Chicago Close - Friday
27/01/12 -- Soybeans: Mar 12 Soybeans closed at USD12.19, down 3 3/4 cents; Nov 12 Soybeans closed at USD12.22 1/4, up 1/2 cent; Mar 12 Soybean Meal closed at USD322.20, down USD1.40; Mar 12 Soybean Oil closed at 51.59, down 35 points. Beans were up 32 cents on the week, with meal up USD10.30 and oil 116 points. Funds sold 3,000 soybean contracts on the day in a bit of light pre-weekend profit-taking. The Commitment of Traders report shows large funds increasing their net long by around 11,500 on the week to Tuesday. China are expected to be back in the market next week following a week off for their Lunar New Year celebrations. A dry weekend is forecast for Argentina, but rain is seen moving up from the south Monday and pushing northwards through the middle of the week. The Buenos Aires Grain Exchange said that the soybean crop in Argentina would come in at 46.2 MMT, one of the lower estimates around and 4.3 MMT below the USDA.
Corn: Mar 12 Corn closed at USD6.41 3/4, up 7 1/4 cents; Dec 12 Corn closed at USD5.71, up 5 cents. Corn was up 30 1/4 cents on the week. Funds were said to have bought 8,000 contracts on the day, stretching their net buying run to seven sessions in a row. That would have them buying around 40,000 on the week. Private exporters announced the sale of 170,200 MT of corn to Mexico for 2011/12. Coming hot on the heels of yesterday's robust export sales that will cheer the market. US exporters will be welcoming China back from it's week-long holiday on Monday too. The Buenos Aires Grain Exchange estimated the Argentine corn crop at 22.0 MMT, some 4.0 MMT below the USDA.
Wheat: Mar 12 CBOT Wheat closed at USD6.47 1/4, down 6 1/4 cents; Mar 12 KCBT Wheat closed at USD7.00, down 9 cents; Mar 12 MGEX Wheat closed at USD8.26 1/4, down 1 cent. Chicago wheat was up 36 3/4 cents on the week, with Kansas rising 33 cents and Minneapolis up 27 1/2 cents. Today was maybe a bit of consolidation ahead of the weekend after wheat posted some decent gains on the week. The Commitment of Traders report shows funds covering in some of their shorts in Chicago on the week to Tuesday, but still reveals them having a net short of almost 58,000 contracts. That looks set to continue to support CBOT wheat. In contrast funds are long 13,000 Kansas lots and 11,000 in Minneapolis. The USDA announced the sale of 133,200 MT of US wheat for unknown.
EU Wheat Mixed On The Day But Posts Solid Weekly Gains
27/01/12 -- EU grains ended narrowly mixed Friday, with Mar 12 London wheat up GBP0.05/tonne to GBP164.55/tonne and Mar 12 Paris wheat down EUR0.25/tonne to EUR209.00/tonne.
Despite a subdued day today, overall London wheat has gained an impressive GBP7.55/tonne and Paris wheat EUR10.50/tonne during the course of the week.
Defra have made a few minor tweaks to the supply and demand numbers this week, reducing wheat imports and 2011 production slightly and increasing domestic consumption a fraction.
They've also introduced a new format to the way the balance sheet numbers are presented, introducing an "estimated operating stock requirement" which this season is pegged at 1.4 MMT. They now subtract that figure from the total available stocks less consumption before coming up with an exportable surplus. All clear?
That exportable surplus is said to be 2.54 MMT, around 180,000 MT less than in 2010/11. However they also tell us that we've already exported half of that amount by the end of November, which at a glance makes things look pretty tight with seven months of the season remaining.
Bear in mind though that this is now with 1.4 MMT skimmed off and "kept back for a rainy day" so to speak.
It is also notable that they have human and industrial consumption at only 300,000 MT less this season than it was in 2010/11. Without naming names they say that they are working on the assumption that "the one existing bioethanol plant" will be back in production Apr/Jun.
They also say that "usage by the bioethanol plant currently under construction is not included; its status will be reviewed in March."
EU Rapemeal Prices
27/01/12 -- Rapemeal prices on the continent continue to rise.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | 187.00 | +6.00 |
| Mar12 | 184.00 | +3.00 |
| Apr12 | 180.00 | +3.00 |
| May/Jul12 | 174.00 | +3.00 |
| Aug/Oct12 | 161.00 | +1.00 |
| Nov12/Jan13 | 166.00 | +2.00 |
| Feb/Apr13 | 167.00 | +1.00 |
The Sort Of Thing That Really Irritates Me
27/01/12 -- Media reports, one firm in particular is especially guilty of this, that ALWAYS include the same piece of blindingly obvious information that everybody already knows.
They must employ freelance journo's in these far-flung places who write any old tosh just to see if they can get it past the editor and send another invoice in. Kerching, kerching.
Breaking News: Chicago Board Of Trade To Close
The Chicago Board of Trade, a large trading centre in Chicago, Illinois will close at the normal time today, just like it normally does. Dealers say that it will then remain closed for two days in honour of it being the weekend. Normal trade will resume Sunday night, just like normal. I am thanking you very much. Copyright.
Get a grip, you know who you are, just read your own reports.
The Moring Vibe And Some Food For Thought
27/01/12 -- The overnight grains are mixed with wheat a couple of cents lower, beans a couple higher and corn up 3-4 cents.
Egypt rejected a cargo of Kazakh wheat yesterday on the grounds of it containing "unauthorised seeds" and promptly switched another three cargoes bought as Kazakh origin to Russian instead.
It also announced that it only needs to buy another half a million tonnes to see it through to the end of the 2011/12 marketing year.
Demand for wheat is strong, that's what they keep telling us. Yesterday's US export sales were in line with expectations after all. Except "sales" aren't shipments, some could be optional origin for a kick off. Others may never get shipped at all, at least not in this marketing year.
The US carried over more than 2 MMT of outstanding "sales" from last season into this. Meanwhile yesterday's actual shipments fell short of the average level required to hit the USDA's 25 MMT target for the current season. That's the fourteenth week in the past sixteen that this has been the case. How strong a trend do you want?
Meanwhile, yesterday's news that Brussels only issued export licences for 218 TMT of soft wheat in the past week tells a similar story. Thirty weeks into the marketing year the EU has exported only 7.9 MMT, which puts us in line to have shifted a measly 13.7 MMT by the end of the 2011/12 season.
Bear in mind that the bulk of that has gone out early in the season. If we were to continue to ship at the January average from here on in then we'd finish the current season shifting little more than 11.5 MMT.
OK, these are the numbers for soft wheat, not all wheat products that the USDA report on. The fact remains though that soft wheat exports are currently 36% down on last year, and slowing. If we finish up exporting 36% less "all wheat" in 2011/12 then we'll export 14.62 MMT this season, far less than the 17 MMT that the USDA currently have on the world balance sheet.
Incidentally I was speaking to a group of local farmers last night, and happened to mention in my presentation that world wheat stocks were forecast to be at, or near, a record high at the end of 2011/12.
At the ending questions and answers session one farmer asked how accurate are all these stocks figures that we have thrown at us. A very good question. My fellow speaker rightly replied that the USDA is about the best option that is available to us on a global scale so, rightly or wrongly, we kind of have to go with their numbers most of the time.
I said that I'd had it put to me not that long ago, based on the fact that UK exports last season were way ahead of early forecasts and using the stocks numbers that we had at the time, that the UK should have run out of wheat before harvest came along. Indeed somebody allegedly got their fingers badly singed on the back of making the assumption that there wasn't enough domestic wheat to go round using the information available.
Thing is, there was enough wheat. At 200+ quid or whatever, wheat was suddenly and magically "found" all over the place. Could it be that it was not unusual for cereal growers to officially and routinely underestimate the size of their crops I asked, to silence and wry smiles all around the room.
Answers on a postcard please to the usual address...
Chicago Close - Thursday
26/01/12 -- Soybeans: Mar 12 Soybeans closed at USD12.22 3/4, up 9 1/4 cents; Nov 12 Soybeans closed at USD12.21 3/4, up 8 cents; Mar 12 Soybean Meal closed at USD323.60, up USD2.50; Mar 12 Soybean Oil closed at 51.94, up 55 points. Weekly export sales were 466,300 MT for 2011/12 and 126,000 MT for 2012/13, below trade estimates for combined sales of 700-850 TMT. Undeterred funds bought 5,000 contracts on the day. Production numbers in South America keep declining with Brazil's Parana state lowering their soybean crop estimate to 11.67 MMT from 12.7 MMT.
Corn: Mar 12 Corn closed at USD6.34 1/2, unchanged; Dec 12 Corn closed at USD5.66, up 3 cents. Funds were buyers for the sixth session in a row, coming in for an estimated 10,000 contracts overnight and a further 3,000 in the day session. Corn prices have risen for each of those six sessions. Weekly export sales were 958,100 MT for 2011/12 and 82,500 MT for 2012/13, above expectations of 650-850 TMT. There's decent rains in the forecast for Argentina Tuesday through to Thursday next week, but the market seems to think that the damage has already been done.
Wheat: Mar 12 CBOT Wheat closed at USD6.53 1/2, up 12 1/4 cents; Mar 12 KCBT Wheat closed at USD7.09, up 12 cents; Mar 12 MGEX Wheat closed at USD8.27 1/4, up 14 1/2 cents. Wheat led, with funds buying an estimated 2,000 Chicago contracts on the day. Export sales of 604,700 MT for 2011/12 and 14,000 MT for 2012/13 were in line with trade ideas of 500-700 TMT. Egypt were reported to have rejected one of four consignments of Kazakh wheat on the grounds of it containing "unauthorised seeds" and had the remaining three cargoes swapped to Russian origin.
EU Wheat Prices Continue To Rise
26/01/12 -- EU grains finished mostly higher again with Mar 12 London wheat GBP1.25/tonne higher at GBP164.50/tonne and Mar 12 Paris wheat rising EUR1.25/tonne to EUR209.25/tonne. New crop London wheat was unchanged.
There wasn't a lot of fresh news, but the bulls have the bit firmly between their teeth at the moment. Bears are running for cover with the market now almost GBP25.00/tonne higher than it was six weeks ago. Nobody saw this sudden sharp correction coming.
The HGCA made some minor tweaks to the final 2011 production estimates, reducing UK wheat production very slightly to 15.26 MMT, still 3% higher than in 2010 despite the spring and early summer drought.
Human and industrial usage was also revised only fractionally lower to 6.9 MMT, despite Ensus showing few signs of springing back into life.
Brussels issued soft wheat export licences for 218 TMT this past week, the best total of 2012 so far but a long way from where you would expect things to be at this time of year.
The marketing year-to-date total now stands at 7.9 MMT, versus 12.3 MMT at the same time in 2010/11. So despite a slightly larger crop in 2011/12 EU-27 soft wheat exports are actually 36% lower than they were a year ago.
EU Rapemeal Prices
26/01/12 -- Rapemeal prices on the continent are on the rise again today, in line with last night's gains in Chicago soymeal.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb12 | 181.00 | +1.00 |
| Mar12 | 181.00 | +2.00 |
| Apr12 | 177.00 | +2.00 |
| May/Jul12 | 171.00 | +3.00 |
| Aug/Oct12 | 160.00 | +4.00 |
| Nov12/Jan13 | 164.00 | +3.00 |
| Feb/Apr13 | 166.00 | +4.00 |
The Morning Vibe
26/01/12 -- The overnight grains are higher in follow through trade and in response to a sharply weaker US dollar. Comments from the Fed last night that US interest rates would remain very low until the end of 2014 sent the dollar tumbling. The pound currently stands close to it's best levels since November at 1.5700 against the greenback, to where it has steadily risen from a low of 1.5230 a fortnight ago.
Fund money is coming back in for CBOT corn in particular, they bought an estimated 8,000 contracts last night. That's the fifth session in a row they've been net buyers adding what's thought to be 47,000 lots to their building net long.
Greece say that they hope to have a deal sorted by the weekend on private debt. Yawn. If it can sort something out it wants to know can the IMF/EU/ECB have the money in it's account by Monday morning.
The UK may or may not be in a recession, and that's official. Unofficially, we are.
Fresh news is thin on the ground as you can see. Short term we seem to be going up, although I for one am far from convinced about the longevity of such a move. Sellers have spotted this trend and don't want to sell. Buyers don't like the look of these levels and generally don't want to buy, at least not unless they have to.
It will be interesting to see what volume of export licences were granted by Brussels for the latest week ended Tuesday when they come out later today. The first three weeks of 2012 have been very uninspiring at 107,000 MT; 167,000 MT and 175,000 MT. That hardly paints a picture of rampant demand for EU wheat.
Year-to-date EU soft wheat exports total 7.7 MMT so far, a 36% decrease on where we were this time last year despite a larger crop this time round.
Chicago Closing Comments - Wednesday
25/01/12 -- Soybeans: Mar 12 Soybeans closed at USD12.13 1/2, down 6 1/2 cents; May 12 Soybeans closed at USD12.22 3/4, down 6 cents; Mar 12 Soybean Meal closed at USD321.10, down USD2.40; Mar 12 Soybean Oil closed at 51.39, up 4 points. Decent overnight rain in Argentina had funds selling an estimated 4,000 soybean contracts on the day. Opinion is still divided on how much bean damage has already taken place. Local analyst Cropcast came out with one of the most pessimistic crop estimates yet, putting the soybean crop there at 45 MMT - 5.5 MMT lower than the USDA.
Corn: Mar 12 Corn closed at USD6.34 1/2, up 4 1/4 cents; May 12 Corn closed at USD6.40 1/4, up 5 cents. Corn rose on ideas that whilst Argentine rains may help beans they have arrived too late for corn. Funds bought an estimated 8,000 contracts on the day, adding to their recent purchases and increased long position. The weak dollar was also supportive following an announcement by the Fed that very low interest rates will continue to be the norm for at least the next couple of years. The gap between old crop and new crop continues to widen. Rising prices now will only encourage more corn acres in the spring. Estimates for tomorrow’s weekly export sales report range from 650 to 850 thousand MT.
Wheat: Mar 12 CBOT Wheat closed at USD6.41 1/4, up 7 3/4 cents; Mar 12 KCBT Wheat closed at USD6.97, up 11 cents; Mar 12 MGEX Wheat closed at USD8.12 3/4, up 9 cents. Funds were said to have been buyers of around 2,000 Chicago wheat contracts on the day, although that would still leave them holding a hefty short position. It is that short that is supporting the market. Estimates for tomorrow’s weekly export sales range from 500 to 700 thousand MT. Sales are on target, it's shipments that aren't and I'd expect them to fall short of the 474 TMT required to hit the USDA's 2011/12 target of 25 MMT once again tomorrow. They've done that in 13 of the last 15 weeks.
EU Wheat Mixed, Is The Bull Run Faltering?
25/01/12 -- EU grains finish mixed with Mar 12 London wheat down GBP0.25/tonne to GBP163.25/tonne and Mar 12 Paris wheat rising EUR2.25/tonne to EUR208.00/tonne.
It was a strange sort of a day with May 12 London wheat posting a GBP5.50/tonne trading range, closing at GBP164.25/tonne despite hitting GBP168.50/tonne early doors. How anybody allowed themselves to get stiffed at the latter price is unclear.
London wheat is now up over GBP23.00/tonne from the lows of just six weeks ago, a serious rise that you would think must have been generated by an equally serious change in circumstances.
All that we have to go on though is a decline in Argentine corn production, that is more than made up for by a rise in output elsewhere around the globe, according to the USDA and IGC. The world wheat crop has also got bigger since then, according to the same two sources.
The only other bull story is perhaps yesterday's suggestion that Russia "might" introduce some form of restriction on grain exports before too long. This particular "news" is far from new, it's been know since at least October that they wanted to cap grain exports at around 24-25 MMT.
I estimate that they will have exported 19.5-20.0 MMT by the end of this month. Their exports have probably slowed to around 1.5 MMT in January and are likely to remain at that level going forwards, so they will probably get through to the end of April before they hit their self-imposed target.
Is Russia potentially being out of the market for a couple of months May/Jun really a big serious issue? I don't think so. A blessing Kazakhstan might think.
At home, feed manufacturers in the UK are unseasonably quiet, and well bought too. Almost to a man they are only looking to make sales, not to buy any more raw materials. There were apparently plenty of export offers of UK and Baltic wheat for all positions today but not a single bid in the market.
Meanwhile, we have world wheat plantings for the 2012 harvest projected at 225 million hectares - the largest since 1998. The US all wheat area is forecast at 57.9 million acres, an increase of 3.5 million from last year. Canadian sowings are seen up 12% and world ending stocks for 2011/12 and 2012/13 are seen as the highest in history by many.
Oh, and American farmers are expected to sow the largest corn crop since the war this spring.
And we haven't even mentioned the European debt crisis yet.
Early Call On Chicago
25/01/12 -- The overnight grains were mixed with beans 1 3/4 down to 1 1/2 up, corn was 3 1/2 up to 1 3/4 down and wheat mostly around 2-4 cents firmer. Crude is down half a dollar or so.
Argentina got more rain overnight but will now have to wait until next week for it's next shot of moisture. Cropcast have come out with a pretty pessimistic number putting the soybean crop at 45 MMT.
The rally that started a week ago has seen corn put on 40 cents, wheat 44 cents and beans 34 1/2 cents, so maybe there's a bit of consolidation due?
When all said and done, based on the average of all the analysts listed below, are things really all that bad? A record and within half a million tonnes of record corn crop for Brazil and Argentina. Plus a second and joint second record soybean crop.
The Russian "news" isn't anything more than a reminder of what we knew already, that they are likely to slow down on exports now we are into 2012.
Portugal’s borrowing costs have risen to fresh euro-era highs today. Greece is still trying to play hardball despite only holding "Jack high" in it's hand. European leaders meet for a summit on Monday without a deal on the table once again. The UK is heading for, or indeed may already be in, another recession.
But don't let those things worry you right now, the only way is up. "The market needs to find a price level that will encourage farmers to sell," I read with a wry smile. How about dropping like a stone when Europe goes tits up, that might encourage a few sellers out of the woodwork!
Early calls for this afternoon's CBOT session: corn up 2-4 cents, wheat up 3-5 cents, beans flat to 2 cents lower.
South American Crop Estimates
25/01/12 -- Here's a summary of the latest crop production estimates from as many analysts and government bodies as I can find. Using the average of all these estimates Brazil is still on for a record corn crop this year, with Argentina only missing out on setting a new record of its own by half a million tonnes.
For soybeans Brazil is set to have its second highest crop, bettered only by last year's record 75.5 MMT. Argentina is set to match last year's second highest total on record:
| Product | 2010/11 USDA | 2011/12 Forecast |
| Argy Soybeans | 49.0 | |
| USDA | 50.5 | |
| Cordonnier | 50.0 | |
| Macquarie Group | 49.0 | |
| Rosario GE | 49.5 | |
| Oil World | 48.5 | |
| IGC | 51.0 | |
| Cropcast | 45.0 | |
| Average | 49.0 | |
| Braz Soybeans | 75.5 | |
| USDA | 74.0 | |
| Cordonnier | 71.0 | |
| Celeres | 74.4 | |
| Conab | 71.8 | |
| Macquarie Group | 73.6 | |
| Oil World | 72.0 | |
| IGC | 71.8 | |
| AgRural | 70.2 | |
| Average | 72.4 | |
| Argy Corn | 22.5 | |
| USDA | 26.0 | |
| Cordonnier | 21.0 | |
| Rosario GE | 21.4 | |
| Macquarie Group | 25.6 | |
| IGC | 23.0 | |
| FAO | 21.4 | |
| Cropcast | 22.2 | |
| Average | 22.9 | |
| Braz Corn | 57.5 | |
| USDA | 61.0 | |
| Cordonnier | 58.0 | |
| Celeres | 62.0 | |
| Conab | 59.2 | |
| Macquarie Group | 60.0 | |
| IGC | 59.0 | |
| Average | 59.9 |
EU Rapemeal Prices
25/01/12 -- Rapemeal prices on the continent are unchanged to a tad easier today.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jan12 | 180.00 | unch |
| Feb12 | 180.00 | unch |
| Mar/Apr12 | 177.00 | -1.00 |
| May/Jul12 | 168.00 | -2.00 |
| Aug/Oct12 | 156.00 | unch |
| Nov12/Jan13 | 161.00 | unch |
| Feb/Apr13 | 162.00 | -1.00 |
Tell Me Something I Don't Already Know
25/01/12 -- Jolly old London wheat certainly has the bit between it's teeth at the moment rising, according to the press, on ideas that Russian exports might be lower than expected and/or some sort of export ban or duty might be imposed.
Some are talking about Russia capping exports at around 25 MMT as if this news only came out yesterday. It's actually been in the market pretty much since the export ban was lifted last summer.
"Russia's exports may tail off around Feb/Mar as they approach Putin's suggested comfort zone of 24-25 MMT of foreign grain sales." I wrote that on here in October.
London wheat has now put on more than GBP20.00/tonne in the last six weeks, yet apart from the Argy corn crop losing some of the potential it had then fundamentally nothing much has changed.
We're certainly no closer to a solution to the European debt crisis, we're probably closer to the "endgame" for Europe in fact.
The current rally isn't demand-led. From what I am hearing UK exporters are actively out there looking for buying interest at these levels and finding very little, by all accounts.
On the supply side though I am also hearing that farmers are reluctant sellers. Bollocks to a potential GBP20.00/tonne extra in the sky rocket, I can still see GBP200.00/tonne in my rear view mirror if I look hard enough seems to be the general mood.
Which strangely put me in mind of this story from the dog's blog: Woof
Chicago Close
24/01/12 -- Soybeans: Mar 12 Soybeans closed at USD12.20, up 2 1/2 cents; May 12 Soybeans closed at USD12.28 3/4, up 3 1/4 cents; Mar 12 Soybean Meal closed at USD323.50, up USD2.50; Mar 12 Soybean Oil closed at 51.35, down 7 points. Funds bought 4,000 soybean contracts on the day it is reckoned on spillover support from corn and wheat. Argentina got some rain overnight but reports on exactly how much and where it fell are divided. Opinion is also split on how much good rain will do at this stage and how much damage is irreversible.
Corn: Mar 12 Corn closed at USD6.30 1/4, up 10 1/4 cents; May 12 Corn closed at USD6.35 1/4, up 9 1/2 cents. Funds were said to have bought around 10,000 corn contracts on the day. Further production downgrades for Argentina got rumours circulating that the government there would impose some form of export restriction this year, a story swiftly denied by officials there. The FAO now estimate Argentina’s 2012 corn crop at 21.4 MMT. That's well below the 29-30 MMT hoped for at the start of the season, but still not too far off being a record crop.
Wheat: Mar 12 CBOT Wheat closed at USD6.33 1/2, up 13 3/4 cents; Mar 12 KCBT Wheat closed at USD6.86, up 12 1/2 cents; Mar 12 MGEX Wheat closed at USD8.03 3/4, up 1/2 cent. Funds were said to have been panicked into covering in 11,000 lots of their short position on Chicago wheat today. Rumours that Russia was about to introduce an export ban and/or duty on foreign sales got the market going. Other wild speculation said that Russia was actively trying to buy US wheat, a highly unlikely scenario. Texas reports that 40% of it's wheat crop is in poor to very poor condition, a situation not entirely unusual for that arid state.
EU Wheat Higher On Argentina And Rumour Mill
24/01/12 -- EU grains finished with new front month Mar 12 London wheat up GBP4.00/tonne to GBP163.50/tonne, and Mar 12 Paris wheat up EUR4.25/tonne to EUR205725/tonne.
This was the highest close for a front month on London wheat in almost four months.
Yesterday's rains in Argentina were a bit disappointing, but subsequent overnight rain and more in the forecast for tomorrow should improve the outlook for soybeans at least, if not corn.
Crop estimates for the latter vary quite widely now from 18 MMT to 23 MMT generally, with the USDA out on a solitary limb at 26 MMT.
The overnight US grains closed lower, and London and Paris wheat both traded either side during the session before pushing on in afternoon trade once America opened.
One rumour going around to send the Chicago market higher straight after the opening today was that the drought in Argentina means that the government there may introduce some sort of export ban this year. The government deny that this is the case.
Another was that Russia may be about to introduce either a grain export duty and/or ban. Yet another was that they are in the market to buy US wheat. The latter seems particularly unlikely with an abundance of cheaper wheat much closer to home in Kazakhstan.
Russia has said for some time that they wish to cap foreign sales at around 24-25 MMT this season, and they look likely to finish January with something like 19.5-20.0 MMT already shipped, so they are likely to hit their maximum around the end of March give or take a few weeks.
Kazakhstan will be looking to take advantage of any window of opportunity that comes its way, having only shipped 4.1 MMT of grains abroad in the Sep-Dec period. They've got to get their skates on to hit their 15 MMT target for the 2011/12 season. They have the wheat that's for sure after a post-Soviet era record harvest last year, it's logistics that's their problem, although a Russian export sabbatical would help free up some transport and portside capacity.
Nevertheless, it looks like the market is determined to attempt to forge it's way higher yet, unless (or is it until?) the European debt crisis pulls the rug from under this particular recovery.
Early Call On Chicago
24/01/12 -- The overnight grains closed lower, partially reversing yesterday's gains, with beans around 7 cents weaker nearby, corn down 2-3 cents and wheat 3-5 cents weaker. Crude is down 72 cents at USD98.86/barrel.
Around two thirds to three quarters of Argentina got rains of 0.25 to 0.75 inches yesterday, there has apparently been more overnight and there's a bit more on the radar for this afternoon and tomorrow. After that we are looking at the first few days of Feb for the next forecast rain event.
The FAO now estimate Argentina’s 2012 corn crop at 21.4 MMT.
I think that by now we all lost count of the number of times that the market has shown signs of optimism that a resolution was in sight for the European debt problems.
The latest wave of bullishness on Europe now seems to be having it's hopes dashed on the cruel rocks of fate once more as Greece and it's debtors reach another impasse. "If you don't accept what's on the table then you won't get anything," warns Greece.
Has it not occurred to them that that may be exactly what some people want? Certainly those insured against a Greek default, but not against a voluntary Greek haircut.
S&P's are now warning that it may downgrade Greece to "selective default" as the EU/ECB and IMF ponder whether to release the next tranche of bailout cash.
India says that it's wheat harvest, which should begin in two months time, will surpass last season's 85.9 MMT total by an unspecified amount.
China is out of action this week for their Lunar New Year celebrations.
Early calls for this afternoon's CBOT session: beans down 6-8 cents, corn down 2-3 cents, wheat down 3-4 cents.
You Couldn't Make It Up
24/01/12 -- A Greek minister who was part of the cabinet that eagerly accepted the original 2010 bailout money from the EU/IMF has sensationally revealed that he didn't actually read the terms of the loan agreement because he too busy.
The agreement was signed in a rush "based on an optimistic and simplistic projection that things would develop in a certain way," he says. Unfortunately for Greece they are now realising that things haven't panned out the way they would have liked now they've extracted their heads from the sand.
I wonder if they've tried tried Wonga.com? They have some very favourable "payday" deals going at the moment I understand. Story here
EU Rapemeal Prices
24/01/12 -- Rapemeal prices on the continent are generally a bit firmer, in line with last night's gains in Chicago soymeal. Jan is a bit easier, giving up this nearby premium that's been around for some time now.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 180.00 | -3.00 |
| Feb12 | 180.00 | +2.00 |
| Mar/Apr12 | 178.00 | +4.00 |
| May/Jul12 | 170.00 | +3.00 |
| Aug/Oct12 | 156.00 | +2.00 |
| Nov12/Jan13 | 161.00 | +1.00 |
| Feb/Apr13 | 163.00 | +2.00 |
The Morning Vibe
24/01/12 -- The overnight grains are mostly lower, but not by a great deal, if we are in for a turnaround Tuesday then there are only modest signs of it so far this morning.
The Argy Ministry have bitten the bullet and dropped their corn and soybean production forecasts there to 23 MMT and 48.9 MMT respectively. The former still looks to be optimistic, and in fact would still be a record crop if correct.
They say that 32% of the corn is in good condition, 42% average and 25% poor. For beans they go 54% good, 34% average and 12% poor.
There seems to be a bit more misplaced optimism around with regards to the European debt problems this week, despite Greece so far failing to secure a deal with its private debt holders. The pound is down to its lowest levels of the year so far against the euro this morning.
I can only conclude that as this particular problem has been hanging around for so long people have got used to it. They are treating the potential cataclysmic fallout from a European collapse as being about as likely to happen as the passengers of an cruise liner being ordered back to their cabins as the ship goes down.
Catching my eye this morning is a report on Agrimoney.com that increased levels of DDGS usage in the US is behind recent increases in corn stocks from the USDA.
We all know that ethanol production in the US has been steadily increasing throughout 2011, to record levels in December in fact. So obviously there's more of the DDGS by-product about. Agrimoney say that "in the September-to-November period (the US) exported only 14% of its output of the byproduct, compared with 22% during the same three months last year."
If they aren't being shipped abroad then clearly it would seem logical to conclude that they are indeed being used domestically resulting in lower corn for feed usage.
Chicago Rises As Weekend Rains In Argentina Disappoint
23/01/12 -- Soybeans: Mar 12 Soybeans closed at USD12.17 1/2, up 30 1/2 cents; May 12 Soybeans closed at USD12.25 1/2, up 30 cents; Mar12 Soybean Meal closed at USD321.00, up USD9.10; Mar 12 Soybean Oil closed at 51.42, up 99 points. This was the highest close for beans since the USDA report just over a week ago. Weekend rains in Argentina were less than hoped for, although there are chances for more between now and Wednesday. Funds were said to have bought 7,000 soybean contracts on the day, enthused by an apparent step closer to sorting out a deal with its creditors by Greece. The weaker dollar was also supportive.
Corn: Mar 12 Corn closed at USD6.20, up 8 1/2 cents; May 12 Corn closed at USD6.25 3/4, up 9 cents. Fund money was said to have bought around 11,000 contracts on the day as most of Argentina only got a half inch or so of rain over the weekend. Ideas now are that for corn what is lost is lost. Most are now using a crop figure around 20 MMT, and more than one is going in at 18-19 MMT, well below the 26 MMT that the USDA currently have. Mexico bought 152,900 MT of US corn today. Firm crude oil also helped as tensions mount over Iran's nuclear program and it's continued threat to close the Strait of Hormuz.
Wheat: Mar 12 CBOT Wheat closed at USD6.19 3/4, up 9 1/4 cents; Mar 12 KCBT Wheat finished at USD6.73 1/2, up 6 1/2 cents; Mar 12 MGEX Wheat closed at USD8.03 1/4, up 4 1/2 cents. Chicago wheat led the way, buoyed by the large spec short that already exists in it. Funds were said to have trimmed that today, but only by around 3,000 contracts. Doubts over US wheat export prospects though continue to nag. The USDA's weekly export inspections report was disappointing at 17.106 million bushels today, this time last year it was 25.027 million. Once again this is another sign of US exports in 2011/12 failing to meet the USDA's target of 25 MMT.
EU Wheat Rises On Ongoing Argentine Drought
23/01/12 -- EU grains finished higher with the exception of expiring Jan 12 London wheat which was unchanged at GBP157.00/tonne. New front month Mar 12 was GBP1.35/tonne higher at GBP159.50/tonne and Mar 12 Paris wheat rose EUR3.00/tonne to EUR201.50/tonne.
Weekend rains in Argentina were less widespread and lighter than anticipated. Few analysts expect corn production there to be anywhere near the USDA's 26 MMT estimate, with 20 MMT probably now the average and some lining up around the 18 MMT mark.
Outside markets were supportive after Iran said that it would "definitely" close the Strait of Hormuz if today's EU oil embargo disrupted its exports of crude oil.
Eurozone jitters remain however. Greece didn't manage to get it's weekend deal sorted with private bond holders to accept a 50% haircut.
Media reports say that Italy needs to redeem EUR48 billion next month, starting with EUR26 billion due on Feb 1st. In addition to that there's a further EUR40 billion due in March and another EUR40 billion maturing in April.
Ukraine crop conditions appear to have improved, but a quarter of their winter sown crops are still likely to need replanting in the spring. Central and western parts of the country are still under stress from low soil moisture reserves however.
Russia's domestic grain prices are rising with exports set to reach around 19.5-20.0 MMT by the end of this month, only 5 MMT away from what the government there say will be take them outside their comfort zone.
Early Call On Chicago
23/01/12 -- The overnight grains are higher with beans up around 15 cents and corn & wheat some 6 cents firmer. Consequently it looks like we are going to start the week higher this afternoon for the sixth week in a row.
Weekend rains in Argentina were not as good as hoped for, although rain is showing up on the radar right now and more is forecast for tomorrow and Wednesday. The trade appears to be thinking that for corn the damage is done and a crop of somewhere between 18 MMT (worst case scenario) and 22 MMT (best case scenario) is on the cards.
For beans there is maybe still a chance of things turning around a little, with 47-52 MMT the likely range.
Crude oil is up as tensions mount between Iran and the West. The BBC report that the EU has placed an immediate ban on all new oil contracts with Iran.
Traders are still nervous over the European situation, which may erupt again at any moment. Greece failed to get a consensus agreement with private debt holders over the weekend.
Italy needs to do something about its mighty EUR334 billion of debt maturing this year, starting with EUR26 billion due on Feb 1st.
Corn currently stands around 25 cents up from the post-USDA report lows, with beans up over 40 cents and wheat up almost 23 cents.
Ukraine crop conditions appear to have improved, but a quarter of their winter sown crops are still likely to need replanting in the spring.
Domestic Russian wheat prices are on the up, according to media reports. They are unlikely to be as aggressive as they have been in the second half of the 2011/12 season.
Early calls for this afternoon's CBOT session: corn and wheat up 5-7 cents, beans up 12-15 cents. The bulls may be willing to see exactly what happens if the hit the accelerator this afternoon I feel.
EU Rapemeal Prices
23/01/12 -- Rapemeal prices on the continent are mostly a bit firmer again 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 | +2.00 |
| Feb12 | 178.00 | +4.00 |
| Mar/Apr12 | 174.00 | +1.00 |
| May/Jul12 | 167.00 | +1.00 |
| Aug/Oct12 | 154.00 | +1.00 |
| Nov12/Jan13 | 160.00 | +1.00 |
| Feb/Apr13 | 161.00 | unch |
The Morning Vibe
23/01/12 -- The overnight grains are higher after weekend rains in Argentina disappointed. Further moisture is however on the cards for today through to Wednesday.
London wheat has opened higher in sympathy, with Jan12 currently GBP2.00/tonne higher at GBP159.00/tonne - the highest for a front month since mid-September. Jan12 goes off the board today.
Greece didn't manage to get it's weekend deal sorted with private bond holders to accept a 50% haircut. Reports in the media over the weekend suggest that those playing hardball have a very good reason to do so - they are insured against a Greek default. So why accept a 50% cut in what you are owed? Let them default and claim 100%, what would you do with your money at stake and your own back against the wall?
Another development over the weekend is news of British, French and US warships entering the Strait of Hormuz. Luckily nobody invited the Italians.
China is taking a week off this week for Lunar New Year. Which they've thoughtfully named after MrsN#1. Happy Year of the Slapper. Sorry, that was a typo, it's Dragon.
Talking of typo's this is a good one: They're all at it
