Chicago Close - Friday
20/01/12 -- Soybeans: Mar 12 Soybeans closed at USD11.87, down 10 cents; May 12 Soybeans closed at USD11.95 1/2, down 8 3/4 cents; Mar 12 Soybean Meal closed at USD311.90, down USD3.80; Mar 12 Soybean Oil closed at 50.43, down 63 points. On the week as a whole beans gained 28 1/2 cents, meal USD10.40 and oil 14 points. Weekly soybean export sales were above expectations of 500-900 TMT at 991,100 MT, of which more than a third was to China. They won't be back for much next week as it's their Lunar New Year celebrations. Informa Economics estimated spring soybean plantings in the US at 74.568 million acres, down a fraction from their December estimate and over 400,000 below the area in 2011. Funds were said to have been sellers of around 5,000 soybean contracts on the day, squaring things off a little ahead of a weekend that may bring decent rains to Argentina.
Corn: Mar 12 Corn closed at USD6.11 1/2, up 5 1/2 cents; May 12 Corn closed at USD6.16 3/4, up 4 3/4 cents. On the week corn was 12 cents higher. Funds were said to have bought 6,000 contracts on the day, making them a suggested net buyer of 14,000 on the week. Weekly export sales were good at 759,900 MT - in line with trade estimates of 500-850 TMT and included 132,200 MT for China. New crop Dec 12 finished 5 1/4 cents lower after Informa estimated 2012 US corn plantings at a very large 94.748 million acres, up 2.8 million on last year and easily the largest since the war. Should they be right and US yields were to fall back into line with the trend then the US would produce an unprecedented volume of corn this year - almost four and a half times the entire output of Brazil and Argentina combined.
Wheat: Mar 12 CBOT Wheat closed at USD6.10 1/2, up 4 3/4 cents; Mar 12 KCBT Wheat closed at USD6.67, up 9 cents; Mar 12 MGEX Wheat closed at USD7.98 3/4, down 1/4 cent. On the week Chicago wheat was 8 1/4 cents higher, with Kansas losing 3 cents and Minneapolis down 2 1/2 cents. Weekly export sales of 584,200 MT were towards the upper end of trade estimates. Sales aren't shipments though. Actually physical exports fell short once again and have now been below the level required to hit the volume the USDA say that the US will export this season in 13 of the past 15 weeks. Informa peg US all wheat area for the 2012 harvest at 57.9 million acres, an increase of 3.5 million, or 6.4% on last year and 600,000 acres up on their December estimate.
EU Wheat Attempting To Defy Gravity
20/01/12 -- EU grains ended with Jan 12 London wheat down GBP0.25/tonne at GBP157.00/tonne and Mar 12 Paris wheat was unchanged at EUR198.50/tonne.
EU wheat continues to do a pretty good job of attempting to defy gravity, closing GBP1.50/tonne higher on the week. Paris wheat clawed it's way EUR1.00/tonne higher compared with last Friday.
Weather models have developed a wetter look for Argentina this weekend, with 1-3 inch totals expected to add to last week's similar amounts. The cooler temperatures that this front is expected to leave behind should also be of benefit.
Despite downgrading corn output forecasts for both Brazil and Argentina yesterday the IGC say that they still expect both countries to produce record corn crops this year.
Brussels issued 175,000 MT of soft wheat export licences this week, bringing the marketing year-to-date total 7.7 MMT so far, a 36% decrease on where we were this time last year despite a larger crop this time round.
US analytical firm Informa Economics today estimated that American farmers will plant 57.9 million acres of wheat for the 2012 harvest, an increase of 3.5 million, or 6.4%, on last year. That's 600,000 acres up on their December estimate.
For corn they came out with 94.75 million acres, up 2.8 million on last year and almost 360,000 acres higher than they suggested in December. That's around 1.2 million acres above the current post war record high of 93.5 million set in 2007 when US farmers gleefully jumped on the ethanol bandwagon.
If they're right, and US yields in 2012 were to return to a trendline 160 bu/acre, that would produce a monster crop of around 14 billion bushels this autumn, allowing for an 8% abandonment rate. That's 355.6 MMT in English money, which would be a whopping 41.6 MMT more than in 2011, an increase of 13% and probably around twice the size of the entire production of Argentina this year.
Early Call On Chicago
20/01/12 -- The overnight grains closed mixed with beans 3-5 cents weaker, and with corn and wheat trading a cent or two either side. Crude is down almost a dollar and a half sending it back below USD100/barrel.
Weekly export sales from the USDA came in at a net 584,200 MT, towards the upper end of trade estimates. Shipments of 357,900 MT however once again fell short of the level required to hit the USDA's 2011/12 target. They've only beat that target twice in the past 15 weeks.
Corn sales of 759,900 MT were in line with trade estimates of 500-850 TMT and included 132,200 MT for China. Soybean sales were 991,100 MT of which more than a third was China. Yesterday's reported Chinese business won't show up until next week.
Chinese New Year celebrations will keep them out of the market next week. Some of this week's widely reported sales were likely a result of that.
Widespread rains are expected in Argentina over the weekend and early part of next week, that may encourage a bit of profit-taking and/or spec selling heading into the weekend.
It was only a matter of time, but some reports are already talking of "excessive" rain hampering harvest progress in Brazil.
The IGC peg soybean production there at 71.8 MMT, and that in Argentina at 51 MMT which is interestingly a little higher than the USDA's scoffed at 50.5 MMT released last week.
Beans have been the biggest gainer on the week so far, up 38 3/4 cents as opposed to corn which is up 6 1/2 cents and wheat, up 3 1/2 cents. With a good chance of decent weekend rains in Argentina then I guess we can expect beans to lead the way lower this afternoon.
Informa are expected to release updated 2012 acreage forecasts mid session. They have a habit of being towards the high end with their estimates.
Europe has gone a bit quiet this past few days, as this millstone of a problem has had the habit of doing over the past year or so. As we all know by now though a sudden volcanic eruption is possible at any time with this festering volcano.
Greece, desperate for the next tranche of EU/ECB/IMF cash continues to hold a gun to it's creditors heads, saying it's 50% or nothing what do you want? As reported previously though it's actually 15% plus a probably worthless 35% time bomb of a bond to have ticking away on your balance sheet for Christ knows how long or nothing. Nothing is almost starting to look the more attractive of the two!
It is only a matter of time before this baby blows IMHO, with the fan splattering brown smelly stuff all around the globe. If and when that happens then it will be like Italian captains deserting their ship as the funds scramble to get out.
But, don't let that worry you, six dollar wheat and corn and twelve dollar beans are cheap as chips, everybody knows that so fill your boots son.
Early calls for this afternoon's session: beans down 3-5 cents, wheat and corn mixed.
EU Rapemeal Prices
20/01/12 -- Rapemeal prices on the continent are a bit of a mixed bag today, slightly weaker nearby and a bit firmer going forward.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 181.00 | -2.00 |
| Feb12 | 174.00 | -1.00 |
| Mar/Apr12 | 173.00 | +1.00 |
| May/Jul12 | 166.00 | +2.00 |
| Aug/Oct12 | 153.00 | +1.00 |
| Nov12/Jan13 | 159.00 | +2.00 |
| Feb/Apr13 | 161.00 | +2.00 |
The Morning Rant: London Wheat Higher For No Reason Whatsoever!
20/01/12 -- Jan12 London wheat has gained GBP16.25/tonne since the mid-December low, pretty impressive eh? So something pretty dramatic must have happened to cause this turnaround?
Well, world wheat production has actually increased by 2.5 MMT since then according to the USDA, or by 7 MMT if you want to side with the IGC.
Consumption must have gone up then? Well it has but only by 1.2 MMT according to the USDA or 2 MMT in yesterday's report from the IGC. By less than production has increased.
Bugger me, so we've actually got more wheat on our hands now than we did when wheat was GBP141.00/tonne? Yes.
I've got it, we must be exporting more. Well no actually, the EU has issued soft wheat export licences for just 7.7 MMT so far in 2011/12, a 36% decrease on last year. Despite a good set of numbers for November, UK exports are down by almost a quarter on where we were last season AND we've got a bigger crop here this time round AND demand from the domestic feed sector is very sluggish.
The Argie drought then? I mean it's decimated corn production down there hasn't it? Slasherty slash. Million of tonnes of the stuff must have been wiped off world supplies surely to Christ? Erm, no. The USDA have world corn production higher now than than they did in December, only by half a million tonnes mind, but higher not lower.
Hah, they don't know what they're on about the USDA. What about the IGC? Those lads have their fingers on the pulse. Glad you asked me that one, they have world corn output 8 MMT higher than in December. In fact they say that "despite a smaller US crop and a worsening outlook for South America, total maize production in 2011/12 is forecast to increase by 4%, to a record 861 MMT." Adding that despite crop downgrades both Argentina and Brazil are still expected to produce record crops.
I know! It must be ending stocks that have been reduced then? No, the USDA and IGC both have corn and wheat carryout higher now than they did in December. The outlook for next season, that must be well down then? No. record ending stocks in 20121/13 too.
Right, so what you are telling me is that we've got more wheat and more corn, both in terms of production AND ending stocks, than we thought we had in mid-December but prices have gone up significantly since then? By 11.5% in fact in the case of London wheat. Yes grasshopper.
Currency then? Well, the pound is up slightly against the euro since mid-December, which makes us less competitive on the continent not more so. The dollar then, it must be the dollar? The pound was 1.5465 on December 14th when London wheat bottomed, by some strange quirk of fate it is exactly the same right now.
Hmmmmmm....
Chicago Reverses Wednesday's Losses
19/01/12 -- Soybeans: Mar 12 Soybeans closed at USD11.97, up 13 1/2 cents; May 12 Soybeans closed at USD12.04 1/4, up 12 cents; Mar 12 Soybean Meal closed at USD315.70, up USD3.70; Mar 12 Soybean Oil closed at 51.06, up 66 points. With China closed next week for the Lunar New Year celebrations there have been strong rumours all week of them actively buying soybeans. Before the open the USDA confirmed the sale of 110,000 MT of soybeans to China. The trade will now be interested to see what, if anything, shows up in tomorrow's weekly export sales report. Trade estimates for that are 500 to 900 thousand MT. Even so, weekly shipments are well behind year ago levels, suggesting that many of the outstanding sales were "optional origin" not specifically US beans. Argentina gets a very decent shot at significant rains this weekend and into next week.
Corn: Mar 12 Corn closed at USD6.06, up 12 1/2 cents; May 12 Corn closed at USD6.12, up 11 3/4 cents. Corn reversed Wednesday's losses with funds said to have bought 12,000 contracts on the day. The USDA announced the sale of 154,700 MT of US corn sold to Mexico. South Korea also bought 230,000 MT of corn overnight, with 110,000 MT of that confirmed today as US origin. The market is comfortable that corn below USD6/bu will flush out the buyers. Trade estimates for tomorrow's weekly export sales range from 500 to 850 thousand MT. Last week's corn sales were only 321,500 MT for 2011/12 and negative 23,000 MT for 2012/13. The International Grains Council raised world corn production by 8 MMT for 2011 to 861 MMT with carryover coming in at 125 MMT, 2 MMT higher than previously. Decent rains are on the cards for Brazil and Argentina this weekend and early next week.
Wheat: Mar 12 CBOT Wheat closed at USD6.05 3/4, up 13 1/2 cents; Mar 12 KCBT Wheat closed at USD6.58, up 5 cents; Mar 12 MGEX Wheat closed at USD7.99, down 1 3/4 cents. Wheat simply followed corn and beans higher. The International Grains Council upped their 2011/12 world wheat production estimate by 7 MMT to 690 MMT today, with ending stocks upped 4 MMT to 204 MMT. Elsewhere Strategie Grains forecast an EU-27 2012 soft wheat crop of 133.3 MMT, a 3% increase on last year. They also peg 2012/13 EU wheat ending stocks 20% up on this season and world wheat ending stocks for next season at a record 211 MMT. Trade estimates for tomorrow's weekly export sales report range from 350 to 600 thousand MT. As ever it will be the weekly shipment total that I will be more interested in. Shipments of just 196,200 MT last week were the lowest since the first week of the marketing year - well below the 465,000 MT level now needed to reach the USDA's export target of 25 MMT.
EU Wheat Rises, Despite Some Bearish Data
19/01/12 -- EU grains finish mixed, although wheat was mostly higher, with Jan 12 London wheat up GBP0.75/tonne to GBP157.25/tonne and Mar 12 Paris wheat rising EUR1.00/tonne to EUR198.50/tonne.
London wheat still seems to be basking in the glory of last week's friendly export data for November. Today's bond auctions by France and Spain were well received by the market despite recent S&P's downgrades, allaying fears (even if only temporarily) over European debt.
What other fresh news was around today was largely bearish though. Some of it very bearish going forward into 2012/13.
The IGC raised their estimate on 2011 world wheat production by 7 MMT to 690 MMT, pegging 2011/12 ending stocks 4 MMT higher than last month at 204 MMT. World corn production and carryout were also increased by 8 MMT and 2 MMT respectively.
Despite reducing South American prospects because of drought and heat stress both Argentina and Brazil are still expected to produce record corn crops, they said.
Looking ahead world wheat plantings for the 2012 harvest are projected to expand by 1.7%, to 225 million hectares - the largest since 1998, they added.
Elsewhere, Strategie Grains issued their second forecast on 2012/13 grain production within the EU-27. They came up with a soft wheat crop estimate of 133.3 MMT up 3% from a year ago, and durum wheat production of 8.9 MMT up 6% from last year. That gives us an all wheat crop of 142.2 MMT versus the USDA's 2011 figure of 137.7 MMT.
Barley production is seen 5% higher in 2012 to 54.5 MMT.
Citing a sharp fall in demand from the animal feed sector they peg world 2012/13 ending stocks at a record 211 MMT next year, with those in the EU-27 climbing almost 20% to 15.8 MMT.
Ag Canada estimate the wheat area there this year at 24.2 million acres, up 12% on 2011. The Canadian barley area is seen leaping 21.5% to a record 7.9 million acres and rapeseed plantings are also forecast to be a record 19.8 million acres.
Early Call On Chicago
19/01/12 -- The overnight grains are higher with beans leading the way up 10-12 cents, with corn and wheat both some 3-5 cents firmer. Crude oil is up more than a dollar.
Macquarie Group have released their latest estimates for South American crop production. Argentina: Corn 25.6 MMT, Soybeans 49.0 MMT. Brazil: Corn 60.0 MMT, Soybeans 73.6 MMT. Maybe more evidence that last week's USDA numbers weren't as outrageously over the top as the bulls would like to make out?
Beans are up on reports of Chinese buying ahead of their Lunar New Year celebrations starting Monday and lasting through all of next week.
The USDA's weekly export sales report is delayed a day to tomorrow due to the MLK holiday on Monday.
There's been a flurry of tender activity this last day or two after prices worked lower. South Korea have bought 230,000 MT of corn overnight, with 110,000 MT of that confirmed today as US origin. Japan has bought 185,000 MT of wheat in it's regular Thursday tender split between US, Canadian and Australian origin.
The USDA have also today confirmed 154,700 MT of US corn sold to Mexico and 110,000 MT of soybeans to China.
Bangladesh bought 60,000 MT Ukrainian wheat for Jan/Feb shipment this week, with UAE buying Black Sea and Kazakh wheat and Ukraine origin corn.
Jordan is tendering for 100,000 MT of optional origin wheat.
The IGC have upped their 2011/12 world wheat production estimate by 7 MMT to 690 MMT today, with ending stocks upped 4 MMT to 204 MMT. World corn production is also increased, by 8 MMT to 861 MMT with carryover coming in at 125 MMT, 2 MMT higher than previously.
Strategie Grains are forecasting an EU-27 2012 soft wheat crop of 133.3 MMT, a 3% increase on last year. They also peg 2012/13 EU wheat ending stocks 20% up on this season to 15.8 MMT and world wheat ending stocks for next season at a record 211 MMT.
Iran continues to wind up the west talking about a closure of the Strait of Hormuz if "Iran is threatened seriously and somebody wants to tighten the noose." That's keeping oil prices steady.
Greece is into a second day of talks with private credit holders ahead of the imminent arrival of EU/ECB and IMF inspectors (if the latter turn up) to see if they are doing all they said they were going to do to qualify for their next cash injection.
News that the IMF is looking to to boost its resources in an effort to tackle the euro zone debt crisis seems to have provided a little boost. Where are they going to get the money from Mars?
Rains are on the cards for Brazil and Argentina this weekend and early next week. Parts of Argentina could get as much as as much as 1.5 inches over the weekend, with more to come Monday/Tuesday.
Early calls on this afternoon's CBOT session: beans up 8-10 cents, corn up 3-5 cents, wheat up 2-4 cents.
EU Rapemeal Prices
19/01/12 -- Rapemeal prices on the continent are mostly a little firmer today, in line with soymeal gains on the overnight Globex market.
Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 183.00 | unch |
| Feb12 | 175.00 | +1.00 |
| Mar/Apr12 | 172.00 | -1.00 |
| May/Jul12 | 164.00 | +2.00 |
| Aug/Oct12 | 152.00 | +1.00 |
| Nov12/Jan13 | 157.00 | +1.00 |
| Feb/Apr13 | 159.00 | +1.00 |
South American Crop Production
19/01/12 -- The USDA numbers last week certainly stirred things up, with some fairly widespread shouts of "you don't know what you're doing" coming from the stands.
So I thought I'd take a little time out this morning to put together a table of other popular analysts estimates for comparison purposes.
For Argy soybeans their estimate of 50.5 MMT, whilst the highest it isn't outrageously so, being just 1% more than the average guess. The average of the four guesses is only half a million less than that, and that still represents a larger crop than last year and in fact the second highest production ever.
For Brazilian soybeans at 74 MMT they were again towards the top end of the range although not the highest, coming in 2% above the average guess of 72.4 MMT. Again this would be the second highest soybean crop in Brazil's history.
Looking at corn. Argentine production of 26.0 MMT from the USDA does stick out as looking somewhat outrageous, coming in 14% higher than the average guess. Even so the average forecast is the second highest Argy corn crop in history.
In Brazil the USDA fall back into line, coming in less than 1.7% above the average guess of 60.0 MMT which in itself is a record.
| Production (MMT) | 2010/11 USDA | 2011/12 Forecast |
| Argy Soybeans | 49.0 | |
| USDA | 50.5 | |
| Cordonnier | 50.0 | |
| Rosario GE | 49.5 | |
| Oil World | 50.0 | |
| Average | 50.0 | |
| Braz Soybeans | 75.5 | |
| USDA | 74.0 | |
| Cordonnier | 71.0 | |
| Celeres | 74.4 | |
| Conab | 71.8 | |
| Oil World | 71.0 | |
| Average | 72.4 | |
| Argy Corn | 22.5 | |
| USDA | 26.0 | |
| Cordonnier | 21.0 | |
| Rosario GE | 21.4 | |
| Average | 22.8 | |
| Braz Corn | 57.5 | |
| USDA | 61.0 | |
| Cordonnier | 58.0 | |
| Celeres | 62.0 | |
| Conab | 59.2 | |
| Average | 60.0 |
Chicago Close
18/01/12 -- Soybeans: Mar 12 Soybeans closed unchanged at USD11.83 1/2; May 12 Soybeans closed at USD11.92 1/4, down 1/4 cent; Mar 12 Soybean Meal closed at USD312.00, up USD1.50; Mar 12 Soybean Oil closed at 50.40, down 37 pips. Beans recovered from trading 10-11 cents lower in early exchanges, despite corn and wheat staying mired at those levels. That may have been down to the unwinding of long corn/short soybean spreads. A wetter outlook for Argentina moving up from the south on Saturday and pushing north into Wednesday should bring some stress relief. China are said to be actively seeking soybeans ahead of their New Year celebrations that start next Monday.
Corn: Mar 12 Corn closed at USD5.93 1/2, down 10 1/2 cents; May 12 Corn closed at USD6.00 1/4, down 10 1/2 cents. Corn crashed below the six dollar mark with funds selling an estimated 13,000 contracts on the day, which would have them dumping 40,000 lots since the USDA report came out last Thursday. The ongoing debt problems in Europe continue to keep the market nervous, possibly stemming the flow of spec money into the grains sector that we may otherwise be witnessing. The USDA announced the sale of 120,000 MT of US corn to Egypt.
Wheat: Mar 12 CBOT Wheat closed at USD5.92 1/4, down 12 1/2 cents; Mar 12 KCBT Wheat closed at USD6.53, down 20 cents; Mar 12 MGEX Wheat closed at USD8.00 3/4, down 7 3/4 cents. Wheat slumped as the South American weather story stands to benefit it the least of the grains complex. Canada's farm ministry are predicting record ending stocks for 2011/12 and the state of Western Australia is now saying that it has brought in a record crop this year. Competition on the export front for US wheat looks like remaining aggressive for the remainder of the season.
EU Wheat Falls On Forecast Argentine Rains
18/01/12 -- EU grains finished mostly lower with Jan 12 London wheat down GBP1.50/tonne to GBP156.50/tonne and Mar 12 Paris wheat falling EUR2.50/tonne to EUR197.50/tonne.
There was a weaker tone to US markets on the back of a wetter outlook for Argentina with significant rains showing up starting this weekend and lasting through into the middle of next week.
The EU markets tried to resist moving lower, with London wheat in particular trading in positive territory for much of the day.
Chicago corn, wheat and soybeans all quickly came under pressure this afternoon though, with front month March wheat opening at USD5.99/bushel. Not only was that below the psychologically important six dollar level, it was also half a cent lower than last weeks low set when the USDA report came out on Thursday.
A close at that level would be little more than 20 cents away from the 2011 mid-December low which was also the lowest closing price for a front month since July 2010 when Russia was burning up.
Canada's farm ministry estimate world wheat ending stocks to be at the highest level in history at the end of the current season in the summer. Meanwhile Western Australia state is wrapping up a record grain harvest of it's own right now. Bumper carryover stocks from last season should see Australia export a record volume of wheat in 2011/12.
UK wheat exports in November were a bumper 442,797 MT, aided by low water in the Rhine and Danube boosting demand from the continent and beyond. Even so though, on a cumulative basis we've still exported 24% less wheat in the Jul/Nov period in 2011/12 than we had at the same point last season.
The November data included the first shipment of UK wheat to the US in two years. There's a second such consignment currently loading in Tilbury by all accounts. It's a good job that the Americans, Dutch and Spanish want our wheat because domestic demand from the feed sector is extremely flat indeed.
Meanwhile the European debt crisis lurches on from not just one disaster to another, but from several disasters to another. Ratings agency Fitch says that Greece is insolvent and that it will default on its debt, albeit in an orderly fashion. They also said that a two-notch downgrade of Italy's credit rating could be on the cards before the end of the month.
The news follows S&P's cutting it's ratings on a host of European countries, and the EFSF bailout fund itself, last week. Today lesser know ratings agency Egan Jones cut Germany, weighed down by it's exposure to the EFSF and the ECB's links to weaker banks, to AA-minus from AA with a negative outlook.
Ask Nogger
18/01/12 -- Today's problem comes from A Typical Chinaman, in China who writes:
Q: Dear Nogger, like most people in my country I usually tuck into a "Full Chinese" most mornings: reggs, double bracon, a couple of srausages, breans, tromatoes, rash browns, brack pudding, troast, krippers, reggs Benedict, more bracon, more srausages, some streaky bracon and a couple of grammon steaks. All of it smothered riberally in Daddies sauce. Oh and trea, loads of trea. Mug after mug of trea for me. And a toasted bracon, srausage and regg sandrich to eat on the ray to work. The tring is, in my constant craving for a more Westernised diet I'm mulling over switching to chricken trikka masala instead, which I runderstand is very propular in your country. What do you think?
A: have you ever tried cornfrakes?
Early Call On Chicago
18/01/12 -- The overnight grains closed lower in turnaround Tuesday style, even though today is technically Wednesday. The market was closed on Monday, so today is really only a Tuesday despite what it might say on your calendar, so stop going on about it will you. Like a bloody dog with a bone you are, let it rest, it's Tuesday.
Right, the overnight grains closed lower in classic turnaround Tuesday fashion. Beans ended with losses of around 7 cents, with corn and wheat both falling in the region of 4-5 cents.
Front month March corn is hovering precariously around the six dollar mark. There's more rain in the forecast for Brazil and Argentina than there was yesterday. It's also trending cooler in Argentina. Improved weather conditions there are likely to be of more benefit to beans heading into the reproductive stage than they will now be for corn.
Fresh news is limited apart from that. The European debt crisis still looms large over the market, like an enormous immobile and irritating black cloud. Or Emile Heskey if you prefer.
The dollar remains strong, which is a hindrance to US exports. Friday's delayed weekly sales figures will be scrutinised for signs of promise after last week's numbers came in pretty flat.
Weekly shipments for soybeans are well behind year ago levels, whilst for wheat they persistently show clear signs of failing to meet the level required to hit the USDA's target of 25 MMT in 2011/12.
Western Australia has just about finished bringing in an all-time high grain harvest, according to media reports.
The USDA have just confirmed the sale of 120,000 MT of US corn to Egypt.
Early calls for this afternoon's CBOT session: beans 5-7 cents lower, wheat down 3-4 cents and corn also 3-4 cents weaker.
Simple Maths: Nogger's Theory Of Relativity
18/01/11 -- Is the market going to go up or down? That's what everybody wants to know isn't it? So I've come up with a simple formula that will give you the answer.
In this simple calculation we have only a couple of variables.
A: Fund money
B: The European debt crisis
C: A price decrease
D: Drought in Argentina
E: A price rise
A-B+D=E, obviously. However B-A-D=C
And even
B-A+D=C/2
Also you need to know that B²=-A and therefore B³=-A²=C³
There you go. You can thank my old maths teacher Mr Dale for that. Tomorrow we have what my English teacher Maggie Mawdsley used to do with the blackboard rubber. She's probably dead now, so they can't touch her for it.
Of course I'm indebted to Chris Tye at Dalmark for helpfully pointing out that if everyone in China starts eating cornflakes for breakfast then my little theory goes straight out of the window big time. I'm sure that Kellogg's are missing a trick here, they should up their Chinese advertising budget to milk this relatively untapped market. Maybe throw in a useful little free gift inside the packet. Chopsticks perhaps, a packet of sweet and sour sauce or a pair of Levi 501's.
Of course that conveniently overlooks the question of what does everyone in China currently eat for breakfast? There's going to be a glut of that coming whatever it is. Christ, they won't be able to give it away will they? Not when the big cornflake switchover takes place.
Also if the entire population of India suddenly develop a taste for lobster thermidor then there's turbulance afoot in the thermidor market that's for sure. Thermidor would be limit up for a week or more if that happened I reckon.
In addition we need to consider what I would tell MrsN#3 if Girls Aloud suddenly developed a taste for 50 year old past their sell-by date grain trade bloggers in their desperate search for thrills. Could be the trickiest call of the lot that one.
Hang on there's a knock at the door...blimey....it's them....oh er, I've dropped me mouse....
EU Rapemeal Prices
18/01/12 -- Rapemeal prices are mostly a little higher this morning following last night's soymeal gains in Chicago.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 183.00 | +1.00 |
| Feb12 | 174.00 | +1.00 |
| Mar/Apr12 | 173.00 | +2.00 |
| May/Jul12 | 162.00 | -2.00 |
| Aug/Oct12 | 151.00 | unch |
| Nov12/Jan13 | 156.00 | +1.00 |
| Feb/Apr13 | 158.00 | +2.00 |
The Morning Vibe
18/01/12 -- The overnight and European grains are a little easier this morning. All eyes remain on Argentina with just about every private forecaster you can think of pegging soybean and corn production there lower than the USDA's 50.5 MMT and 26 MMT estimates of last week.
Most of the soybean figures are in the 49-50 MMT region, with corn lining up around 21.5-24.0 MMT.
There's a fair bit of rain in the forecast for the weekend and early next week though. Here's the latest GFS model for Sunday, Monday, Tuesday: 
In other news Canada's farm ministry estimate world wheat ending stocks for the current season at 211 MMT - the highest in history - I read on Agrimoney.com this morning.
Also catching my eye on Agrimoney is a story that Western Australia has had "a record grains harvest, way ahead of initial expectations."
The never far away eurozone jitters are back on the table this morning, thrashing around like a line of freshly caught mackerel. Fitch have got fed up with S&P's grabbing all the headlines this week and have chucked their two penneth in, saying that a two notch downgrade for Italy is on the cards and that Greece will default on it's debt, albeit in an orderly manner.
After the release of yesterday's impressive UK export numbers for November which included 49,500 MT of wheat heading across the pond to the US word is reaching Nogger Towers this morning of a similar sized vessel currently loading in Tilbury heading in the same direction.
Even so, on a cumulative basis we've exported 24% less wheat in the Jul/Nov period in 2011/12 than we had at the same point in 2010/11. OSR shipments however are more than double where they were last season at almost 322 TMT.
Chicago Closing Comments
17/01/12 -- Soybeans: Mar 12 Soybeans closed at USD11.83 1/2, up 25 1/4 cents; May 12 Soybeans closed at $11.92 1/2, up 24 3/4 cents; Mar 12 Soybean Meal closed at USD310.50, up USD9.00; Mar 12 Soybean Oil closed at 50.77, up 48 points. Argentine weather and a much better NOPA crush number for December of 145.45 million bushels supported the market. Last month's crush was only expected to be around 140.8 million. Some forecasters have a significant rain event in the pipeline for Argentina this weekend, but some are saying that it may already be too late.
Corn: Mar 12 Corn closed at USD6.04, up 4 1/2 cents; May 12 Corn closed at USD6.10 3/4, up 4 1/4 cents. The Rosario Grain Exchange lowered their Argy corn crop estimate to 21.4 MMT from 26 MMT. Sharply higher crude oil also lent support. Corn harvesting is underway in the southern Brazilian states of Parana and Rio Grande do Sul, say Celeres. Yield are expected to see significant losses. Funds bought an estimated 9,000 corn contracts on the day.
Wheat: Mar 12 CBOT Wheat closed at USD6.04 3/4, up 2 1/2 cents; Mar 12 KCBT Wheat closed at USD6.73, up 3 cents; Mar 12 MGEX Wheat closed at USD8.08 1/2, up 7 1/4 cents. Wheat followed soybeans and corn higher despite lacking a bullish storyline of it's own. The strong US dollar continues to hamper foreign sales with it looking increasingly unlikely that the US will hit the USDA's export target of 25 MMT this season.
Ask Nogger
17/01/12 -- Today's problem comes from A Farmer in East Anglia, he writes:
Q: Dear Nogger, I'm one of those minted cereal farmers to which you refer with page 3 models and famous actresses & pop stars like Kylie Minogue constantly pestering me. I'm no oil painting and have been told that going out on a date with me is like trying to fight off a sweaty octopus, but that doesn't seem to put them off. I also find the idea of using a knife and fork abhorrent. However, I do farm 700 acres of prime farmland, live in an enormous mansion and have three Jags which is what they seem to like. Now that I've got my wheat in the ground all I have to occupy me is counting my money until harvest time comes around in the summer. Yet I can't help harping incessantly on and on and on about the fact that I only sold my wheat for £200.00/tonne ex farm last year when the top of the market round here was £200.01/tonne. My question is this: With all this money and female attention is it really that wrong to still fancy my sister?
A: What part of Ipswich do you come from?
EU Wheat Moves Higher On Argentine Weather Woes
17/01/12 -- EU grains ended with Jan 12 London wheat up GBP2.55/tonne to GBP158.00/tonne and Mar 12 Paris wheat up EUR1.75/tonne to EUR200.00/tonne. For London wheat this was the highest close for a front month since late September.
Spillover support from firmer US markets on the back of dryness in Argentina saw the market probe higher despite ongoing eurozone economic concerns.
News that the UK exported a hefty 442,797 MT of wheat in November, more than double the volume shipped in October, also lent support. That amount included almost 50,000 MT heading to the US, the first such shipment since the 2009/10 season. Low water in the Rhine pre-Christmas boosted demand for UK wheat on the continent it seems.
That means that the UK has now exported almost 1.3 MMT in the July/Nov portion of the 2011/12 marketing year.
Dryness in Argentina has prompted the Rosario Grains Exchange to cut it's corn production forecast there from 26.0 MMT last month to 21.4 MMT, 1.1 MMT down on last season despite an increase in planted area.
Ukraine has received "abundant" snowfalls since Sunday which will help protect winter wheat there from the worst of the winter. Even so 25-33% of crops may have to be replanted in the spring. That will probably lead to a sharp drop in wheat production in 2012, but possibly an increase in corn output.
Total grain exports from Ukraine so far this marketing year are up 42% on 2010/11 to 9.65 MMT. Russia, Ukraine and Kazakhstan combined have exported 30.7 MMT of grain in the first half of 2011/12 and have the potential to ship a further 28 MMT in remainder of the marketing year, say Agritel.
Crop conditions in Europe remain generally favourable with little winter kill threat, according to MARS (the Monitoring Agricultural ResourceS Unit).
On the international tender front Tunisia is shopping for 125,000 MT of wheat and the UAE is looking for 40,000 MT of wheat.
Early Call On Chicago
17/01/12 -- The overnight grains closed higher with beans up around 18 cents, corn up 7-8 cents and wheat 6-9 cents firmer. Crude oil is around two dollars higher, lending support.
Weather in Argentina is the key driver, although decent rains are in the forecast Sunday/Monday that's still 5-6 days away.
The Rosario Grain Exchange have lowered their Argy corn crop estimate to 21.4 MMT from 26 MMT and for soybeans they now say 50.5 MMT from 52 MMT.
The corn harvest is just about underway in southern Brazil, according to Celeres. Yields are expected to be down on drought earlier in the season.
For now the market seems to have shrugged off ratings downgrades for France, Italy, Spain, Portugal, Austria and others and even yesterday the eurozone bailout fund the EFSF itself. Determined to press on S&P's are expected to start downgrading various European banks as soon as today.
ECB President "Super" Mario Draghi says that the situation in Europe is "a very grave state of affairs."
Greece is running out of time, and it seems determination, to get her act together. Contingency plans are doubtless being made behind the scenes in other European countries if indeed she does default in March.
The NOPA December US soybean crush came in 145.45 million bushels, up a little over 4 million on November and higher than trade estimates of 140.8 million.
China's fourth quarter GDP grew by 8.9% - a very decent performance by most standards, but in fact the slowest pace in two years. Half full or half empty?
It looks like fund money will be looking to get back into grains today following another dry weekend in Argentina. Early calls for this afternoon's CBOT session: beans 15-20 cents higher, corn up 6-8 cents, wheat up 7-9 cents.
EU Rapemeal Prices
17/01/12 -- Rapemeal prices on the continent are mostly a little firmer today, in line with soymeal gains on the overnight Globex market.
Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 182.00 | -1.00 |
| Feb12 | 173.00 | +2.00 |
| Mar/Apr12 | 171.00 | +4.00 |
| May/Jul12 | 164.00 | +1.00 |
| Aug/Oct12 | 151.00 | +1.00 |
| Nov12/Jan13 | 155.00 | unch |
| Feb/Apr13 | 156.00 | unch |
Rumours
17/01/12 -- As Greece attempts to resurrect a last minute deal with private sector bondholders to take a 50% haircut on it's debt ahead of the arrival of EU, ECB and IMF inspectors due in Athens later this week, some media reports suggest that divisions within the so-called "troika" mean that the man from the IMF isn't even going to bother turning up:
IMF and EU Begin Clashing Over How to Handle Greek Crisis
Morning Snippets
17/01/12 -- The overnight markets are sharply higher. In the case of beans and corn effectively reversing Friday night's losses, and for wheat more than making up for a couple of cents fall ahead of the long weekend.
Argy weather is the driver once again as the market comes to the conclusion that corn and soybean production there will probably end up significantly lower than last Thursday's USDA numbers suggested. They are likely to be correct in that assumption.
Having apparently ditched 36,000 corn contracts in the two sessions since the USDA report came out will funds be back in as buyers tonight? It certainly looks so at the moment.
At 9.65 MMT, Ukraine has shipped 42% more grain so far this season than last. The combined exports of the Black Sea powerhouses of Russia, Ukraine and Kazakhstan have reached 30.7 MMT of grain in the first half of 2011/12 and they have the potential to ship a further 28 MMT in the second half, according to Agritel.
They also report that Ukraine has had "abundant" snowfall since Sunday which will finally protect winter grains from sub-zero temperatures.
Corn harvesting is underway in the southern Brazilian states of Parana and Rio Grande do Sul, say Celeres.
At home, Consumer Prices Index (CPI) inflation fell from 4.8% to 4.2% last month - the biggest monthly fall since April 2009.
EU Grains Quiet As US Market Closed
16/01/12 -- EU grains finished narrowly mixed with Jan 12 London wheat down a whopping five whole pence to GBP155.45/tonne, and Mar 12 Paris wheat up EUR1.25/tonne to EUR198.25/tonne. New crop London months were GBP0.85/tonne lower.
With America closed for Martin Luther King Day there was very little fresh news or impetus about.
It was a dry weekend in Argentina, with little respite in the forecast for the main growing areas this week. Corn and soybean plantings have stalled at around 85% done and the planting window is rapidly closing.
Dryness in Ukraine is also raising a few eyebrows, with production prospects for this season's harvest already touted as being well below last year's record output of 56.4 MMT. Winter wheat acres that have failed to sprout, or didn't get planted at all might end up going into spring barley or corn. If it's the latter then perversely they may end up with a larger grain harvest than they think if Mother Nature plays ball.
The wretched European debt crisis is never far from the headlines, with a March Greek default looking more likely after a breakdown in talks with the private sector currently unwilling to take a 50% write-down on the debt they hold.
Following an assortment of credit rating downgrades for various EU countries on Friday, including France and Austria, S&P's went one further tonight by cutting it's rating on the EFSF eurozone bailout fund to AA+.
Ask Nogger
16/01/12 -- Today's problem comes from FWi in Surrey, he writes:
Q: Dear Nogger, Is there a need for a resurrection of Farmer Frank, our controversial agony uncle, in your considered opinion?
A: What have farmers got to fret about? They're all minted and therefore must have page 3 models throwing themselves at them on a daily basis even if they are pig ugly and possess the table manners of a warthog. Apart from the ones in long and happy relationships married to their sisters that is. And apart from the ones that are "overly fond" of their animals, but they don't see anything wrong in what they're doing so it's unlikely that they will get in touch either.
EU Rapemeal Prices
16/01/12 -- Rapemeal prices continue to slide lower, following losses in Chicago soymeal since Thursday's USDA report.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 183.00 | -1.00 |
| Feb12 | 171.00 | -3.00 |
| Mar/Apr12 | 167.00 | -1.00 |
| May/Jul12 | 163.00 | -2.00 |
| Aug/Oct12 | 150.00 | unch |
| Nov12/Jan13 | 155.00 | unch |
| Feb/Apr13 | 156.00 | unch |
The Morning Vibe
16/01/12 -- America is closed for Martin Luther King Day so trade in Europe looks set to be thin. Friday's S&P's downgrades weigh on the euro with the pound hovering just under 1.21 against the single currency.
Brazil got some rain across the weekend but Argentina was dry, a bit like Mrs N#1. We went to Relate once you know. The counsellor asked her what was wrong in out relationship. She said "I'd just like him to tell me the truth, be honest with me. Tell me I look nice and that he still fancies me from time to time." I said "Make your bloody mind up will you!"
Talking of cold and dry places, crop prospects aren't looking too promising in Ukraine this year. The Ministry there place the 2012 grain harvest potential at only 44-46 MMT, compared to 56.4 MMT in 2011.
Spare a thought for the poor sods at Cargill, they've just reported an 88% slump in profits for their second quarter ended November 30. Just USD100 million was added to their bottom line, making that their worst quarter since 2001. I'll organise a whip round tout suite.
The Germans are coming! Robert Wiseman have sold their soul to the Devil for a reported GBP279.5 million. Have you tried that new drink they've brought out? Vodka mixed with yoghurt? I had about a dozen of them on Saturday night. Absolutely Mullered I was.
Here's The Deal
16/01/12 -- I've been reading the papers over the weekend and trying to weigh up the likelihood of a Greek debt default. There's more to this 50% "haircut" that they are asking bondholders to take than initially meets the eye.
It seems that the gist of it is this if you are unlucky enough to own say EUR1000 of Greek debt: you agree that half your money is lost, the other EUR500 will be repaid in the form of EUR150 cash (that's the good bit, if you can call 15% "good") and the remaining EUR350 will come as a nice shiny new bond to be (hopefully) repaid at some time in the future by the same guy who's already defaulted on you.
Now if that EUR1000 debt is currently showing up as an asset on your balance sheet you probably aren't going to take too kindly to that proposal are you? Especially as you now that this guy owes money all over town, some of it to people that also owe money to you.
So what's the alternative? Keep your EUR1000 "asset" (the expression toxic debt is so vulgar isn't it) and hope that some other idiot (like the IMF, say) comes along and loans this guy enough money to pay you back. OK, let's run with that....
