Weather Watching
07/01/12 -- There's a big week coming up. Will Argentina get rain? I've spent most of the day trying to find an animated forecast for the week ahead in South America and failed to come up with anything decent.
So I've created my own from a selection of weather map forecasts from COLA/IGES in the US, and for your personal convenience I've borrowed a map from my old chum Gail Martell at the stunningly excellent Martell Crop Projections showing exactly where it's particularly dry.
As if I haven't already spoilt you too much by doing all that for you on a Saturday afternoon, I've overlaid the latter with a note of where the main soybean and corn producing areas are so you don't actually need to do anything other than click the link below.
I really MUST get round to buying Nogger a beer some time
Chicago Closing Comments - Friday
06/01/12 -- Soybeans: Jan 12 Soybeans closed at USD11.89 1/2, down 11 3/4 cents; Mar 12 Soybeans closed at USD11.96 1/2, down 12 1/2 cents; Jan 12 Soybean Meal closed at USD309.60, down USD0.70; Jan 12 Soybean Oil closed at 50.80, down 97 points. On the week overall beans were down 9 cents, meal up 20 cents and oil down 129 points. Weekly export sales of 281,300 MT for the 2011/12 were well below trade ideas of 400-600,000 MT. Informa Economics pegged 2011 US soybean production at 3.08 billion bushels with yields as 41.8 bu/acre. That's higher than the USDA's last estimate of 3.046 billion bushels and 41.3 bpa. Informa also cut their estimate for Brazilian production this year by 2 MMT to 72 MMT. For Argentina they now say 51 MMT. Both are in the ballpark of other trade predictions, if anything the Argentine number is a little higher than most. The USDA's December estimates were 75 MMT and 52 MMT respectively, they will issue revised number on Thursday. Prior to that the weather in South America will dominate proceedings.
Corn: Mar 12 Corn closed at USD6.43 1/2, unchanged; May 12 Corn closed at USD6.50 3/4, down 3/4 cent. On the week corn was down 3 cents. Weekly export sales were at the low end of trade hopes at a combined 306,000 MT, although China popped up as a featured buyer. Informa pegged the 2011 US corn yield at 147.0 bpa versus the USDA's 146.7 bpa. Corn production was estimated at 12.340 billion bushels compared to the USDA's 12.310 billion. In South America they cut their Brazilian corn production estimate to 61 MMT, and lowered output in Argentina to 24 MMT. The Brazilian estimate is the same as the USDA issued last month, the Argentine number is in line with other trade estimates. The latest Commitment of Traders report shows funds adding around 45,000 contracts of new length in the week to Jan 3rd, maybe they are getting their risk appetite back?
Wheat: Mar 12 CBOT Wheat closed at USD6.24 3/4, down 4 1/2 cents; Mar 12 KCBT Wheat closed at USD6.80, down 6 cents; Mar 12 MGEX Wheat closed at USD8.01, down 17 1/2 cents. On the week as a whole Chicago wheat shed 28 cents, Kansas 37 cents and Minneapolis 48 1/2 cents. Weekly export sales were poor at 138,600 MT for 2011/12 and 29,500 MT for delivery in 2012/13. That fell well short of the 300-500,000 MT that the trade was expecting. Shipments of 425,800 MT also once again failed to meet the level required to hit the USDA's overall marketing year target. Egypt bought a combination of French, Ukraine and Russian/Kazakh wheat today. US wheat hasn't featured into them so far this marketing year, and seems set to miss out for the rest of 2011/12 too. Argentina is talking of easing the existing export quota system for wheat once domestic requirements have been secured.
EU Wheat Little Changed At The End Of A Volatile Week
06/01/12 -- EU grains reversed some of yesterday's losses to close with Jan 12 London wheat up GBP1.00/tonne to GBP151.75/tonne, Jan 12 Paris wheat rising EUR4.25/tonne to EUR201.00/tonne.
At the end of a choppy first week of 2012 there wasn't actually a great deal of overall change - London wheat was GBP0.50/tonne lower and Paris wheat down EUR1.50/tonne.
The EU only issued 106,000 MT of soft wheat for the week to Jan 3rd. That's the lowest weekly total of the 2011/12 marketing year so far. Even allowing for the fact that it was a holiday week it's a pretty poor performance. Cumulative exports now stand at 7.36 MMT, almost 4 MMT down on a year ago.
On a brighter note French wheat accounted for half of the 240,000 MT of the grain that Egypt bought in a tender today. Ukraine wheat also got the nod for one cargo with optional Russia/Kazakhstan origin making up the remainder of the order.
The weak euro, which fell to a fresh 15-month lows against both the pound and the dollar today, seems to be helping EU wheat regain some market share. With the eurozone crisis lurching from one calamity to another the outlook certainly seems to be for further declines for the single currency.
The weather in South America is the other principal factor in the market at the moment with bears pinning their hopes on rain forecast for the second half of next week and into the following weekend. The wheat harvest in Argentina is almost over so weather concerns aren't a factor for that, but corn planting has yet to be completed - and that is what is getting the trade all excited.
The USDA will issue a revised crop production estimate for that next week. They currently stand at 29 MMT but the trade is now suggesting that 24-25 MMT may be nearer the mark, possibly less if next week's rains disappoint.
Also next week the USDA will report on US winter wheat plantings, the trade is expecting those to come in around 2 million acres higher than previously reported.
It's already shaping up to be another volatile week ahead. Spain and Italy will attempt to auction off debt, how well that goes and what yield they have to pay will be closely scrutinised. Weather watchers will be keeping a close eye on developments in South America and then we have the USDA out on Thursday. Chicago corn has posted a limit move for each of the last five years on the day of the January WASDE report.
Early Call On Chicago
06/01/12 -- The overnight grains finished with wheat and soybeans around 6-7 cents higher and corn up 4-5 cents. Crude oil is up around half a dollar.
It looks like we are in for a modest correction from last night's losses with Argy weather forecasts looking a little drier than yesterday. Heat is set to dominate this weekend.
Strong US jobs numbers today should also support. Figures just out show that the US economy added 200,000 jobs in December, beating expectations. The data also says that the unemployment rate fell to 8.5% in December, the lowest level in nearly 3 years. The market was expecting 155,000 jobs added and unemployment at 8.5%.
It's not all good news however. The USDA reported weekly export sales for corn, beans and wheat were all disappointing.
Wheat sales of 138,600 MT for the 2011/12 marketing year were down 68 percent from the previous week, down 64 percent on the 4-week average and a marketing-year low. There was also a small 29,500 MT sale for delivery in 2012/13. That fell well short of the 300-500,000 MT that the trade was expecting.
Corn sales of 299,500 MT for 2011/12 and 6,500 MT for delivery in 2012/13 just about fell within the range of 300-600,000 MT that the trade anticipated.
Soybean sales of 281,300 MT for the 2011/12 were below trade ideas of 400-600,000 MT.
Wheat shipments of 425,800 MT again failed to meet the level required to hit the USDA's overall marketing year target.
Egypt has bought two cargoes of French wheat, one of Ukraine wheat and one of Russian/Kazakh origin. Tunisia has bought 50,000 MT of what will probably be French milling wheat.
The Argy government has announced new less restrictive measures will apply to wheat exports from the end of this month, and that the same rules should be introduced for corn a month down the line.
The Eurozone juggernaut rumbles on out of control with yields on Spanish and Italian bonds back on the rise and Hungary getting another sovereign debt downgrade.
Informa are out with their latest S&D numbers mid-session ahead of the USDA next Thursday. This could be an interesting session ahead of the weekend. On the week so far wheat is down sharply, corn down a tad and beans up a little.
Early calls for this afternoon's CBOT session: Corn 4-5 cents higher, beans and wheat 6-8 cents higher.
Could 2012 UK Rapeseed Crop Hit 3 MMT?
06/01/12 -- A recent report from the HGCA, citing data from farming consultancy firm The Anderson’s Centre, suggested that UK rapeseed plantings will jump to a record 758,000 hectares for the 2012 harvest - a 7.5% increase on this season.
Unlike UK wheat and barley yields, which have plateaued over the last 10-15 years, rapeseed yields are still on the up. If they can continue that trend in 2012 then could we be in for our first ever 3 MMT crop this year?
EU Rapemeal Prices
06/01/12 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 191.00 | -2.00 |
| Feb12 | 179.00 | -4.00 |
| Feb/Apr12 | 176.00 | -4.00 |
| May/Jul12 | 169.00 | -3.00 |
| Aug/Oct12 | 152.00 | -3.00 |
| Nov12/Jan13 | 158.00 | -4.00 |
| Feb/Apr13 | 160.00 | -4.00 |
The Midday Muse
06/01/12 -- EU and the overnight US grains are attempting to stage a modest recovery. Certainly Paris wheat should be supported by the continuous decline of the euro which is setting new 15-month lows against the pound and the dollar this morning.
Last night's falls in Chicago grains, for wheat it was the largest one day decline in seven weeks, may have been a little overdone seems to be the market vibe this morning.
The Eurozone crisis rumbles on though. Yields on Italian 10 year bonds are now at 7.135 percent. Shares in UniCredit, Italy’s biggest lender, have crashed 37% in three days and trading in them has already been temporarily halted twice today, according to Bloomberg. More on that story here.
Brussels issued only 106,000 MT of soft wheat for the week to Jan 3rd. That's the lowest weekly total of the 2011/12 marketing year. OK, it was New Year but even so it's a very poor showing.
Cumulative exports now stand at 7.36 MMT, almost 4 MMT down on a year ago.
We await news on the Egyptian wheat tender this afternoon. I fancy the Frogs to get a look in and maybe share the order with the Argies with Russia dipping out for once.
Today's latest South American weather forecasts appear to be removing some of the rain that was put in yesterday. What everyone does seem to agree on though is that it's going to be hot and dry over the weekend and into the middle of next week.
From Bryce Anderson, meteorologist with DTN via Twitter: Very HOT temps ahead for central Argentina thru early next week before showers move in. Stress for corn, soy map.
Things are also unusually warm in the Midwest. From AccuWeather via Twitter: "Philip, S.D. hit a high temperature of 74 degrees Thursday, breaking the old record of 46 set back in 2002 by almost 30 degrees!"
Lower corn output in South America won't do Australia any harm. They are on target to export a record volume of wheat in 2011/12 - 20.9 MMT according to ABARES and 21.5 MMT according to the USDA. They've certainly got plenty of it after two back-to-back record harvests.
Corn Dominates Ukraine Grain Exports
06/01/12 -- Ukraine's grain exports continue to be dominated by corn which accounted for 2.16 MMT, or 85%, of the 2.55 MMT of grain shipped out during December.
Year-to-date grain exports to Jan 4th are 9.65 MMT, up 42% on last year, with corn accounting for more than half that total at 5.18 MMT. Wheat exports so far this season are only 2.49 MMT, or just over a quarter of all shipments.
The Morning Vibe
06/01/12 -- Yes folks, you know the old saying "New Year, New Let Downs By Virgin Media." The long haired dyslexic O level deficient hippy is once more getting my goat this morning. Suffice to say that anyone emailing me today may have to wait some time for a response. Bastards. What use is it owning your own island when you can't even make your email service work?
Elsewhere I see that the overnight grains have rebounded a little this morning, partially recovering some of last night's losses. London wheat has followed suit opening a pound or so firmer, with Paris wheat up a euro or two.
Egypt are tendering for wheat today. Having shared the spoils with Russia and Argentina in the last tender it wouldn't be a huge surprise to see French wheat do even better than that this time round given the weakness of the euro.
The Buenos Aires Grain Exchange seem to think that drought came too late to be a problem for wheat production there. They've just increased their forecast for Argy wheat production this season to 14 MMT from 13.6 MMT as the harvest winds down at 93% complete. Soybean planting is 85% done and 83.5% of the corn crop is now in the ground, they add.
Cargill says it will permanently close its Des Moines soybean crushing plant next month, citing overcapacity in US production of soymeal, I hear.
Chicago Dips On EU Jitters, South American Weather Forecasts
05/01/12 -- Soybeans: Jan 12 Soybeans closed at USD12.01 1/4, down 20 1/4 cents; Mar 12 Soybeans closed at USD12.09, down 21 cents; Jan 12 Soybean Meal closed at USD310.30, down USD7.20; Jan 12 Soybean Oil closed at 51.77, down 96 points. Funds ditched an estimated 6,000 soybean contracts on renewed Eurozone debt concerns and a wetter outlook for Argentina. A firm dollar and weaker crude added to the negative bias leading to a sharp correction which was maybe overdue. Even so beans are still a dollar higher than the December low. Estimates for tomorrow's weekly export sales report are 400-600 TMT.
Corn: Mar 12 Corn closed at USD6.43 1/2, down 15 cents; May 12 Corn closed at USD6.51 1/2, down 15 1/4 cents. Funds dumped an estimated 13,000 contracts on the day as European jitters returned to haunt the market. Estimates for tomorrow's weekly export sales report are 300-600 TMT. The USDA are out next week with their WASDE estimates, before that Informa are due to release their numbers tomorrow. Despite recent downgrades to production in Brazil and Argentina both are still set for historically high output.
Wheat: Mar 12 CBOT Wheat closed at USD6.29 1/4, down 20 3/4 cents; Mar 12 KCBT Wheat closed at USD6.86, down 28 cents; Mar 12 MGEX Wheat closed at USD8.18 1/2, down 20 1/2 cents. Funds were said to have sold around 4,000 Chicago wheat contracts on the day on spillover weakness from corn and beans. Bumper world stocks and sluggish US exports weigh. Estimates for tomorrow's weekly export sales are 300-500 TMT. Weekly shipments will also be under scrutiny as they have been regularly falling short of the level required to hit USDA targets for 2011/12.
EU Wheat Correction Continues For Second Day
05/01/12 -- EU grains finished lower with Jan 12 London wheat down GBP1.75/tonne to GBP150.75/tonne and Jan 12 Paris wheat falling a hefty EUR6.00/tonne to EUR196.75/tonne.
It was a second day of correction for wheat, appearing to highlight that volatility will be the theme for 2012 just as it was for much of 2011.
European debt worries were back to the fore, with the single currency falling to 15-month lows against both the US dollar and sterling.
UK and EU farmer selling reportedly picked up this week as ex farm levels rebounded to psychologically important levels, and the best that has been on offer for some time.
The weather forecast in Argentina is turning wetter. As that has been just about the only bullish factor supporting this three week long rally it is perhaps not surprising that a correction from markets that had gained more than 10% in the case of London wheat and in excess of 16% for Paris wheat was on the cards.
EU exports remain sluggish. Brussels only issued export licences for 136 TMT last week. OK that was Christmas week but you have to go all the way back to the first week of the marketing year to find a lower weekly total.
That brings total EU exports to 7.26 MMT in 2011/12 so far, 35% down on the 11.13 MMT that had been exported this time twelve months ago.
EU ending stocks are seen increasing 8.4% in 2011/12 by the USDA, although other estimates are significantly higher. Rabobank forecast a 13% rise and are predicting prices on the Paris market to average a lowly EUR168.75/tonne in 2012.
That price is so low that I had to get written confirmation that I hadn't misread it. At around 14% below where we are now that would suggest London wheat averaging just GBP130.00/tonne this year.
Next week sees Spain and Italy attempting to auction off debt, rains maybe finally arriving in Argentina and the USDA releasing it's January world supply and demand estimates. What could possibly go wrong?
Early Call On Chicago
05/01/12 -- The overnight grains were lower with beans around 10-12 cents easier, wheat down 7-8 cents and corn down 6-7 cents. Crude is down and the dollar is higher, both negative for grains today.
At the moment we have a tug of war between the European debt crisis and drought in some parts of South America. Today it seems to be the ongoing problems in Europe that are winning.
The euro has hit a fresh 15-month low against the dollar today as Greece hints that it may default on it's debt and French bond yields are up on a month ago.
Rain is in the forecast for Argentina, but as ever it always seems to be 7-10 days from now that it's due to arrive, never tomorrow. Allendale have cut their Argy soybean crop estimate to 49 MMT, in line with the rest of the trade. The USDA said 52 MMT last month but seem certain to reduce that estimate next week.
Allendale left their Brazilian soybean estimate unchanged.
For corn they now predict Argy production 5 MMT below the USDA at 24 MMT, and for Brazil they cut the crop by half a million to 60.5 MMT. Both of those would still be record crops.
In the US, Allendale see winter wheat plantings at 2.2 million higher than the USDA at 42.85 million acres. They also say that second quarter usage was the lowest in their records dating back to 1975.
Farm Futures peg the 2012 US corn planted acreage at 93.6 million, with soybeans at 74.9 million and all wheat at 59.2 million.
For corn that's 1.7 million, or 2%, up on last year. For beans it's a 0.1 million drop and for wheat it's a 4.8 million, or 9%, rise on last year.
Clearly the South American story is the only thing propping this market up. We've risen a fair way since the middle of December so it looks like some consolidation is overdue today.
Early calls for this afternoon's CBOT session: corn down 5-7 cents, beans down 8-10 cents, wheat down 6-8 cents.
EU Rapemeal Prices
05/01/12 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 193.00 | -1.00 |
| Feb12 | 183.00 | unch |
| Mar/Apr12 | 180.00 | +1.00 |
| May/Jul12 | 172.00 | -2.00 |
| Aug/Oct12 | 155.00 | -3.00 |
| Nov12/Jan13 | 162.00 | +1.00 |
| Feb/Apr13 | 164.00 | +2.00 |
The Morning Rant
05/01/12 -- The shakeout continues for European grains today with front month Paris wheat down EUR4.25/tonne in early trade, now residing back below EUR200.00/tonne. London has opened with May 12 down GBP1.20/tonne and new crop Nov 12 down GBP1.75/tonne.
The market seems to be waking up to the fact that fundamentally South American weather doesn't really offer a great deal of support for wheat. Should the USDA increase 2011/12 ending stocks by 2 MMT next week then we'd be faced with the highest carryout in history.
As things stand they've already got world wheat production pegged at a record 689 MMT in 2011. Seeing as they are currently still using a Kazakhstan production estimate of only 21 MMT it is entirely possible that this could be increased further a week today.
Wheat consumption globally is currently also forecast at a record 680 MMT this year, although that makes 2011/12 the third season out of the past four that production outstrips demand.
Meanwhile the European debt crisis rumbles on with Greece hinting at a default and France this morning having to pay a higher yield on it's EUR8 billion bond auction than it did last month. The euro is down to a 15 month low against both the US dollar and sterling.
Jan 12 Paris malting barley and corn expire today, with Jan 12 Paris wheat going off the board next Tuesday.
Chicago Close
04/01/12 -- Soybeans: Jan 12 Soybeans closed at USD12.21 1/2, up 3 1/4 cents; Mar 12 Soybeans closed at USD12.30, up 2 1/2 cents; Jan 12 Soybean Meal closed at USD317.50, up USD1.70; Jan 12 Soybean Oil closed at 52.73, down 7 points. Funds bought an estimated 3,000 soybean contracts on the day, concentrating more on this week's hot and dry forecast for Argentina than next weeks potentially wetter outlook. Most private estimates now see soybean production there around 3 MMT lower than the USDA's 52 MMT. In Brazil estimates range from 71 MMT to 75.6 MMT versus the USDA's 75 MMT.
Corn: Mar 12 Corn closed unchanged at USD6.58 1/2; May 12 Corn closed at USD6.66 3/4, down 1/4 cent. Funds sold an estimated 3,000 contracts on the day, shedding a little of the length that they've built up over the past week or so. Weather forecasts in Argentina offer some hope for decent rains around ten days from now. Private forecasters are lining up in the 22-25 MMT range for corn production there compared to 29 MMT from the USDA last month. They will issue a revised estimate next week. For Brazilian corn the USDA are currently at 61 MMT and the trade is estimating more like 59 MMT. That would also still be a record high however.
Wheat: Mar 12 CBOT Wheat closed at USD6.50, down 7 cents; Mar 12 KCBT Wheat closed at USD7.14, up 1 1/2 cents; Mar 12 MGEX Wheat closed at USD8.39, down 5 1/4 cents. Funds sold an estimated 2,000 Chicago contracts on the day. The developing South American weather scenario offers support via the potential for lower corn production theoretically maybe creating more demand for wheat. That's about the only bullish story wheat has got with record production coming from Australia, India, China and Kazakhstan this season. The USDA upped crop conditions in Kansas and Oklahoma significantly from late November.
EU Wheat Rally Stalls
04/01/12 -- EU grains ended with Jan 12 London wheat down GBP2.80/tonne to GBP152.50/tonne and Jan 12 Paris wheat fell EUR6.25/tonne to EUR202.75/tonne. New crop London wheat was down GBP4.00/tonne.
It was a strange sort of a day which started off quietly but suddenly turned sellerish mid-morning. It's difficult to say exactly why.
Whatever the reason merchants are reporting increased farmer selling today after three weeks of upside during which Jan 12 London wheat had put on GBP14.30/tonne based on last night's close.
A German bond auction was fully subscribed to, but in a manner than many described as disappointing. The market now appears to be thinking to itself "hmmm, if they aren't falling over themselves to buy German bonds what are they going to make of France's EUR7-8 billion auction tomorrow?"
The euro sank to one year low against the pound, and very close to last week's yearly low versus the dollar on the news.
Some weather forecasters are turning wetter for Argentina, although not until next weekend. QT Weather are talking of "a swath of 1.25-4.00 inch (rain) totals over Cordoba, Sante Fe and Entre Rios" in Central Argentina for the 14/15th January.
Russian customs authorities report that the country has shipped out 17.9 MMT of grains to Dec 29th, including 14.8 MMT of wheat, 2.0 MMT of barley and 0.75 MMT of corn.
That still leaves more than 7 MMT left to go before they hit their suggested self-imposed limit of 25 MMT. Exports are expected to slow up a little now, partly due to seasonal problems and also as much of what is left to export is located further away from the ports.
Winter wheat crop conditions in the top US producing state of Kansas have improved to 53% good to excellent from 47% just over a month ago, with Oklahoma ratings also jumping to 63% from 56%, say the USDA.
Early Call On Chicago
04/01/12 -- The overnight grains closed mostly lower with beans and wheat down around 2-3 cents and corn up one to down three. Crude oil is also lower.
Beans have added more than a dollar a bushel, or 11%, since the middle of December. Corn has put on almost 13% and CBOT wheat posting gains in excess of 12% during the same timeframe.
Fundamental reasons for the latter are particularly difficult to find.
Some reports filtering through today suggest a wetter outlook for South America next week. That should be sufficient to encourage some profit-taking after what has been 12 consecutive sessions of almost constant rises.
European jitters are also back on the table.
The USDA are out next week with their revised supply and demand estimates. Doubtless they will reduce their Argy corn production number from the existing 29 MMT, closer to the 24-25 MMT level that the trade already has factored in. Even so that would still be a record crop.
For Brazilian corn the USDA are currently at 61 MMT and the trade is estimating more like 59 MMT. That would also still be a record.
For beans they are currently saying 75 MMT for Brazil and 52 MMT for Argentina. The trade is thinking more like 72 MMT and 49 MMT respectively. Both would be the second highest on record.
Not surprising then that this rally is being seen as a selling opportunity by some producers who'd spent September through to mid-December fretting as the watched prices steadily decline.
Next month will see the USDA's annual outlook forum, at which we get the first tentative clues on their ideas on US farmers' spring planting intentions. Corn sowings are already predicted to be the highest since WWII. Soybean and wheat plantings are also seen higher as land comes out of the US Conservation Reserve Program.
US ethanol output meanwhile has been setting a succession of record weekly production levels at the end of 2011 as blenders there milked the tax credit for all it was worth. It will be interesting to see the January data now that they no longer have that particular benefit.
Early calls for this afternoon's CBOT session: corn flat to up 1 cent, wheat down 2-3 cents, beans down 3-5 cents.
Nurse!
04/01/12 -- A morning that started off quietly and slowly now sees front month Jan 12 London wheat down the very same GBP3.05/tonne it was up yesterday and with Jan 12 Paris wheat currently losing EUR4.00/tonne.
So what's made the wheels fall of this one? A German Bund auction found "muted but adequate demand" say Reuters. Which has doubtless served as a timely reminder that the European debt problems have most certainly not gone away.
All eyes will now be on how well, or otherwise, France's EUR7-8 billion offering tomorrow will be received. After that Spain and Italy are both set to hold their first bond auctions of 2012 next week.
The pound is up to 1.2020 against the euro, it's best in a year.
Elsewhere some reports I am reading are suggesting that the GFS model is "turning much wetter" for Argentina next week. We shall see...
EU Rapemeal Prices
04/01/12 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 194.00 | +4.00 |
| Feb12 | 183.00 | +5.00 |
| Mar/Apr12 | 179.00 | +4.00 |
| May/Jul12 | 174.00 | +5.00 |
| Aug/Oct12 | 158.00 | +3.00 |
| Nov12/Jan13 | 161.00 | +3.00 |
| Feb/Apr13 | 1562.00 | +3.00 |
The Early Vibe
04/01/12 -- We've seen some fairly dramatic price increases in the grains sector in the past couple of weeks on the back of this South American weather scare. The question I am interested in is just how justified are they?
Despite downgrading their Argy corn crop production estimate to 24.5 MMT yesterday, Cropcast's forecast is still an all-time record.
Brazil's grain association Abiove still peg the country's soybean crop higher than last year at 74.6 MMT, whilst Celeres go a million tonnes higher than that.
Meanwhile wheat is going up "just because" on the back of rising corn despite the lack of a bullish storyline of it's own and ending stocks estimated within less than 2 MMT of the highest on record at the end of 2011/12.
Kansas winter wheat is now rated 53% good to excellent from 47% a month ago and conditions in Oklahoma in the top two categories have jumped to 63% from 56% in late November, according to the USDA yesterday.
If there REALLY is a crisis then I'm struggling to see it right now.
That's not to say that the South American situation won't get worse, but prices where they are aren't perhaps really justified at this exact moment in time.
Meanwhile it remains to be seen how US domestic demand for corn holds up now that the ethanol blenders' tax credit has expired and the duty on imports has been lifted.
On top of that there's the not insignificant matter of the Eurozone debt crisis which the market seems to have almost forgotten about.
Jan Paris malting barley and corn expire tomorrow and Jan milling wheat next Tuesday, followed by Jan soy complex contracts next Friday. Sandwiched in amongst that are weekly export sales from the USDA on Friday (and next Thursday) plus the USDA's WASDE also next Thursday.
Chicago Close
03/01/12 -- Soybeans: Jan 12 Soybeans closed at USD12.18 1/4, up 19 3/4 cents; Mar 12 Soybeans closed at USD12.27 1/2, up 19 3/4 cents; Jan 12 Soybean Meal closed at USD315.80, up USD6.40; Jan 12 Soybean Oil closed at 52.80, up 71 points. A hot and dry long weekend in South America saw beans close at two month highs, even if they were closer to the lows of the day rather than the highs at the end of play. Cropcast lowered its Argentine soybean production estimate by 1.6 MMT to 49.8 MMT which is 2.2 MMT lower than the latest USDA figure. Crude oil was sharply higher which also lent support.
Corn: Mar 12 Corn closed at USD6.58 1/2, up 12 cents; May 12 Corn closed at USD6.67, up 12 1/4 cents. Funds were said to have bought 13,000 contracts on the day enthused by the drought in parts of South America. New Year, new money is what they say. Cropcast cut its forecast for Argentine corn production by 3 MMT to 24.5 MMT, 5.5 MMT lower than the USDA, but even so still a record volume. The next significant rain event on the forecasts for Argentina is around 10 days away and the trade is getting jittery that this is still the case.
Wheat: Mar 12 CBOT Wheat closed at USD6.57, up 4 1/4 cents; Mar 12 KCBT Wheat closed at USD7.12 1/2, down 4 1/2 cents; Mar 12 MGEX Wheat closed at USD8.44 1/4, down 5 1/4 cents. Despite closing higher wheat was also far closer to being at the lows of the day rather than the highs. Funds were said to have bought around 2,000 CBOT contracts on the day on spillover support from corn. Outside markets also helped as did a weaker US dollar.
EU Wheat Maintains Upwards Trajectory
03/01/12 -- EU grains extended their recent gains with Jan 12 London wheat climbing GBP3.05/tonne to GBP155.30/tonne, Jan 12 Paris wheat rising EUR2.50/tonne to EUR209.00/tonne.
The rest of the EU grains complex also posted strong gains with corn and rapeseed both up EUR6.75/tonne nearby.
For London wheat this was the straight sixth up day during which time it has risen GBP10.80/tonne, or 7.5 percent. Paris wheat has now been up for 11 of the past fourteen sessions and has now risen 17 percent since the last day of November.
It's not particularly demand for wheat, or even damage to developing wheat, that is behind this rally. It's the developing drought in South America damaging corn and soybean production there.
The trade is now talking a Brazilian soybean crop some 3 MMT or so below the current USDA estimate and a Argentine one of around 4 MMT less than the USDA predict. Corn production potential in the latter is thought to be as much as 6 MMT lower than the USDA's 29 MMT estimate.
Even so losses of this kind of magnitude are hardly critical. A 23 MMT Argentine corn crop would still be only 0.3 MMT away from being the highest in history.
What is more important right now is how does the trade perceive these losses, and if they will be the catalyst to encourage fund money back into the grains sector in the New Year we now find ourselves in.
EU Wheat Starts 2012 On The Offensive
02/01/12 -- You can say what you like about the French, and I usually do, but our Gallic mates across the Channel dragged their sorry backsides into work today unlike much of the rest of Europe and the US.
Paris grains started 2012 where they left 2011, on the offensive, with Jan 12 Paris wheat rising EUR4.00/tonne to EUR206.50/tonne. Corn, rapeseed and malting barley futures also posted solid gains of around EUR3-4/tonne to kick off the New Year.
It was thin trade with much of the rest of the world taking a day off, but Jan 12 Paris wheat pushed on to post its highest close since September.
Parts of Brazil got rain over the festive period, although not enough for soil moisture deficits to fully recover. Meanwhile Argentina, where around 20% of the soybean and corn crops were still to be planted as of last week, remained dry.
As well as having a dry weekend, temperatures in Argentina were said to have been above to well above normal, particularly in western growing areas with highs across the country ranging from 32-39C.
A strong short wave trough offers the best chance for some moisture relief, but that doesn't show up until early next week.
Closer to home, weekend rain and snow across much of western and central Europe will have helped replenish soil moisture for winter wheat, although parts of Hungary and Romania and much of Ukraine are still dry.
