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.
