Chicago Closing Comments - Friday
18/11/11 -- Soybeans: Jan 12 Soybeans closed unchanged at USD11.68 1/4; Mar 12 Soybeans closed at USD11.78 1/4, down 1/4 cent; Dec 11 Soybean Meal closed at USD298.40, up USD3.90; Dec 11 Soybean Oil closed at 50.88, down 52 points. Beans were marginally higher on the week and meak & oil a tad lower. Funds were modest buyers of around 1,000 soybean contracts on the day as the USDA announced the sale of 124,500 MT of soybeans to China. the Buenos Aires Cereals Exchange forecast soybean plantings in Argentina at 18.85 million hectares, up from the 18.60 million hectares estimated last week. European debt problems continue to pressure the market and cap gain potential.
Corn: Dec 11 Corn closed at USD6.10 1/4, down 4 1/4 cents; Mar 12 Corn closed at USD6.18, down 5 1/4 cents. Corn was down 28 1/4 cents, or 4.4%, on the week. Funds were said to have sold 8,000 contracts on the day and 30,000 on the week. Crude oil was lower on the European debt situation, and the firm dollar continues to hamper US exports which were the lowest in more than a year last week in yesterday's weekly sales report. Competition is hotting up for US corn on the export front. The corn harvest in Ukraine is 88% complete producing a crop of 19 MMT so far, according to the Ministry there.
Wheat: Dec 11 CBOT Wheat closed at USD5.98 1/4, up 5 3/4 cents; Dec 11 KCBT Wheat closed at USD6.68 1/2, up 2 cents; Dec 11 MGEX Wheat closed at USD9.17 1/4, down 7 3/4 cents. Chicago wheat was down 18 1/2 cents on the week, with Kansas falling 35 1/2 cents and Minneapolis down 17 cents. Farmer selling is light at these levels, but so is export demand as US wheat remains over-priced relative to other origins around the world, despite recent price falls. Egypt tendered for wheat after the close of Chicago, once again it will be a surprise if US wheat is even offered it is priced so far out. The Buenos Aires Grains Exchange increased it's estimate on Argentine wheat production to 13 MMT from 12.6 MMT.
London Wheat Sets Third 15 1/2 Month Low Of The Week
18/11/11 -- EU grains ended lower with Nov 11 London wheat down GBP2.45/tonne to GBP142.60/tonne and Jan 12 Paris wheat EUR1.00/tonne easier at EUR182.00/tonne.
It's been a resolve testing week for the bulls with London wheat losing GBP6.15/tonne and Paris wheat a more modest EUR2.50/tonne since last Friday.
London wheat has closed at it's lowest since late July 2010 today, the third time it has reset that record this week.
The European debt crisis is going from bad to worse, and news that today's meeting in Berlin between David Cameron and Angela Merkel achieved little in the way of progress whilst not surprising is disappointing.
Brussels only issued export licences for 241,000 MT of soft wheat this week bringing the year to date total to 5.8 MMT, 37% down on this point last season. US wheat exports are also falling well behind schedule.
Export competition is fierce on a global basis with Australia reporting a much larger crop than realised last season and another potentially bumper crop on the way in 2011/12.
The Buenos Aires Grains Exchange increased their estimate for wheat production in Argentina this season to 13.0 MMT from 12.6 MMT.
Meanwhile Ukraine is stepping up it's grain exports, shipping as much corn abroad in the first half of November as it did in the whole of October. The Ukrainian Agrarian Confederation are forecasting a final record corn crop of 21-22 MMT there this season.
EU Rapemeal Prices
18/11/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Nov11 | 159.00 | -1.00 |
| Dec11 | 159.00 | -2.00 |
| Jan12 | 159.00 | -3.00 |
| Feb/Apr12 | 160.00 | -2.00 |
| May/Jul12 | 158.00 | -4.00 |
| Aug/Oct12 | 143.00 | -2.00 |
| Nov12/Jan13 | 150.00 | -1.00 |
The Morning Vibe
18/11/11 -- The overnight Globex market is a bit firmer after last night's steep losses, London and Paris wheat are lower still trying to catch up with what happened in Chicago yesterday.
The Telegraph report that Asian investors are now selling German bonds as they gear up to pull their money out of Europe completely. If bunds aren't good enough for them then they certainly don't want Spanish, Italian or even French debt. The "exodus marks a dangerous inflexion point in the unfolding drama," they say. I agree, this thing is starting to accelerate out of control.
Eurozone jitters haven't turned to panic yet, but we might not be far off. Spain holds a general election on Sunday having just having had to pay the highest yields on ten year bonds in 15 years yesterday, a smidgen under the 7% level deemed unsustainable.
Russia's harvest stood at 96 MMT as of Nov 1st off 93% of the planted area, according to Rosstat. The corn harvest was 60% done as of that date, they add.
Reuters report the Russian wheat harvest at 59.4 MMT as of Nov 16th. They don't say whether that is is clean or bunker weight, the latter I assume, making the clean weight total likely to be around 56.5-57.0 MMT.
The corn harvest in Ukraine is 88% complete producing a crop of 19 MMT so far, according to the Ministry there.
After a couple of weeks of promising numbers Brussels only issued export licences for 241,000 MT this week bringing the year to date total to 5.8 MMT, 37% down on this point last season.
There's intense competition developing for what export business is around and the EU and US are certainly closer to the back of the queue than the front.
Chicago Dives
17/11/11 -- Soybeans: Jan 12 Soybeans closed at USD11.68 1/4, down 19 1/2 cents; Mar 12 Soybeans finished at USD11.78 1/2, down 19 1/2 cents; Dec 11 Soybean Meal ended at USD294.50, down USD1.90; Dec 11 Soybean Oil closed at 51.40, down 108 points. European jitters were back leading to a broad-based commodity sell-off. Crude slumped the best part of four dollars to end below USD99/barrel, a disappointing performance having waited since June to close above that psychologically important level for the first time on Wednesday. Spillover weakness for corn and wheat pressured soybeans despite better than expected weekly export sales of 746,100 MT for 2011/12 and the confirmation of private exporters selling an additional 420,000 MT to China.
Corn: Dec 11 Corn ended at USD6.14 1/2, down 28 1/4 cents; Mar 12 Corn closed at USD6.23 1/4, down 28 3/4 cents. Weekly export sales were very poor at 208,900 MT compared with expectations of between 350 and 600 thousand MT and the lowest in more than a year. There's plenty of evidence that world buyers are switching away from US corn to cheaper alternatives from Ukraine or even India, or buying Black Sea/Australian feed wheat. Argentina is alos expected to ship 15 MMT of corn i 2011/12. Stop loss selling was also a feature as corn crashed to its lowest close almost six weeks with funds selling an estimated 25,000 contracts.
Wheat: Dec 11 CBOT Wheat closed at USD5.92 1/2, down 24 1/4 cents; Dec 11 KCBT Wheat ended at USD6.55 1/2, down 20 1/2 cents; Dec 11 MGEX Wheat finished at USD9.25, down 8 1/2 cents. This was the first time we've seen a front month Chicago contract close below USD6/bushel since July 1st. Weekly export sales were a bit below expectations at 317,000 MT for 2011/12 and 17,500 MT for 2012/13 delivery. More important than that though is weekly shipments missing the required volume to hit the USDA's 2011/12 export target for five weeks in the past six. The strong dollar and bumper harvests around the world are making other sellers far more aggressive than the US.
EU Grains Slump
17/11/11 -- EU grains finished slumped lower (with the exception of malting barley) with Nov 11 London wheat down GBP2.25/tonne to GBP145.05/tonne and Jan 12 Paris wheat falling EUR3.50tonne to EUR183.00/tonne.
This was another fresh more than 15 month low for a front month for London wheat.
French analyst Strategie Grains suggest that the 2011 EU-27 soft wheat harvest was 129.5 MMT, which is 400,000 MT up on their previous estimate.
They also increased their corn production forecast by 1 MMT to 64.4 MMT, a hefty 16% rise on last year. French output alone was seen 0.5 MMT higher than last month at 15.8 MMT, 0.6 MMT higher than the latest USDA estimate. Production in Romania was also increased to 10.1 MMT making it the second largest grower in the EU-27.
Looking ahead to 2012 they estimate the EU-27 soft wheat crop nearly five percent higher at 135.8 MMT, with the planted area up 100,000 hectares to 23.2 million. Barley plantings are seen rising by 200,000 hectares to 12.1 million, with corn sowings flat at 8.9 million hectares as the area fallow declines by 300,000 hectares to 5.7 million.
The Australian Bureau of Statistics said that wheat production there last season may in fact have been a stunning 27.9 MMT, a 28% increase on 2009/10 and far higher than any other estimates have been. Thailand became the latest Asian buyer of Australian feed wheat today, booking 150,000 MT in favour of more expensive US corn.
US wheat and corn sales were a disappointment in today's USDA export sales report, and wheat shipments are now starting to lag well behind the levels required to meet what is starting to look like an increasingly ambitious USDA target of 26 MMT of exports in 2011/12.
Early Call On Chicago
17/11/11 -- The Globex grains were mostly lower with wheat down 3-5 cents, corn down 4-6 cents and beans 3-4 cents weaker. Having convincingly broke through the USD100/barrel mark yesterday WTI crude is now in danger of falling back below it, currently down USD1.67/barrel at USD100.92/barrel.
Right at this moment beans are the strongest leg of the three and wheat the weakest. Beans will be supported by news from the USDA confirming private exporters selling 420,000 MT of US soybeans to China. That would appear to be the Sinograin business reported yesterday.
The USDA also reported weekly export sales for beans of 746,100 for 2011/12 plus a further small quantity for 2012/13, above the 500-700 TMT expected. Corn sales were disappointing at 208,900 MT versus the 350-600 TMT anticipated. Wheat sales were also a let down at 317,100 MT for 2011/12.
Wheat shipments are continue to lag. We are 24 weeks into the 2011/12 marketing year and cumulative shipments are at 12.6 MMT, meaning that the US need to export at the rate of 478,500 MT/week for the rest of the season to hit the USDA's 26 MMT target. They have now failed to match that total in five of the last six weeks.
Competition in the world marketplace is hotting up, with Algeria surprising by placing a 500,000 MT wheat order with South America rather than it's normal preferred supplier - France. Japan also turned it's back on America to buy corn from Ukraine yesterday.
Grain shipments from the latter are now starting to accelerate after a slow start, thanks to the recent removal of export duties.
The 2011 Agriculture Census released by the Australian Bureau of Statistics today says that wheat production there last season may in fact have been a stunning 27.9 MMT, a 28% increase on 2009/10 and 1.6 MMT higher than ABARES previously stated.
Euro nervousness is spreading with yields on Spanish 10-year bonds now almost 7 percent.
Early calls for this afternoon's CBOT session: corn down 4-6 cents, wheat down 3-5 cents, beans down 2-3 cents.
The Lunchtime Rant
17/11/11 -- We've got the builders in, which isn't a euphemism for something else, it also means that the electric has been off for half the morning hence the lack of blog activity.
Things seem to be accelerating as more wheels start to fall off the European debt-laden juggernaut by the day.
Spain's borrowing costs have reached a Euro-era high I see at today's bond auction, falling a fraction shy of hitting the generally accepted as unsustainable rate of 7 percent. At a similar auction just a month ago yields were 5.433 percent and now they are 6.975 percent.
The yield differential between French and German bond yields has also widened to a new record high this morning. Aren't France supposed to be one of the rescuers?
Demonstrations are underway in Italy meanwhile as new PM "Super Mario" Monti tries to push through new austerity measures of his own. Elsewhere the IMF's head of Europe has resigned "for personal reasons" in the midst of the crisis.
The patients are dropping like flies and now the doctors are either going down with the same symptoms or resigning. Oh dear.
EU Rapemeal Prices
17/11/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Nov11 | 160.00 | -1.00 |
| Dec11 | 161.00 | -2.00 |
| Jan12 | 162.00 | -3.00 |
| Feb/Apr12 | 162.00 | -3.00 |
| May/Jul12 | 162.00 | -2.00 |
| Aug/Oct12 | 145.00 | unch |
| Nov12/Jan13 | 151.00 | -1.00 |
Chicago Soymeal Ends At 13-Month Low
16/11/11 -- Soybeans: Jan 12 Soybeans closed at USD11.87 3/4, down 12 1/2 cents; Mar 12 Soybeans closed at USD11.98, down 12 1/4 cents; Dec 11 Soybean Meal closed at USD296.40, down USD5.00; Dec 11 Soybean Oil closed at 52.48, down 12 points. This was the lowest close for a front month on meal for thirteen months. Meal has been the weakest leg of the three of late due to strong demand for oil from the biodiesel sector. NYMEX crude closed above USD100/barrel for the first time in five months. The market was disappointed that the USDA didn't confirm any of the recently rumoured sales to China. We will see what tomorrows weekly export sales report brings, with trade estimates for that between 500 and 700 thousand MT.
Corn: Dec 11 Corn closed at USD6.42 3/4, down 2 3/4 cents; Mar 12 Corn closed at USD6.52, down 2 3/4 cents. Funds were said to have sold 5,000 lots on the day despite rising crude oil prices. A firm dollar and news of Japan buying a substantial quantity of corn from Ukraine at heavily discounted levels to US origin material weighed on prices. South Korea has also been looking elsewhere for corn this week, in addition to buying feed wheat to partially displace it in the ration. Trade estimates for tomorrow's weekly export sales are between 350 and 600 thousand MT.
Wheat: Dec 11 CBOT Wheat closed at USD6.16 3/4, down 16 cents; Dec 11 KCBT Wheat closed at USD6.87, down 18 cents; Dec 11 MGEX Wheat closed at USD9.33 1/2, up 2 1/4 cents. Minneapolis was again the leader, opening up a gap now well in excess of USD3/bushel between it and Chicago wheat. Funds were said to have been sellers of 3,000 contracts of the latter on the day. Algeria bought up to 500,000 MT of optional origin wheat in a tender today, trade gossip suggests that France may have missed out on an order it would normally expect to get in favour of Argentine wheat. Trade estimates for tomorrow’s weekly export sales report range from 350 to 450 thousand MT.
EU Wheat Rebounds From Recent Losses
16/11/11 -- EU grains ended higher with Nov 11 London wheat up GBP1.30/tonne to GBP147.30/tonne and Jan 12 Paris wheat EUR1.50/tonne firmer at EUR186.50/tonne.
Yields on Italian and Spanish bonds were down a little on fervent ECB buying, providing some respite from recent woes. Europe's problems haven't gone away though. UK unemployment rose above 2.6 million and those out of work in the 16-24 age group is up in excess of 1 million for the first time ever.
Bank of England Governor Mervyn King warned of a worsening economic outlook and said that he expected markedly weaker growth than predicted in the summer.
Defra say that the UK produced 15.36 MMT of wheat and 5.64 MMT of barley in 2011, both estimates are virtually identical to the latest USDA figures. With feed wheat and feed barley currently trading at or around parity they see wheat usage in the animal feed sector up 5% on last year at the expense of barley.
In contrast, the HGCA have increased the size of the UK's exportable wheat surplus to 2.72 MMT citing a lower estimate for feed use, "based in part on better availability of forage crops," according to Agrimoney.com.
Agrimoney go on to say that the HGCA's balance sheet calculations include an "assumed restart date" for Ensus of "February-March 2012", which would mean the plant, being mothballed for some 10 months – more than twice as long as the site originally envisaged.
Elsewhere the Ukraine Ministry have increased their 2011 grain harvest estimate to 55 MMT. Faced with a corn crop likely to be almost double that of last year Ukraine exporters have been aggressive marketeers following the lifting of export duties on corn and wheat last month securing the sale of 800,000 MT of corn to the normally US stronghold of Japan today.
Japs Eye Ukraine Corn
16/11/11 -- My sixth sense tells me that the overnight grains amazingly all finished around 6 cents lower in a minor correction from last night's gains.
WTI crude is attempting to break through USD100 and hold, currently standing at USD99.92/barrel. The firm dollar is a hinderance to US export hopes, particularly for wheat of which the world has plenty.
The euro has fallen to a one month low of 1.3470 against the dollar today, with some analysts forecasting 1.30 within a fortnight.
Other news is mixed. Europe hasn't imploded, yet. The ECB are said to have been buying Italian debt this morning, so we see yields on 10 year bonds there down slightly to 6.835%. Spanish yields are also down a touch to 6.26%, although these are far from life-saving rates.
China's Sinograin has confirmed that it has bought six cargoes of US soybeans this week. It also says that it won't be buying any more if CBOT prices exceed USD12/bushel. Last night's close was USD12.00 1/4.
Japan has turned it's back on the US and bought 800,000 MT of Ukraine corn - its biggest purchase of European grain in at least a decade, according to Bloomberg. It would be picky to say that Ukraine isn't in Europe for the purposes of this exercise, you get the point.
Ukraine corn is USD20-25/tonne cheaper on a cost & freight basis, so the Japs have saved themselves a cool USD16-20 million by switching supplier on this one, so who can balme them? South Korea is also seen buying Ukraine corn and Australian feed wheat.
As the corn harvest winds down the Ukraine Ministry have increased their 2011/12 grain harvest estimate to 55 MMT, a 40% increase on last year.
Early calls for this afternoon's CBOT session: wheat, corn and beans all 5-7 cents lower.
EU Rapemeal Prices
16/11/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Nov11 | 161.00 | -1.00 |
| Dec11 | 163.00 | -1.00 |
| Jan12 | 165.00 | unch |
| Feb/Apr12 | 165.00 | -1.00 |
| May/Jul12 | 164.00 | -1.00 |
| Aug/Oct12 | 145.00 | -1.00 |
| Nov12/Jan13 | 152.00 | -1.00 |
It's Not Dead It's Pining
16/11/11 -- Supermarket dictatorship Tesco says that it will be carrying out a thorough investigation into how a dead bird found it's way into a pre-prepared baby leaf and rocket salad. Although what Amy Winehouse was doing there in the first place is anybody's guess. Maybe someone put it there for a lark? Tern away if you're squeamish, you soft bustard. No, no, I can't rook. It's nothing to crow about: Beautiful plumage
Morning Snippets
16/11/11 -- It's turnaround Wednesday with the overnight Globex markets all lower, reversing some of last night's gains. The dollar is firmer again, with the pound falling to 1.5767 against the greenback.
South Korea has bought 55,000 MT of optional origin feed wheat from Australia's GrainCorp at just under USD260/tonne cost & freight. They've also bought a cargo of optional origin (probably Ukraine) corn at USD301.50 C&F from Glencore.
China's state buyer Sinograin has confirmed that it has bought six cargoes of US soybeans this week. It's not the ten cargoes that had been rumoured, although it's possible that they may also have purchased some South American origin as well. They also indicate that it's been the recent drop below USD12/bushel that has been the catalyst to tempt them into the market.
Ukraine's sunflower harvest is finished producing a crop of 8.8 MMT, 24% up on last year.
UK unemployment is now over 2.6 million and the number of 16-24 year olds out of work accounts for more than a million of that - a depressing new record. No doubt Ed Milliband will have something to say about that on tonight's news, the smarmy smug-faced alien. The number of Scots out of work has risen to 215,000 - so it's not all bad news.
Chicago Rallies
15/11/11 -- Soybeans: Jan 12 Soybeans closed at USD12.00 1/4, up 22 cents; Mar 12 Soybeans closed at USD12.10 1/4, up 21 1/2 cents; Dec 11 Soybean Meal closed at USD301.40, up USD2.20; Dec 11 Soybean Oil closed at 52.60, up 138 points. Beans managed to finish above USD12 for the first time in seven sessions on continued reports of Chinese buying. Funds bought an estimated 6,000 soybean contracts on the day. NOPA report US soyoil stocks at their lowest levels since December 2005 on strong demand from the biodiesel sector, which explains the strength displayed in beans and oil relative to meal. South American weather continues to throw up little in the way of threat to planting/crop development there.
Corn: Dec 11 Corn closed at USD6.45 1/2, up 12 cents; Mar 12 Corn closed at USD6.54 3/4, up 11 1/2 cents. Funds were said to have bought around 15,000 contracts by the end of the session. Spillover strength from beans was evident as too was support from rising crude oil. South Korea bought 70,000 MT of US corn along with 110,000 MT of optional origin. They did also however pop up as booking a couple of cargoes of what may have been Black Sea feed wheat, and trade gossip suggests that the optional origin corn may also be coming from that region, probably Ukraine.
Wheat: Dec 11 CBOT Wheat closed at USD6.32 3/4, up 17 cents; Dec 11 KCBT Wheat closed at USD7.05, up 13 cents; Dec 11 MGEX Wheat closed at USD9.31 1/4, up 3 3/4 cents. Funds were said to have bought 3,500 CBOT contracts on the day. Chicago gained on Minneapolis for once on short-covering. Strength in the other CBOT pits supported wheat even though export demand remains slack. Competition from the Black Sea and beyond will limit US export hopes as we approach 2012, but after four down sessions in a row a rally was maybe due.
London Wheat Closes At 15 1/2 Month Low
15/11/11 -- EU grains ended mixed with Nov 11 London wheat down GBP1.00/tonne to GBP146.00/tonne and Jan 12 Paris wheat EUR2.25/tonne higher at EUR185.00/tonne.
European credit woes continue with yields on Italian bonds back up above 7% and Spain paying 14-year highs to sell 3.2 billion euros of short-term debt today. Yields on 2-year French debt also shot sharply higher.
That had the pound residing around 1.17 against the euro for much of the day, putting London wheat under pressure relative to it's French counterpart. This was a 15 1/2 month closing low for a front month in London wheat.
UK wheat exports in September were 277 TMT, down 30% year-on-year bringing cumulative shipments during the first quarter of 2011/12 (Jul/Sep) to 559 TMT, down 35% year-on-year.
The recently publicised UK sale(s) to the US were probably made a couple of months ago and prices have fallen considerably since then. South Korea reportedly bought two cargoes of feed wheat at sub-USD260/tonne delivered today, reputedly one of the lowest prices that they've paid in more than a year and a significant discount to UK wheat.
The Andersons Centre are forecasting a UK wheat area of just under 2 million hectares once again for the 2012 harvest. Winter barley plantings are seen rising 5% to around 375,000 ha, but the spring barley area is called 6% lower to 573,000 ha.
Buoyed by a bumper crop this year, and some very decent oil levels too, the UK rapeseed area is seen rising to a record 758,000 hectares, 8% up on last year. That would give us our first ever 3 MMT crop if we could match this season's yields.
Early Call On Chicago
15/11/11 -- The Globex grains were mostly firmer with soybeans leading the way and again looking like being the strongest leg of the complex for the third session in a row this afternoon.
Beans closed around 14-15 cents firmer overnight, with corn up 2-4 cents and wheat up one to down one on the nearbys.
Last night's strong export inspections for beans lent weight to ideas that demand remains strong, particularly from China who may have been buying on this most recent dip. At least that's the theory.
The Eurozone millstone of debt looks like ensuring that things don't get too carried away this afternoon though. Yields on Italian, Spanish and French bonds are back up today, the latter two to record differentials versus Germany. Europe is of course China's biggest export home, casting doubt even on it's considerable ability to continue to maintain growth if and when the good ship Eurozone sinks.
Whilst Asia is still buying corn, it is watering down it's requirements with considerably cheaper feed wheat purchases.
Ukraine has stepped up it's export efforts, with ports there now said to be operating at close to maximum capacity now that duties have been lifted and the corn harvest is winding down.
Wheat has fallen for four sessions in a row, declining 41 1/2 cents in that time, so maybe a modest rebound is due today? Even so US prices are still too dear for many buyers on the global market.
Corn has also fallen for the past four sessions, although by a more modest 26 1/2 cents, which again means we look set to see something of a minor correction this afternoon.
European stocks are lower and US markets are expected to trade likewise. Gold is down along with crude oil and the dollar is firmer, so if the grains are going to rally today then they look like having to go it alone as there isn't much outside help coming their way from that lot.
Early calls for this afternoon's CBOt session: corn up 2-4 cents, beans up 14-16 cents, wheat flat to 2 cents firmer.
Who's Next To Get Sucked In?
15/11/11 -- Greece appear to already be in Davies Jones' locker with Italy also well on the way to "sleeping with the fishes" - so who's next to get sucked in?
France might not be as safe as some might think, it's banks have more than twice Germany's exposure to Greece and over two and a half times that to Italy.
On the bond markets today the gap between yields on French and German bonds has reached record levels with France having to stump up 3.5% compared to Germany's 1.775%.
News of S&P's "technical error" downgrade to France's credit rating last week may simply have been someone pressing the "publish" button a bit too early.
EU Rapemeal Prices
15/11/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Nov11 | 162.00 | -1.00 |
| Dec11 | 164.00 | -2.00 |
| Jan12 | 165.00 | -1.00 |
| Feb/Apr12 | 166.00 | unch |
| May/Jul12 | 165.00 | -1.00 |
| Aug/Oct12 | 146.00 | unch |
| Nov12/Jan13 | 153.00 | unch |
News Snippets
15/11/11 -- Ukraine's grain harvest is 96% complete at just over 54 MMT, according to the Ag Ministry. The on-going corn harvest has reached 85% done producing a crop of almost 18.5 MMT to date, they say. Winter plantings are 99% complete at 8.5 million hectares of which 6.5 million is wheat, they add.
The Australian Oilseeds Federation have upped their forecast for rapeseed production there to a record 2.63 MMT, 22% up on last season and a little higher than the USDA's latest offering of 2.5 MMT. Oil contents are said to be coming in higher than normal now that the harvest is underway.
Strong weekly export inspections for soybeans of 53.5 million bushels last night indicates that demand for US beans remains strong, as it usually is at this time of year. The continued suggestion of Chinese buying, and the potential for another robust set of export sales and shipment data on Thursday should underpin the market for now. Last week's numbers showed over 1.2 MMT of soybeans being shipped out of the US in the week to Nov 3rd, with China taking almost three quarters of that. Those sales could drop away sharply however once new crop comes on stream from South America in the New Year.
UK CPI inflation fell from 5.2% in September to 5.0% in October, according to data out today.
Yields on Spanish and Italian bonds are up again this morning, keeping the euro under pressure. Am I not alone in being surprised that we aren't closer to 1.25 against the single currency than the present 1.17?
South Korea is reported to have bought two cargoes of optional origin feed wheat at just under USD260/tonne delivered. Australian or Ukraine origin may be the most likely candidate for that in more evidence of corn pricing itself out of the market.
Chicago Closing Comments
14/11/11 -- Soybeans: Nov 11 Soybeans closed at USD11.72, up 6 cents; Jan 12 Soybeans closed at USD11.78 1/4, up 2 3/4 cents; Dec 11 Soybean Meal closed at USD299.20, down USD0.30; Dec 11 Soybean Oil closed at 51.22, up 24 points. Funds bought an estimated 4,000 soybean contracts on the day. Widespread reports of Chinese buying supported the market, as too did suggestions from various analysts that China will need to import more beans than the USDA currently project in 2011/12. The weekly crop progress report showed 96% of soybeans harvested. The NOPA crush for October was lower than expected at 141.179 million bushels.
Corn: Dec 11 Corn closed at USD6.33 1/2, down 5 cents; Mar 12 Corn closed at USD6.43 1/4, down 4 1/2 cents. Funds sold an estimated 8,000 contracts on the day. Reports of foreign buyers snapping up everything from Indian to Ukraine corn along with substantially cheaper feed wheat from the like of Australia may harm US export hopes for corn. Australian feed wheat is around USD70-75/tonne cheaper than US corn into southern Asia. There's some talk of China stepping in for corn at these levels, they waited until corn got to USD6/bushel before buying last time and their own harvest is now underway at around 9% complete. After the close the USDA reported the US crop at 93% harvested, up 13% from average.
Wheat: Dec 11 CBOT Wheat closed at USD6.15 3/4, down 1 cent; Dec 11 KCBT Wheat closed at USD6.92, down 12 cents; Dec 11 MGEX Wheat closed at USD9.27 1/2, down 6 3/4 cents. Spillover weakness from corn dragged wheat lower. We are in a market where there are plenty of foreign sellers perfectly happy to undercut US wheat, yet the US seem fairly relaxed about that for the time being. That might not change until the spring. The weekly crop progress report showed 96% of intended winter wheat planted and crop conditions at 50% good/excellent, 4% better than last year.
EU Grains Lower In Quiet Trade
14/11/11 -- EU grains finished mixed but mostly lower with Nov 11 London wheat down GBP1.50/tonne to GBP147.00/tonne and Jan 12 Paris wheat falling EUR1.75/tonne to EUR182.75/tonne.
The latter came within less than a euro, and the former less than a pound of being the lowest closes for a front month since July 2010.
It was a fairly quiet and subdued session. The markets drew some solace from the fact that both Italy and Greece have had a change of leadership in the past few days. Even so stocks were down in London and on the continent after an Italian bond auction saw yields climb to a 14-year high of 6.29 percent. The market will now be looking to see how Spain fares with it's auction of 10-year bonds on Thursday.
There wasn't a great deal of fresh news around. Algeria are tendering for 50,000 MT of wheat, an order that would normally be expected to get filled by French origin material.
The world grain trade is looking a lot more competitive and cut-throat than it did six months ago. US corn and Paris wheat are down around 15 percent since then, with London wheat falling almost 20 percent.
A Vietnamese buyer bought Indian corn rather than US origin material over the weekend, whilst Australian feed wheat continues to displace US corn into Asia priced at around USD75/tonne cheaper on a delivered basis.
Corn harvesting in Ukraine is 83% done producing a crop of just over 18 MMT to date, suggesting final output of close to 22 MMT. They too are heavily discounting US corn into homes that would normally be considered an American stronghold.
Reuters quote the Russian Hydrometcentre as saying "weather conditions are highly favourable and the state of winter crops (there) are very good."
Early Call On Chicago
14/11/11 -- The overnight grains finished mixed with beans 8-10 cents firmer and the front end months flat to 2 cents higher on corn and wheat. Crude is weaker and the dollar firmer, which may add a bit of negative sentiment this afternoon.
Italy managed to auction off EUR3 billion of five year bonds, albeit at a 14-year high rate of 6.29 percent. The market will now be looking to see how Spain fares in it's auction of 10-year bonds on Thursday.
Strength in beans maybe came from the fact that they've fallen more substantially than wheat and corn of late. In the past month beans are down more than a dollar a bushel whereas wheat and corn are barely changed.
Another supportive factor is Cofco saying that China will have an import requirement for 58.5 MMT of beans in 2011/12, 2 MMT more than the USDA's current estimate. Some analysts think that 60-61 MMT might even be on the cards.
Less helpful however is news that the October NOPA soybean crush came in at 141.2 million bushels, up 30.9 million from September, but 3.8 million down on expectations of 145 million bushels. This was also down 7% on last year.
Vietnam has bought Indian corn, others in the region are buying Ukraine origin corn. Asia is also buying Australian feed wheat to replace US corn in the ration. Maybe we will therefore start to see US corn exports slip a little before too long?
US wheat exports meanwhile already are slipping as world stocks return to buoyant levels and there are other more willing sellers around the globe.
Following the recent news of UK wheat sales to the US, and their spectacular failure to even feature in any of the Egyptian wheat tenders over the past few months then there could be some further downside for US wheat and corn?
Reuters quote the Russian Hydrometcentre as saying "weather conditions are highly favourable and the state of winter crops (there) are very good."
Things don't look so rosy in Ukraine however where things have been much drier since winter grains were sown. Exports of this season's bumper grain crop are finally starting to pick up now that duties have been removed though and have now overtaken last season's levels by 8% at 5.5 MMT.
Corn harvesting in Ukraine is 83% done producing a crop of just over 18 MMT to date, suggesting final output of close to 22 MMT.
Early calls for this afternoon's CBOT session: corn and wheat flat to up 2 cents, soybeans 8-10 cents firmer. We may open a bit firmer but I'll go for wheat and corn to be red by the time we close tonight though.
Beep Beep, Beep Beep, Yeah
14/11/11 -- Carrs are reporting a decent set of figures today with group turnover up 25% to GBP373 million for the year ended September 3rd. Profit before tax is almost 35% higher at a nice round GBP10 million.
Within that Agriculture chipped in with a revenue of GBP272.7 million, up 26.7%, and a profit before tax on item excluding associate and joint ventures of GBP7 million (up 12.1%).
I was now going to make a joke about that being a lot of water biscuits. I did a quick Google for Carr's Water Biscuits and was surprised to discover that it may well have been part of the same company at one time as under history on their website it says "Carr’s Biscuits began during the British Industrial Revolution, when Jonathan Carr formed a small bakery in the city of Carlisle, England in 1831."
EU Rapemeal Prices
14/11/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Nov11 | 163.00 | unch |
| Dec11 | 166.00 | -1.00 |
| Jan12 | 166.00 | -1.00 |
| Feb/Apr12 | 166.00 | -1.00 |
| May/Jul12 | 166.00 | -1.00 |
| Aug/Oct12 | 146.00 | -2.00 |
| Nov12/Jan13 | 153.00 | -2.00 |
Italian Borrowing Costs Still Rising
14/11/11 -- New PM or not, Italy has been required to pay a yield of 6.29% in this morning's auction of EUR3 billion of five year bonds. That's the highest rate it's had to pay in fourteen years and almost one percentage point higher than it paid in a similar auction just a month ago.
That's another step closer to the begging bowl on day one in office for "Super" Mario Monti.
Morning Muse
14/11/11 -- Checking back through my sent items over the weekend I discover an email sent on the 9th September saying that there was some trade gossip going around suggesting the sale of UK feed wheat to East Coast US homes.
The rumour at the time was that business had been done out of both Tilbury and Portbury. Now we have the Portbury business confirmed I wonder if there are further sales out of Tilbury still to emerge? Out of interest Nov London feed wheat then was around GBP20/tonne higher than it is today.
The market looks set to maybe open a bit firmer this morning after the departure of Berlusconi over the weekend. He might be history but unfortunately for them Italy's debt is larger now than it was on Friday.
Last week's Italian auction of one year bills went well, but only thanks to the ECB, and they are due to have another one today. How long the ECB will/can continue to dig deep to shore up Italy is anyone's guess, but the implications of not doing so would be immense. And what happens when Spain also comes a calling?
