Late Slump Sees Chicago Corn Back Below USD6.00
13/01/12 -- Soybeans: Jan 12 Soybeans closed at USD11.60, down 18 1/2 cents; Jan 12 Soybean Meal closed at USD304.80, down USD1.30; Jan 12 Soybean Oil closed at 50.20, down 95 points. Jan contracts went off the board at noon with beans down 20 cents on the week, meal down USD4.80 and oil losing 60 points. Deferred positions pressed on to post further losses late in the session with Mar 12 soybeans closing at USD11.58 1/4, down 24 1/4 cents; Mar 12 Soybeans closed at USD11.58 1/4, down 24 1/4 cents; Mar 12 Soymeal closed at USD301.50, down USD5.60; Mar 12 Soybean Oil closed at 50.29, down 117 points. Funds sold an estimated 8,000 soybean contracts on spillover weakness from yesterday's bearish USDA report and as noon weather forecasts turned wetter for Argentina. S&P's downgrades for various eurozone nations didn't help, propelling the dollar to a sixteen month high against the euro.
Corn: Mar 12 Corn closed at USD5.99 1/2, down 12 cents; May 12 Corn closed at USD6.06 1/2, down 11 3/4 cents. On the week as a whole Mar corn lost 44 cents after the USDA report once again surprised the market. Corn slumped below USD6.00/bushel for the first time since mid-December today and is now only 20 cents away from the 2011 lows it established then. Funds were heavy sellers for the second day in a row, particularly late in the session, dumping an estimated 18,000 contracts. If true that means they've ditched 36,000 over the past couple of days. That wipes out all the length they'd put on and then some in the previous week to Tuesday, according to today's weekly Commitment of Traders report. A firm dollar didn't help in the wake of yesterday's rather disappointing export sales. Markets are closed Sunday night and Monday for the Martin Luther King holiday.
Wheat: Mar 12 CBOT Wheat closed at USD6.02 1/4, down 2 3/4 cents; Mar 12 KCBT Wheat closed at USD6.70, down 3 cents; Mar 12 MGEX Wheat closed at USD8.01 1/4, down 6 1/4 cents. Wheat didn't fall anything like as much as corn or beans, with funds already short there wasn't the same wall of selling as in the other two pits, although they were still given credit for offloading 4,000 Chicago contracts on the day. Chicago wheat fell 22 1/2 cents on the week, with Kansas down 10 cents and Minneapolis up 1/4 cent. Lost in amongst yesterday's USDA data was a surprise increase in US wheat exports this season from 24.5 MMT to 25 MMT. The US now needs to export wheat at the rate of 465,000 MT/week to hit that target, but it's only managed to do that once in the past ten weeks. The firm dollar is unlikely to help their cause much. Egypt bought two cargoes of French wheat and one from Russia in a tender today.
EU Grains Mostly Higher
13/01/12 -- EU grains shrugged off yesterday's declines recovering to finish mostly higher with Jan 12 London wheat up GBP3.50/tonne to GBP155.50/tonne and Mar 12 Paris wheat rising EUR3.00/tonne to EUR197.00/tonne.
For the week as a whole nearby London wheat was up GBP3.75/tonne whilst Paris wheat lost EUR4.00/tonne on the continuous chart, courtesy of January expiring mid-week. Mar 12 Paris wheat gained EUR1.75/tonne on the week, whilst Mar 12 London wheat rose GBP3.15/tonne.
Based on this close we have the curious situation where soon to go off the board January London wheat is now a premium to March and parity with May.
The euro had improved steadily throughout the week, buoyed by successful Spanish and Italian debt auctions. However the single currency gave up most of those gains today, with the pound rising from under 1.1950 to close to 1.2100 in late afternoon trading.
The single currency also slumped to fresh 16-month lows against the US dollar as rumours circulated that a credit downgrade was "imminent" for several eurozone countries.
In the end Standard and Poor's downgraded an assortment of countries late in the day, including a loss of it's prized AAA rating for France, criticising Europe's lack of decisive action to resolve the debt crisis.
The recent weakness of the euro is arguably one of the factors that has helped French origin grain make inroads at recent Egyptian wheat tenders. The latter bought three cargoes of wheat today, two from France and one from Russia.
The Buenos Aires Grain Exchange say that corn and soybean plantings there are only around 85% done, normally they'd be finished with corn by now and wrapping up with soybeans.
Early Call On Chicago: Eurozone Downgrades Possibly Imminent
13/01/12 -- Having spent most of the morning in positive territory the overnight grains ended lower, at least the most actively traded months did, with beans and wheat down 1-3 cents and corn falling 3-4 cents.
Despite yesterday's capitulation, prices are still around 30 cents above the December lows for corn and wheat and some 75 cents higher for beans. Prices for all three still remain at historically high levels, so once again it's a case of is the glass half empty or half full?
European jitters seemed to have eased a bit this week, aided by successful Spanish and Italian bond auctions, but of course the debt crisis is far from resolved.
Breaking news right now suggests that Standard & Poor's may be planning on "imminently" downgrading a so far un-named assortment eurozone countries. Some reports are suggesting that "imminently" might mean this very afternoon. That could cause a few ripples.
Overnight deposits with the ECB hit another all-time high yesterday, it's safer there than lending it out to reckless rapscallions like other banks, or perish the thought the private sector.
Argentina got its rain event, so what's on the cards for the weekend and into next week? It's back to "as you were" from a moisture perspective, although at least it's cooler than it has been. There's a bit of rainfall in the forecast for the south and east Tuesday/Wednesday, but precious little in central, western or northern areas all next week.
Egypt bought two cargoes of French wheat and one from Russia in a tender today. US wheat stands more chance of getting an audience with the Pope than a look in on that business this year. Russia's wheat export potential was upgraded by half a million tonnes to 19.5 MMT by the USDA yesterday.
January contracts go off the board today.
Early calls for this afternoon's Chicago session: corn 3-4 cents lower, beans down 2-4 cents, wheat down 2-3 cents. Any European downgrades could add a bit more Friday the 13th pressure.
EU Rapemeal Prices
13/01/12 -- Rapemeal prices on the continent continue to fall in line with declines on soya in America. Jan12 is down EUR7.00/tonne on the week and Feb/Apr12 down EUR8.00/tonne.
Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 184.00 | -2.00 |
| Feb12 | 174.00 | -1.00 |
| Feb/Apr12 | 168.00 | -4.00 |
| May/Jul12 | 165.00 | -2.00 |
| Aug/Oct12 | 150.00 | -2.00 |
| Nov12/Jan13 | 155.00 | -2.00 |
| Feb/Apr13 | 156.00 | -2.00 |
Chicago Close - Thursday
12/01/12 -- Soybeans: Jan 12 Soybeans closed at USD11.78 1/2, down 19 cents; Mar 12 Soybeans closed at USD11.82 1/2, down 20 1/2 cents; Jan 12 Soybean Meal closed at USD306.10, down USD3.90; Jan 12 Soybean Oil closed at 51.15, down 44 points. Down, but not entirely out was perhaps the theme for the soy complex which closed well off session lows. The USDA report was not as bearish for beans as it was for corn and wheat. Argentina's crop was dropped only 1.5 MMT to 50.5 MMT, with Brazil's cut 1 MMT to 74 MMT. US ending stocks were raised 45 million bushels from last month to 275 million, but on a world scale global 2011/12 inventories were reduced by 1.1 MMT to 63.4 MMT. Private exporters announced the sale of 414,000 MT of soybeans to unknown. Weekly export sales were 433,860 MT - in line with expectations. Funds sold an estimated 11,000 soybean contracts on the day.
Corn: Mar 12 Corn closed at USD6.11 1/2, down the daily 40 cents limit; May 12 Corn closed at USD6.18 1/4, also down 40 cents. Funds were said to have dumped 18,000 contracts on the day after the USDA report came in bearish for corn. US 2011 yields yields were also increased by 0.5bpa contrary to an anticipated a 0.5bpa drop. That placed 2011/12 US ending stocks around 100 million bushels higher than expected at 846 million. Argy production by 3 MMT to 26 MMT and left Brazil's unchanged at 61 MMT. Both of those would still be a record. Ukraine- who have been an aggressive seller of late - had it's production for 2011 was raised by 1.5 MMT to 22.5 MMT. Weekly export sales of 321,500 MT for 2011/12 and negative 23,000 MT for 2012/13 were below expectations too.
Wheat: Mar 12 CBOT Wheat closed at USD6.05, down 36 cents; Mar 12 KCBT Wheat closed at USD6.73, down 28 3/4 cents; Mar 12 MGEX Wheat closed at USD8.07 1/2, down 9 cents. Funds sold an estimated 6,000 CBOT wheat contracts on the day. Global 2011/12 wheat ending stocks were raised to 210 MMT, within 0.4 MMT of being the highest ever recorded. Weekly export sales of 365,200 MT for wheat were at the low end of trade estimates. Shipments of just 196,200 MT were the lowest since the first week of the marketing year and fell well short of the amount needed to meet the USDA's target for 2011/12 of 25 MMT. US winter wheat plantings for the 2012 harvest were pegged a million acres higher than expected at 41.95 million, 1.3 million up on last year. The SRW wheat area came in at 8.37 million acres, significantly higher than the 7.77 million anticipated. HRW wheat was estimated at 30.1 million acres versus the 29.44 million expected.
EU Wheat Slumps On Negative USDA Data
12/01/12 -- EU grains ended with Jan 12 London wheat down GBP4.50/tonne, or 2.9%, to GBP152.00/tonne and Mar 12 Paris wheat down EUR7.25/tonne, or 3.6%, to EUR194.00/tonne.
The much awaited USDA report, which was expected to be bullish by many in the market, sent the market crashing in afternoon trade with US corn going limit down - the sixth successive limit move it has posted on this day in January. Three of the last four have now been limit down moves.
Argentine corn production was cut as expected, but at 26 MMT it's still a record crop. Brazil's corn crop was left unchanged at 61 MMT, also an all-time high. Soybean production for both was trimmed, by 1.5 MMT in the case of Argentina and by 1 MMT for Brazil. Even so both numbers would still be the second highest output in history.
On the wheat front US plantings were forecast higher than most anticipated at 41.9 million acres. World production was raised 2.5 MMT to a record 691.5 MMT by virtue of a 1.5 MMT upgrade for Kazakhstan (of whom they've had their estimate far too low for some time now), 0.8 MMT more from Brazil and a small increase for Russia too.
World wheat ending stocks in 2011/12 were raised 1.5 MMT to 210 MMT, which is now less than half a million away from being the highest ever and 8 MMT more than the so called burdensome levels of 2008/09.
There were also some minor tinkerings with world wheat exports with Australia's potential reduced 1 MMT and Russia and America's increased by 0.5 MMT each - the latter looking particularly unlikely to be achieved.
Elsewhere FranceAgriMer increased slightly their estimate for the 2011 harvested soft wheat crop to just under 34 MMT, a 5% drop on 2010. Exports within the EU are seen holding steady with last season at 6.6 MMT, but exports to non-EU destinations are forecast to fall by around a third to 8.7 MMT.
Despite the recent bout of euro weakness Brussels was only required to issue 167,000 MT of soft wheat export licences in the week to Jan 10th. That brings the marketing year to date total to 7.53 MMT, a 37% decline on this time last year.
The euro reversed that trend and was sharply higher today after promising bond auctions from Spain and Italy, helping to explain the larger decline for Paris wheat than it's London counterpart this afternoon.
Early Call On Chicago
12/01/12 -- The overnight grains closed higher in anticipation of a bullish USDA report. It wasn't very friendly at all however.
US ending stocks came in higher than expected for wheat, corn and soybeans. US 2011 production of corn and soybeans was raised and yields were also increased - by 0.5bpa in the case of corn when a 0.5bpa drop was expected.
To top off the whole little lot US wheat plantings for the coming harvest were pegged a million acres higher than anticipated.
On a world scale global 2011/12 wheat ending stocks were raised to 210 MMT, within 0.4 MMT of being the highest ever recorded. World corn ending stocks were increased by 0.9 MMT to 128.1 MMT, although for soybeans they were reduced by 1.1 MMT to 63.4 MMT.
Wheat production in 2011 was raised slightly for Russia to 56.23 MMT and by 1.5 MMT for Kazakhstan to 22.5 MMT.
For corn they dropped Argy production by 3 MMT to 26 MMT and left Brazil's unchanged at 61 MMT. Both of those are still a record! Argentina's export prospects were trimmed from 20 MMT to 18.5 MMT. Ukraine corn production for 2011 was raised by 1.5 MMT to 22.5 MMT.
For soybeans Argentina's crop was dropped only 1.5 MMT to 50.5 MMT, with Brazil's cut 1 MMT to 74 MMT. Argentina's exports were cut by 1 MMT, but Brazil's increased by 0.5 MMT. China's imports were held steady at 56.5 MT.
In other news the USDA's weekly export sales for came in at 365,200 MT for wheat in 2011/12 plus a further 73,000 MT for 2012/12. Corn sales were 321,500 MT for 2011/12 and negative 23,000 MT for 2012/13. Soybean sales were 433,900 MT, all for 2011/12. Expectations on all three were for sales of 350-600,000 MT.
Catching the eye for wheat was weekly shipments of just 196,200 MT - a paltry amount and the lowest since the first week of the marketing year 31 weeks ago. Needless to say that is well below the 465,000 MT level now needed to reach the USDA's export target of 25 MMT, which was inexplicably revised upwards from 24.5 MMT today.
On top of all that news the USDA also announced the sale of 414,000 MT of soybeans to unknown.
All in all we have a very bearish set of numbers for wheat and corn, and maybe modestly less so for soybeans.
March corn closed at USD6.51 1/2 last night and has subsequently been trading around 30-35 cents lower than that in over the counter trading since these numbers came out.
We now need to wait and see if we get a wholesale capitulation this afternoon or if consumers and our old buddies the funds decide that this is a buying opportunity.
Early calls are all over the place from limit down to 15-20c lower on corn. Limit down to 15-20c lower on wheat and from 5-15c to 20-30c lower on beans. I'd expect corn to open 30-35c down in line with synthetic trade, with wheat down around 30c and beans 20-25c weaker.
The USDA Numbers
12/01/12 -- The USDA's eagerly awaited raft of important numbers including US winter wheat plantings, revised 2011 production numbers for corn and beans, quarterly stocks and 2011/12 ending stocks:
USDA 2011/12 Ending Stocks Estimates (billion bushels):
| Product | USDA | Avg Est | Range | USDA Dec Est | USDA 10/11 | |
| Wheat | 0.870 | 0.842 | 0.766-0.888 | 0.878 | 0.862 | |
| Corn | 0.846 | 0.749 | 0.587-1.020 | 0.848 | 1.128 | |
| Beans | 0.275 | 0.233 | 0.127-0.285 | 0.230 | 0.215 |
USDA Quarterly Stocks Estimates (billion bushels):
| Product | USDA | Avg Est | Range | Year Ago | |
| Wheat | 1.656 | 1.695 | 1.590-1.904 | 1.933 | |
| Corn | 9.642 | 9.391 | 9.200-9.700 | 10.057 | |
| Beans | 2.366 | 2.324 | 2.227-2.577 | 2.278 |
USDA 2011 Production Estimates (billion bushels):
| Product | USDA | Avg Est | Range | USDA Dec Est | USDA 10 | |
| Corn | 12.358 | 12.265 | 12.165-12.375 | 12.310 | 12.447 | |
| Beans | 3.056 | 3.048 | 3.010-3.200 | 3.046 | 3.329 |
USDA 2011 Yield Estimates (bushels/acre):
| Product | USDA | Avg Est | Range | USDA Dec Est | USDA 10 | |
| Corn | 147.2 | 146.163 | 145.0-147.5 | 146.7 | 152.8 | |
| Beans | 41.5 | 41.358 | 41.0-42.7 | 41.3 | 43.5 |
USDA 2012 Crop Winter Wheat Acres (million acres):
| Product | USDA | Avg Est | Range | USDA 2011 |
| All Wheat | 41.9 | 40.933 | 39.600-42.850 | 40.646 |
EU Rapemeal Prices
12/01/12 -- Rapemeal prices on the continent are down sharply for the second day running on the back of a slump in the Chicago soymeal market due to rains in Argentina.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 186.00 | -6.00 |
| Feb12 | 175.00 | -5.00 |
| Feb/Apr12 | 172.00 | -4.00 |
| May/Jul12 | 167.00 | -3.00 |
| Aug/Oct12 | 152.00 | -4.00 |
| Nov12/Jan13 | 157.00 | -3.00 |
| Feb/Apr13 | 158.00 | -3.00 |
News Snippets
12/01/12 -- A record 8.25 MMT carry-in left over from last season, plus record output this year (estimated at 28.3 MMT by ABARES) leaves Australia awash with wheat. November wheat exports were up 50% from Ocober to 1.75 MMT and almost double the volume shipped in the same month in 2010.
The euro is up for once this morning after promising bond auctions from Spain and Italy. Spain raised EUR10.4 billion - double the targeted amount, with total bids amounting to EUR18.7 billion. Meanwhile 10-year Italian yields came in at 6.65%, down 33 pips and 1-year bills were sold at 2.735% versus 5.952% a month ago.
The United Nation's Food and Agriculture Organization says that world food prices fell 2.4% in December. That will have them dancing in the Cairo bread queues I'm sure. They'd better make the most of it judging by recent fund activity. Is anyone else getting deja vu here?
FranceAgriMer have slightly increased their estimate for the 2011/12 soft wheat harvest to 33.97 MMT. Domestic consumption is seen unchanged from last month at 15.34 MMT. Exports within the EU are also raised a tad to 6.62 MMT and exports to non-EU destinations upped from 8.6 MMT to 8.7 MMT, making total shipments this season to 15.44 MMT, 21.7% down on last year's 19.7 MMT. Ending stocks are place at 2.29 MMT versus 2.93 MMT in 2010/11.
The Bank of England have surprised nobody by leaving UK interest rates on hold at 0.5% and kept a lid on QE too.
Tesco have announced that they had a disappointing Christmas, their shares plunged 14% this morning on the news. Blimey, how much stuff did AWT nick I wonder?
The overnight grains are all a bit higher, with wheat up 4-5 cents, corn up 6-7 cents and soybeans 7-8 cents higher in anticipation of a slightly bullish USDA report. Will they deliver?
The Morning Rant
12/01/12 -- Argentina got it's soaking rains but corn closed virtually unchanged, seemingly unmoved by the news, supported by fund buying once again. These boys are starting to build up a significant long position in corn, buying an estimated 5,000 corn contracts last night to add to the 4,000 they bought on Tuesday and the 11,000 added on Monday. If you're a livestock farmer who wants prices down then this developing trend should get you worried.
For a video of the Argy rains go here, it's in Spanish or whatever lingo they speak down there, but it's worth a look even if only to ogle the young and foxy presenter.
Luckily for you and me, my newest mate Lourens who sent me the link has translated the gist of it for us:
"Significant rains went from the south of the Buenos Aires province and then gradually up to the West to North-Western regions (provinces of Córdoba and Santa Fe). This means rain in all of the important soy, mais, sunflower areas. The meteorologist says that around 40 millimetres has fallen (on average).
"Farmers in different regions gave local reports about the situation. They confirm rainfall between 25 to 80 mm. In general however around 100 mm is needed to get the soil sufficient back to normal for optimum growth. In some areas it had not rained for 40 days (biblical isn't it?).
"Damage due to drought was reported everywhere. Especially the first 'batch' of mais suffers most. This mais is just in the stage of kernel-setting, so high demand of water and nutrients. Mais however sowed in a later stage has been strongly affected as well but strong recovery can be expected when regular rains will come.
"Reports are more optimistic when speaking about soy. The early sowed soybeans are suffering from drought, with permanent damage, but good recovery can occur in many cases.
"The second batch of soybeans (sowed in December) can now benefit fully from the rain, however already (small) plants are lost due to drought. For the soy-areas that are still awaiting sowing, farmers can decide to use a short-cycle variety.
"Long term (3-months) forecast for rain is expected to be normal or slightly below normal. Long tern expectations for temperature normal or slightly above normal."
Many thanks to Lourens for that.
Now we wait on the USDA to see if they chose to urinate on the Fund's chips.
Chicago Soybeans Tumble On Argentine Rains
11/01/12 -- Soybeans: Jan 12 Soybeans closed at USD11.97 1/2, down 26 1/4 cents; Mar 12 Soybeans closed at USD12.03, down 29 cents; Jan 12 Soybean Meal closed at USD310.00, down USD9.00; Jan 12 Soybean Oil closed at 51.59, down 61 points. Beans fell heavily, as did rain in Argentina, giving up most of yesterday's gains. Funds sold 8,000 soybean contracts on the day as Argentina got a more widespread and heavier rainfall event than had been expected. We now need to see what happens there tomorrow with more rains in the forecast before they move north. Tomorrow's USDA report is the next highlight of the week. That isn't expected to do a lot for US soybean production or stocks. South America output is of course thought likely to be lowered with Argentina coming in around 25 MMT and Brazil around 72 MMT. Also tomorrow we have the USDA's weekly export sales which for beans are expected to be around 350-600 TMT.
Corn: Mar 12 Corn closed at USD6.51 1/2, down 1/2 cent; May 12 Corn closed at USD6.58 1/4, down 1 cent. Funds were said to have bought 5,000 corn contracts on the day as they "rebalance" their books in favour of the grain. That would have them building up a very significant long over the past couple of weeks. Argentine rains are thought to be less likely to benefit corn than soybeans at this stage. Tomorrow's USDA reports are expected to be bullish for corn with US 2011 production and 2011/12 ending stocks lowered. South American output is also expected to be cut with Argentine production coming in around 25 MMT (from 29 MMT last time) and the Brazilian crop to something like 59 MMT (from 61 MMT). Weekly export sales are thought likely to be in the region of 350-600 TMT.
Wheat: Mar 12 CBOT Wheat closed at USD6.41, up 1 1/4 cents; Mar 12 KCBT Wheat closed at USD7.01 3/4, up 3 3/4 cents; Mar 12 MGEX Wheat closed at USD8.16 1/2, up 4 1/4 cents. Tomorrow's USDA reports aren't thought likely to throw up too many surprises for wheat. The one area that is open for debate is US plantings for this year's harvest with trade estimates of around 39.6 to 42.8 million acres, compared to 40.65 million last time. Trade estimates for tomorrow's weekly export sales report range from 350 to 600 thousand MT. Weekly shipments will also be of interest as these frequently keep missing the target required to hit the USDA's estimate of 24.5 MMT for the full 2011/12 season, implying larger ending stocks than the trade currently expects.
London Wheat Posts Highest Close Since September
11/01/12 -- EU grains finished mixed although Jan 12 London wheat bucked the trend closing GBP1.60/tonne higher at GBP156.50/tonne, Mar 12 Paris wheat fell EUR0.50/tonne to EUR201.25/tonne. Other London months were between GBP0.60/tonne lower to GBP0.55/tonne higher.
For London wheat this was the highest close for a front month since late September.
Argentina got a bit more rain than was anticipated overnight and throughout today. There's a fair bit more in the forecast for tomorrow as well before the rains move away to the north. Also on a positive note, the temperatures that this front is leaving behind are much cooler than to 95-105 degrees that they have seen of late.
The trade is still debating rainfall amounts and how much benefit this event is likely to have done. Martell Crop Projections say that "2-4 inch totals (fell) in Santa Fe, Cordoba and northern Buenos Aires. These are key corn and soybean provinces."
The vibe at the moment seems to be that soybeans stand to benefit more than corn, particularly second crop soybeans (usually sown in December and often immediately after wheat) which can now benefit more fully from these rains.
The big highlight of the week apart from that is tomorrow's USDA world supply & demand and stocks report. They will also announce their ideas on US wheat plantings for the 2012 harvest. Trade opinion on this varies quite widely with some anticipating a drop of as much as a million acres from their previous estimate of 40.65 million, yet others such as Allendale are predicting an increase of up to 2.2 million.
Other news is limited. Algeria are tendering for 50,000 MT of wheat for March. South Korea is buying optional origin feed wheat to supplement it's corn requirements at heavily discounted levels to US corn.
Early Call On Chicago
11/01/12 -- The overnight grains ended lower as rains finally arrived for Argentina, bringing maybe slightly better totals than had been forecast. It looks like there's possibly a bit more in the forecast for tomorrow now too, here's a link to the latest GFS models with today's forecasts in the left hand column and yesterday's in the right hand column: Spot the difference.
It also seems that this front has ushered in cooler air behind it, so there's some respite from the hot temperatures that we've seen over the past couple of weeks. It seems far too early however to know how much good this rain event will bring, but it certainly can't do any harm.
The Globex market finished with beans 12-13 cents lower, corn down 4-5 cents and wheat down 3-5 cents.
All eyes now are on tomorrow's USDA report. The trade is expecting it to be a bit friendly for corn, with US 2011 production seen lower than last month and 2011/12 US ending stocks subsequently shrinking. Soybean output and stocks in the US are seen barely changed. All wheat acres may rise a little. Cuts for soybean and corn output in South America are also likely. That is what the market is banking on anyway. I will reserve judgement until tomorrow.
Other news is pretty scant. South Korea are buying feed wheat again today, this time for delivery by April 1 at around USD63.50/tonne cheaper than US corn.
The firm dollar and profit-taking ahead of tomorrow's reports mean that the opening calls are lower for this afternoon's CBOT session: beans down 10-12 cents, corn and wheat 3-5 cents lower.
EU Rapemeal Prices
11/01/12 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 192.00 | -1.00 |
| Feb12 | 180.00 | -5.00 |
| Feb/Apr12 | 176.00 | -4.00 |
| May/Jul12 | 170.00 | -4.00 |
| Aug/Oct12 | 156.00 | -3.00 |
| Nov12/Jan13 | 160.00 | -4.00 |
| Feb/Apr13 | 161.00 | -4.00 |
Little Change In Chicago Ahead Of USDA Report
10/01/12 -- Soybeans: Jan 12 Soybeans closed at USD12.23 3/4, down 2 cents; Mar 12 Soybeans closed at USD12.32, down 1 cent; Jan 12 Soybean Meal closed at USD319.00, down USD1.20; Jan 12 Soybean Oil closed at 52.20, up 18 points. There was very little change across the board as the trade awaits the extent of Argentine rains over the next few days and ahead of Thursday's USDA reports. There is plenty of scepticism that rainfall amounts will turn out to be inadequate. Nevertheless funds sold an estimated 3,000 soybean contracts on the day. Conab today increased their Brazilian soybean crop estimate to 71.75 MMT. The USDA announced the sale of 145,000 MT of soybeans to "unknown" today. China said that it imported 52.64 MMT soybeans in 2011, down 3.9% from 2010.
Corn: Mar 12 Corn closed unchanged at USD6.52; May 12 Corn closed at USD6.59 1/4, down 1/4 cent. As with soybeans the entire complex seems to have set out it's stall, positioned itself how it wants, and is now happy to wait and see what fireworks the USDA may light on Thursday. By then we will also have a much better handle on rains in South America this week and a more reliable forecast for potential follow-up moisture for the middle of next week. Funds were said to be net buyers of 4,000 contracts on the day, further adding to their recent newly established length. In Thursday's report the USDA is seen cutting US 2011/12 ending stocks from 848 million bushels to around 750 million and 2011 US production to 12.265 billion bushels versus 12.310 billion last time.
Wheat: Mar 12 CBOT Wheat closed at USD6.39 3/4, down 2 cents; Mar 12 KCBT Wheat closed unchanged at USD6.98; ar 12 MGEX Wheat closed at USD8.12 1/4, up 2 1/2 cents. Weather developments in South America are less likely to affect wheat other than to potentially increase demand for it by virtue of lower corn production and therefore exports from Argentina. However, lower South American corn output isn't likely to do much, if anything, for US wheat demand. We are already starting to see Asian buyers snapping up optional origin feed wheat, probably Australian and maybe Black Sea origin, to dilute their corn requirements. South Korea's largest feed producer has bought two cargoes of optional origin wheat at around USD60/tonne cheaper than US corn in the past couple of days.
EU Wheat Awaiting News From USDA And Argentina
10/01/12 -- EU grains finished mixed with Jan 12 London wheat up GBP0.35/tonne to GBP154.90/tonne and expiring Jan 12 Paris wheat rising EUR0.50/tonne to EUR203.25/tonne.
Fresh news was pretty thin on the ground, rains are set to arrive in Argentina today and last through to Friday with varying amounts of a quarter of an inch to up to 3 inches with 85-90% coverage.
The other big event of the week is Thursday's USDA report which will likely feature downgrades to South American corn and soybean production plus revised final estimates on 2011 US production and US all wheat acres. If that wasn't enough we'll also get new quarterly and 2011/12 ending stocks numbers too.
For the time being at least fund money seems to quite fancy getting back into the grains sector in 2012. The longevity of their renewed risk on strategy may well decide where we go next.
The EU still has the ability to upset the apple cart any time though. Ratings agency Fitch say that there is a significant chance that Italy will have its credit rating downgraded as soon as this month. Greece is trying to get private sector bondholders to accept a 50% haircut on debt in an attempt to get a second EU/IMF bailout.
South Korea's largest feedmiller has bought a couple of optional origin cargoes of feed wheat this week, at levels around USD60/tonne below the price of US corn (which it has also bought), indicating that it is watering down it's corn requirements with cheaper alternatives.
Early Call On Chicago
10/01/12 -- The overnight grains finished mixed with wheat around 2-3 cents weaker, beans down a fraction and corn up a fraction. Crude oil is two dollars firmer.
The very latest weather forecasts continue to be poured over. Rains should cover 85-90% of Argentina during the next few days with amounts varying from a quarter of an inch to up to 3 inches in places. A new development today is an increased chance of moisture again in the middle of next week.
South Korea's largest feed producer has bought two cargoes of US corn today, plus one of optional origin feed wheat from Glencore to add to yesterday's similar feed wheat purchase from Toepfer. The wheat was priced around USD60/tonne cheaper than the corn. They clearly seem to be diluting their corn requirements with much cheaper feed wheat.
Conab today peg Brazil's soybean crop at 71.75 MMT, which although down on last season is actually an increase on where they were in December and the second largest crop in history. Corn production is however seen down from last month but up on a year ago to 59.2 MMT - still an all-time high despite the weather problems there.
Celeres still forecast a 74.4 MMT Brazilian soybean crop and a corn harvest a smidgen under 62 MMT.
Besides the Argentine rain issue the trade is nervously awaiting Thursday's USDA data. A bit like Christmas when you're a kid that can't come soon enough. Last month they had Brazilian soybeans at 75 MMT and Argy output at 52 MMT. For corn they had 61 MMT and 29 MMT.
China says they imported 52.64 MMT soybeans in 2011, down 3.9% from the previous year.
Early calls for this afternoon's CBOT session: corn flat to up 2c, beans flat to down 1c, wheat down 2-3 cents.
EU Rapemeal Prices
10/01/12 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 193.00 | +3.00 |
| Feb12 | 185.00 | +2.00 |
| Feb/Apr12 | 180.00 | +1.00 |
| May/Jul12 | 174.00 | +2.00 |
| Aug/Oct12 | 159.00 | +4.00 |
| Nov12/Jan13 | 164.00 | +4.00 |
| Feb/Apr13 | 165.00 | +4.00 |
The Morning Vibe
10/01/12 -- The overnight grains are narrowly mixed, but there's no real sign of a significant Turnaround Tuesday at this stage.
Of undoubted note is the significant inflow of fund money into the grains sector over the last couple of weeks. Having spent months reducing their corn length, getting down to around all square on beans and establishing a weighty wheat short there are signs that they may have rediscovered their risk appetite.
Four months ago non-commercial funds had a net long position of over 270,000 Chicago corn contracts. By Christmas those same funds were long less than 45,000 contracts. Last week's commitment of traders report (to Jan 3rd) shows them doubling that length in a week, they are thought to have continued in the same vein since. An updated COT report will be out on Friday.
As long as fund money is prepared to flood in at this rate then it looks like we'll go higher. Developments in Europe will almost certainly govern the latter.
The pattern for 2012 then looks set to be decided by who wins this particular tug-of-war game, just as it was for much of 2011 in my humble opinion.
Merkel and Sarkozy met in Berlin yesterday and said that they don't want any country to leave the eurozone and that progress in being made to treaty changes which will need to be ratified by all 17 countries that use the single currency. They also conceded that there's been no progress on re-negotiating the Greek aid package.
In other matters it is interesting to note I think that Jan 12 Paris wheat, which goes off the board today currently stands at an EUR1.50/tonne premium to Mar 12. That differential has eroded from EUR8.75/tonne on the last trading day before Christmas.
Exactly how Paris wheat has managed to find itself in a position where these large front-end premiums have become the norm during this crop year is a mystery. There is clearly no clamour for spot physical wheat as maybe there was last spring.
We are heading into an important few days with rain potentially on the cards for Argentina pushing northwards over the next few days. Whilst these may be less widespread than thought last week, there seems to be plenty in the forecast for Brazil.
Of course we also have the USDA out on Thursday. The market is expecting cuts to 2011/12 US ending stocks for wheat and corn and little change for beans. They will also give us final production numbers for 2011 in the US with corn seen at 12.265 billion bushels versus 12.310 billion last time. Soybean production isn't expected to show much change from the previous 3.046 billion bushels. The wheat planted area for the 2012 harvest is expected to be raised from 40.646 to 40.933 million acres, although some estimates suggest as much as a 2.2 million acre increase.
The USDA will also give us their ideas on South American production. The average trade guess sees Brazilian soybean output falling from 75.0 MMT to 73.8 MMT, with Argy soybeans down from 52.0 MMT to 50.8 MMT. Brazilian corn production is seen falling from 61.0 MMT to 59.5 MMT and that of Argentina from 29.0 MMT to 25.8 MMT.
If those average trade guesses come true then we've seen soybean production for the two major South American producers decline from 127.0 MMT to 124.6 MMT, a drop of 2.4 MMT from the December report. That's less than 1% of world soybean production "lost" yet CBOT prices have risen 11.4% from the December lows.
For corn we're looking at a combined loss of 4.7 MMT, or just a half percent of world production yet CBOT prices are up 12.6% from the December lows.
Fund money inflows are clearly once again influencing prices by far more than the fundamentals are. Will Europe poke them in the eye?
Argentina Latest
10/01/12 -- Will it, won't it? There are a few subtle changes again today to the latest GFS weather maps for Argentina. For your personal guidance once again here they are stitched together along with the maps from Saturday to show any appreciable difference.
Saturday's forecasts for Weds, Thur, Fri are the left hand column with today's revised maps in the right hand column.
Clickety click
Chicago Close
09/01/12 -- Soybeans: Jan 12 Soybeans closed at USD12.25 3/4, up 36 1/4 cents; Mar 12 Soybeans closed at USD12.33, up 36 1/2 cents; Jan 12 Soybean Meal closed at USD320.20, up USD10.60; Jan 12 Soybean Oil closed at 52.02, up 122 points. Beans led the entire complex, with some suggesting that they might be most at risk in Argentina due to their longer growing season. Hot and dry was the weekend theme. Rain is still on the cards later this week, but perhaps not as much as was thought last week. Opinion is widely divided over the extent of existing damage and the potential for recovery should rains arrive. The USDA reported the sale of 145,000 MT of beans to unknown.
Corn: Mar 12 Corn closed at USD6.52, up 8 1/2 cents; May 12 Corn closed at USD6.59 1/2, up 8 3/4 cents. Funds appear to have begun 2012 with a renewed risk appetite, buying an estimated 11,000 corn contracts on the day. They're hoping for some further bullish impetus from the USDA on Thursday. The bulk of the trade estimates for Argentine corn production now seem to be centred around the 25 MMT range versus 29 MMT from the USDA last month. The trade is also expecting 2011/12 US ending stocks to be reduced by around 100 million bushels from last month's 848 million.
Wheat: Mar 12 CBOT Wheat closed at USD6.41 3/4, up 17 cents; Mar 12 KCBT Wheat closed at USD6.98, up 18 cents; Mar 12 MGEX Wheat closed at USD8.09 3/4, up 8 3/4 cents. The theory is that wheat demand will benefit from a slump in South American corn production. So it might, but it's unlikely that it will US wheat that gets to see the benefit. South Korea's largest feedmiller bought 55,000 MT of optional origin feed wheat from Toepfer today. That could end up being Eastern European or Australian wheat, it certainly won't be US wheat. Meanwhile US wheat hasn't won a share of Egypt's business since last June.
EU Grains Begin Week On The Offensive
09/01/12 -- EU grains ended with Jan 12 London wheat up GBP2.80/tonne to GBP154.55/tonne and soon to expire Jan 12 Paris wheat up EUR1.75/tonne to EUR202.75/tonne.
Jan 12 Paris wheat goes off the board tomorrow, new front month March closed EUR6.00/tonne higher at EUR201.25/tonne. You could say that that suggests that the front-end premium that we've seen of late maybe hasn't really been justified, and why should it exist at all in fact?
Argentine weather dominates the start of another trading week. Some are saying that this is the worst drought in 70 years, and could cause more damage than the one of 2008/09 that slashed corn and soybean output by around 30%.
Yet others say that the drought can "in no way be compared to what happened in 2008," according to a report on Bloomberg today quoting Argentina’s National Institute for Farming Technology.
Whichever is true, it is the market's perception of reality that is important right now.
In other news German farmers have planted 5.52 million hectares of winter grains for the 2012 harvest compared to 5.34 million a year ago. The German Statistical Office say winter plantings of wheat are 3.23 million ha (+2.0%), barley sowings are 1.24 million ha (+5.6%) and those of winter OSR at 1.32 million ha (+1.3%).
Chicago grains came in firmer and swiftly moved sharply higher in afternoon trade, adding to enthusiasm for EU wheat.
The European debt crisis is still bubbling along under the surface. Data today shows that Italian & Spanish bank deposits declined sharply during Oct/Nov, raising fears a deposit outflow trend has already started in Italy and Spain.
Later in the week we have the USDA's revised numbers on US crop production in 2011, plus quarterly ending stocks, 2011/12 ending stocks and an assortment of world production numbers.
Early Call On Chicago
09/01/12 -- The overnight grains were higher, reversing Friday's losses in beans and doing even better than that for corn and wheat. Trade talk is that there's less rain in the forecasts for Argentina than there was. That's true, see the story below, although the difference isn't too striking to me.
"Argentina will receive very beneficial moisture during the next few days, producing near 90% coverage," is one story I read this morning. Yet moisture stress is continuing to cause "irreversible yield loss for at least 75% of early-planted corn" is another.
It's up to the market to decide who to believe. There are plenty of people out there willing to suggest what the USDA may or may not say on Thursday. Some are anticipating a bullish report and others expecting a bearish slant. Only time will tell, personally I've given up trying to second-guess them.
What I can tell you is that last season's January report was almost universally bullish, especially on corn which touched limit up that particular afternoon. In that report they cut US yields and production by more than anticipated, with yields coming in 1.5 bu/acre below their December number and lower than even the lowest trade estimate.
The year before they went for the opposite tack and surprised the market pegging US 2009 production at a record 13.2 billion bushels, with a yield of 165.2bu/acre that beat the previous record by the proverbial country mile. March corn futures closed at just USD3.92 1/2 that day, down the at the time daily limit of 30 cents.
In 2009 they pegged carryout for corn, beans and wheat significantly higher than had been expected. Corn closed limit down again that day, and in delivery and therefore limitless Jan beans fell 83 1/2 cents!
So although we don't know which way the market is going to go on Thursday, history tells us that the potential is there for it to go very sharply one way or the other.
Fresh news is thin on the ground ahead of the will it won't it rain and USDA stories.
The USDA have announced the sale of 145,000 MT of 2011/12 soybeans to unknown this afternoon.
Morocco is shopping for 190,000 MT of what will probably end up being French wheat.
The euro is hovering around 1.27 against the US dollar, if it goes through 1.26 then it will be close to it's lowest since the summer of 2010 against the greenback.
Spec money appears to be flooding back into the grains. Agrimoney report their net long in Chicago corn "soared by nearly 44,000 lots to 192,500 contracts" in the week to January 3.
Will the weather in South America and the USDA reaffirm their actions?
Early calls on this afternoon's CBOT session: corn up 7-9 cents, beans up 9-10 cents, wheat up 8-12 cents.
Argentina
09/01/12 -- Reports this morning suggest that the GFS model is showing less rain for Argentina today than it did on Friday, and that is being cited as the reason for the overnight grains firmness this morning.
My little animation that I created over the weekend, highlighting where and when the rains are/were due means that I've still got copies of Saturday's GFS maps on my PC. Out of interest, I thought I'd compare these to today's revised maps to see just how different they are.
The answer seems to be "not a great deal" if you ask me. Here's a link so you can make your own mind up with Saturday's maps for Weds, Thur and Fri down the left and today's down the right:
Spot the difference
Twitterrific
09/01/12 -- Twitter, what's that all about? It's for kids isn't it, like Two Facedbook, Kelly Suchandsuch is a slag. No I'm not you fat cow etc, etc.
That seems to be many people's perception of it. Which reminds me of when I set up my very first website and told one of my now retired customers that he could check out our daily prices live online without having to wait for a fax to come in. To which he replied "no thank you I'll wait for the fax. I don't do the internet. It's full of Freddie Starr ate my hamster stuff isn't it?"
Now I'm probably going back to around 1995 here, but his opinion of the usefulness, or in this case uselessness, of the internet was not uncommon then. Yet now we can't do without it.
So if you haven't got round to Twittering yet then I implore you to give it a go.
For the uninitiated the basic principal is that you follow whoever you like and basically build up a little (or large) network of people who's opinions you find useful or interesting.
The circle of people that you follow can be as diverse as you like and tailored to suit your own specific interests. Reuters, Bloomberg, Viz, Rotherham United, Nogger, Rio Ferdinand, Eddie Izzard, some person posing as Princess Di in heaven, Elizabeth Windsor, David Cameron, BBC Breaking News, BBC Business and some guy who keeps bees in Botswana. They're all on there.
You can link up with real farmers all over the world. OK, some times they might post "having fish and chips for tea, yummy" but then other times it might be "not rained here for months, wheat crops very poor, here's a link to how my fields are looking..."
Give it a go. Search for @noggersblog and see who I'm following and follow a few of them if you like what they post, you can then see who their followers are and build up you little network that way.
A few others well worth checking out are @ArlanFF101, @BBCBreaking, @BBCBusiness, @WXRISKCOM, @Grainboy, @Licht_biofuels, @Agrimoney, @AgsPlayers, @GrainUK, @MRJRNELSON65, @JGCWatts and @djeudall just to set the ball rolling.
EU Rapemeal Prices
09/01/12 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 190.00 | -1.00 |
| Feb12 | 183.00 | +4.00 |
| Feb/Apr12 | 179.00 | +3.00 |
| May/Jul12 | 172.00 | +3.00 |
| Aug/Oct12 | 155.00 | +3.00 |
| Nov12/Jan13 | 160.00 | +2.00 |
| Feb/Apr13 | 161.00 | +1.00 |
The Morning Vibe
09/01/12 -- No surprises for guessing that it's been another hot and dry weekend in Argentina. That's what was forecast and that's what they got, so no changes there then.
What does appear to have changed over the weekend though is the weather forecast for the week ahead. WxRisk say that Sunday models show SOME good rains in central Argentina for Jan 10-11 but NOT the major 2-4" rains with 70% coverage that the GFS model was predicting on Friday.
At 9am the overnight grains currently see corn up 7-8 cents, beans up 10-12 cents and wheat tagging along for the ride 8-10 cents higher. Yes, wheat which is virtually fully harvested in Argentina is up more than corn which isn't even fully planted yet. There must be a woman driving this particular bull bus, that's all I can say!
In what already looks sure to be a volatile week we've got our chums the USDA out with their January numbers on Thursday. As mentioned elsewhere, corn has put in a limit move one way or the other in each of the last five years on the day of this particular report. Will it be up or down this time round?
The vibe in the market seems to be that there is probably more chance of a bearish report than a bullish one, but second guessing the USDA these days is virtually impossible so we're just going to have to wait and see.
Also due later this week are the first Spanish (Thursday) and Italian (Friday) bond auctions of 2012.
Prior to that German Chancellor Merkel and French President Sarkozy are meeting in Berlin today and are due to hold a press conference at 13.30 Central European Time.
Elsewhere the state of Western Australia has now brought in it's second largest grain harvest on record at 14 MMT - more than double last year's production, I gather. That's well above expectations of 11-12 MMT back in September.
