks for 2010/11 were raised from 122.9 MMT to 124.3 MMT, and for 2011/12 they were increased from 114.5 MMT to 117.4 MMT (vs 112.5 MMT expected).
The 2011/12 world wheat crop is increased from 672 MMT to 678 MMT.
The numbers look neutral for corn, but a little bearish for wheat and quite bearish for soybeans. Early calls see beans down 10-20 cents, with wheat down 5-10 cents and corn flat to 5 cents lower.
The Morning Vibe
12/09/11 -- Global stock markets continue to fall this morning, adding to Friday's steep declines with the FTSE100 already down 142 points. The French CAC is almost 5% lower, and the German DAX down more than 3% in early trade.
No surprises for guessing that it's the threat of a Greek debt default that's causing the concern. NYMEX crude is down almost two dollars as the US dollar threatens to break through support at 1.58 against the pound.
The overnight grains are around unchanged however, despite dollar strength, which is a pretty decent performance under the circumstances as the market awaits this afternoon's USDA reports.
Unless you have been living in a cave, or held pikey prisoner in Leighton Buzzard, you will probably know by now that the trade is expecting a US corn/soybean production estimate of just over 12.5 billion and 3.0 billion with yields coming in at 149bpa and 41bpa respectively.
The USDA will also report on crop conditions after the close, once again I'd expect a drop in good/excellent for both corn and beans of 1-2 percentage points.
Chinese soybean imports are slowing a little, with August coming in at 4.5 MMT, 5% down on last year and 16% down on July.
WxRisk says that the chance of a frost in the Dakotas, northern Iowa, Minnesota and Wisconsin later this week is "pretty high" as a "strong cold front will arrive over the upper Plains from south central Canada late on the 13th into the 14th and sweep rapidly to the Midwest reaching the East coast by the morning of the 15th."
Once we get the USDA out of the way this frost threat story could cause some excitement. However the threat of a Greek default and the domino effect that would cause could overshadow the bullish fundamentals.
