Chicago Close - Friday
03/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.32 1/2, up 15 1/2 cents; Nov 12 Soybeans closed at USD12.37 1/4, up 13 1/2 cents; Mar 12 Soybean Meal closed at USD328.60, up USD5.20; Mar 12 Soybean Oil closed at 51.65, up 46 points. For the week overall nearby beans gained 13 1/2 cents, with meal adding USD6.40 and oil 6 points. Funds were said to have come in for 6,000 soybean contracts on the day, which would have them buying 23,000 since Monday's collapse. Informa cut very slightly their forecast for US soybean plantings this year to 74.568 million acres. They also dropped their forecast for Argentine production to 46.5 MMT from 51 MMT and lowered Brazil to 70 MMT from 72 MMT. The USDA attaché in Argentina pegs the soybean crop there at the same 46.5 MMT as Informa, 4 MMT below the USDA's January number.
Corn: Mar 12 Corn closed at USD6.44 1/2, up 1 1/2 cents; Dec 12 Corn closed at USD5.81 1/2, up 2 1/2 cents. Front month March was only marginally higher on the week, up 2 3/4 cents, but it's 51 cents up in a fortnight and a day. Informa cut their Argentine corn production estimate by 1.5 MMT to 22.5 MMT and left their Brazilian estimate unchanged at 61.0 MMT. The USDA attaché in Argentina pegs corn production there a little lower at 21.8 MMT, compared with the USDA's own estimate of 26.0 MMT last month. They will issue a revised forecast next Thursday. The Commitment of Traders report shows large funds adding 32,300 corn contracts to their overall length in the week through to last Tuesday.
Wheat: Mar 12 CBOT Wheat closed at USD6.60 3/4, down 2 cents; Mar 12 KCBT Wheat closed at USD7.12 3/4, down 5 cents; Mar 12 MGEX Wheat closed at USD8.38 1/2, up 2 1/2 cents. On the week as a whole Chicago wheat added 13 1/2 cents, Kansas gained 12 3/4 cents and Minneapolis put on 13 1/4 cents. The Commitment of Traders report shows trend-following funds reducing their overall Chicago short position by around 19,000 contracts in the week ending Tuesday. Informa increased their estimate for US all wheat plantings for the 2012 harvest to 57.9 million acres, 3.5 million up on last year. Russia indicated a more relaxed response to it's grain exports than many had anticipated.
EU Wheat Ends Higher Despite Russian News
03/02/12 -- EU grains finish mixed but mostly higher with Mar 12 London wheat up GBP0.45/tonne to GBP167.45/tonne and Mar 12 Paris wheat rising EUR1.50/tonne to EUR217.25/tonne.
On the week overall London wheat was up GBP2.90/tonne and Paris wheat rose EUR8.25/tonne. London wheat set a near five month high this week, with Paris wheat rising to its best levels in almost eight months.
Russia surprised the market by saying that it was putting off a decision on restricting grain exports to another day, and then promptly announcing that 27 MMT was a level it would be comfortable with and that the government "doesn’t see grounds for any kind of grain export restriction in April this year".
It had been suggested by many that the latter scenario was likely given the existing rate of shipments.
They are said to have exported just over 19 MMT in the July/Jan period, with January's figure being around 1.1-1.3 MMT, so the rate of exports has certainly slowed considerably. That is partly a function of the weather, but it also seems clear that a lot of it is down to Russian offers not being as uber-competitive as they were.
Now that this issue has been cleared up, at least for now, the trade can fret over something else. Step forward this week's ultra cold weather in eastern Europe, pushing west into France and Germany. How much damage will that do to winter crops? The jury will remain out on that one for some time yet.
Elsewhere, the USDA attaché in Argentina estimates corn production there at 21.8 MMT, more than 4 MMT below the current USDA figure. Exports are seen at 14 MMT, 3.5 MMT below the current USDA estimate.
Stats Canada estimate wheat stocks there at 20.962 MMT, a little higher than the trade expected.
Brussels issued soft wheat export licences for 178 TMT this past week, bringing the year to date total to 8.1 MMT, 36% down on year ago levels. Exports have been pretty poor for the last six weeks, which is a long time to get over a Christmas hangover!
Russia Latest
03/02/12 -- Having said that they were going to make an announcement on grain exports yesterday, and then changing that to today. And then changing that to "at some date in the future, but I can't tell you when" earlier today. They are now saying that they CAN export 27 MMT of grains in 2011/12, up from the 24-25 MMT previous suggested cap, without any restrictions. They go on to say that there are no grounds for an kind of export restrictions to be introduced in April.
Reminds me of many a shopping trip with MrsN#1 that does. You know the form, traipse round every shop in town and end up buying the dress/shoes that she saw in the first shop seven hours previously. "You never tell me I look nice," used to get that quite often. Apparently bursting out laughing and saying "believe me if you ever do look nice I will tell you" wasn't the response she was expecting.
Late Call On Chicago
03/02/12 -- The overnight grains finished with beans 6-7 cents firmer, wheat up 4-5 cents and corn mixed up a cent or so to down a cent or so. Crude is a bit firmer, but still languishes just under USD97/barrel. The US dollar is little changed.
Fresh news is limited. Informa are out with their global production numbers mid-session. Stats Canada came out with an all wheat stocks number of 20.962 MMT, a bit higher than trade estimates.
Russia have deferred their planned announcement on grain exports.
South American weather has improved, but production estimates haven't, as yet.
For the week overall so far beans are down 2 cents (to last night's close), with corn up 1 1/4 cents and wheat up 15 1/2 cents.
Late calls for this afternoon's CBOT session: corn up 1-2 cents, wheat up 3-5 cents, beans up 6-8 cents.
Snippets
03/02/12 -- Russia's First Deputy Prime Minister Viktor Zubkov is set to make an announcement on the country's grain export situation later today, according to Reuters*
However, other well-sourced information coming my way via Bloomberg says that the press conference has in fact been rescheduled from today to an undetermined date in the future.
The latter makes sense. They don't want to come right out and introduce an export ban as that makes them look like an unreliable supplier. But they do want Russian exports to ease up, so keep the threat of a possible maybe hanging over the wheat market so buyers will think twice about Russian offers in any future tenders. Nice poker play Viktor.
Poor old "jack high" Kazakhstan must be spitting with all the wheat they've got to sell. The only problem is Russia has all the aces like railcars and the deep water access.
What's the alternative if you're a Kazakh farmer with wheat to shift? Sell it into government intervention. The price? Well, this is Kazakhstan you know, not Rouen.
There's overheads, and cashflow, and the yak to feed and everything. Storage, fixing the roof, feed the yak, he's a hungry yak, more overheads, wages. What? The price? Look I'm doing you a favour here mate. The price on offer is a princely one hundred euros a tonne. Delivered. And I'm doing myself at that.
Yes my little farmy folks, spare a thought for your Kazakh bretheren as that genuinely is the price of currently putting your quality milling wheat into intervention in Kazakhstan. And the doors are only open for 3 MMT even at that price, after that you need to order it a taxi for the Black Sea yourself.
Elsewhere, Brussels issued soft wheat export licences of 178 TMT this past week, bringing the year to date total to 8.1 MMT. Not a very impressive figure, in fact the fifth week in the last six that exports have been under 200 TMT.
Taiwan has bought 50,000 MT of Argy corn overnight.
There's still no agreement between slippery Greece and its private bondholders. As a side issue the Beeb are reporting that they "cooked the books" to comply with the Maastricht treaty and join the euro in the first place.
The Guardian and Telegraph are today reporting that international debt inspectors have discovered a EUR15 billion "black hole" in its public finances. Hmmmmmm.
Stats Canada are out later this afternoon with their latest Canadian stocks data and Informa are due out around 16.30 London time with their world crop production numbers.
*Reuters now concur, today's meeting is off, "shifted to another day, the source added, but declined to say when."
Chicago Close - Thursday
02/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.17, up 1 3/4 cents; Nov 12 Soybeans closed at USD12.23 3/4, up 5 1/2 cents; Mar 12 Soybean Meal closed at USD323.40, up USD1.10; Mar 12 Soybean Oil closed at USD51.19, up 1 point. Funds bought an estimated 3,000 soybean contracts in a fairly lacklustre session. Soybean sales were poor at 308,400 MT for 2011/12 and 60,000 MT for delivery in 2012/13. Trade expectations were for sales of 450-750,000 MT. Year to date sales are down by almost a third on a year ago, yet the USDA only project at 15% decline at the end of 2011/12. Shipments are down by a quarter. Rain is in the forecast again for Argentine soybeans which are mostly in the flowering stage now.
Corn: Mar 12 Corn closed at USD6.43, up 1 cent; Dec 12 Corn closed at USD5.79, up 2 1/4 cents. Funds were said to have bought around 3,000 contracts on the day. Weekly export sales of 912,000 MT for 2011/12 and 63,000 MT for 2012/13 were towards the top end of trade estimates. Year to date shipments are 16.9 MMT versus a final 2011/12 number from the USDA of 41.9 MMT. Informa are due out mid-session tomorrow with their latest take on world production, ahead of the USDA's own figures a week from today.
Wheat: Mar 12 CBOT Wheat closed at USD6.62 3/4, down 11 1/2 cents; Mar 12 KCBT Wheat closed at USD7.17 3/4, down 4 3/4 cents; Mar 12 MGEX Wheat closed at USD8.36, down 3/4 cent. Chicago wheat led the complex lower for once, with funds selling an estimated 2,000 CBOT contracts on the day. The USDA reported weekly export sales of 518,900 MT of 2011/12 and 35,200 MT of 2012/13 for wheat - in line with trade forecasts. The trade is now expecting an announcement regarding Russian exports tomorrow. Bitterly cold conditions there and across Europe remain a concern.
EU Wheat Declines, But Ends Well Off Session Lows
02/02/12 -- EU grains finished mixed with front month Mar 12 London wheat down GBP0.10/tonne to GBP167.00/tonne and Mar 12 Paris wheat down one euro to EUR215.75/tonne.
Wheat was down all day on ideas that prices have got a bit ahead of themselves stifling demand. End user interest is very thin on the ground at these levels, with merchants reporting that most of the calls coming in today are from farmers wanting to sell at yesterday's levels.
Even so the close was well off session lows, just as yesterday's finish was well off session highs. Mar 12 London wheat was GBP3.35/tonne lower at one stage with Mar 12 Paris wheat showing a decline of EUR4.00/tonne at one point.
Very cold temperatures are gripping most of Europe, giving rise to winterkill fears for crops without a protective snow covering. Most of European Russia is however well insulated from the cold under 35 cm of snow, says the the Federal Hydrometeorological Centre there.
The anticipated announcement on Russian grain exports was not forthcoming, with some reports suggesting that it has been deferred until tomorrow. Some are expecting a ban, but others think that a reassessment of the current suggested maximum export ceiling of 24-25 MMT is more likely, and that this self-imposed limit could in fact be raised.
Stony silence was also the order of the day in Athens, where negotiations between the government and private creditors drag on, despite repeated insistence from Greek officials that a deal is a "formality".
Elsewhere India has revised it's 2012 wheat production estimate up to a record 88.3 MMT, a 2.8% increase on last year. Harvesting there is expected to begin in around six weeks time.
Jordan bought 150,000 MT of unspecified origin wheat in a tender, but other international orders are scarce.
Around 400,000 MT of grain is said to be sitting on demurrage off the coast of Iran after the recently introduced sanctions against them brought trade with the Arab nation to a sudden and grinding halt.
A Tricky Market To Call
02/02/12 -- Seeing as we're in a tricky market to call I thought that I'd do you a little card trick. I've done this once before, and on a quiet day I'm going to attempt to do it again. Cue drum roll.....
Look at the image below and pick a card, any card, hold it in your mind (if you can find it) but don't tell me what it is right? OK, keep that card in your mind.
DON'T CLICK IT! DID I SAY CLICK IT? YOU'RE SO BLOODY IMPATIENT AREN'T YOU? DON'T CLICK ON IT UNLESS I TELL YOU TO, DON'T EVEN HOVER YOUR MOUSE OVER IT. Stop mucking about, you're interfering with the airwaves and upsetting my mojo, fiddling with my karma and twisting my melons all at the same time. It's a hard enough trick as it is, just bloody concentrate for once will you?
Right, hold that card in you head, NOW click anywhere on the image below (if you are capable of doing two things at the same time that is) and I will, via my legendary telepathetic powers, remove your card from the pack.
Hahaha. I did it. The bugger has vanished hasn't it? Applause!
Tomorrow I'm going to saw the dog in half live online.
NOTE: No animals were hurt in the making of this trick. That happens tomorrow.
Early Call On Chicago
02/02/12 -- The overnight grains are lower with wheat down 8-10 cents, corn some 5-7 cents weaker and beans around 7-8 cents lower. Crude oil is a dollar or so easier, below USD97/barrel for the first time since before Christmas and the US dollar is a touch firmer.
The USDA reported weekly export sales of 518,900 MT of 2011/12 and 35,200 MT of 2012/13 for wheat - in line with trade forecasts. For corn they came up with 912,000 MT for 2011/12 and 63,000 MT for 2012/13 which was again in line with expectations for sales of 700,000 MT to 1.1 MMT. Soybean sales were poor at 308,400 MT for 2011/12 and 60,000 MT for delivery in 2012/13. Trade expectations were for sales of 450-750,000 MT.
Weekly wheat shipments of 454,500 MT were a bit better than of late, but once more didn't quite reach the level required to hit the USDA's full 2011/12 target of 25 MMT. They've fallen below the required level now for 15 of the last 17 weeks.
US ethanol stocks are said to be at their highest levels in more than eight months, a hangover no doubt from record production in the run-up to the expiry of the blenders tax credit at the end of 2011.
Jordan has bought 150,000 MT of unspecified origin wheat in a tender.
Freezing temperatures in Russia are not expected to cause much crop damage as most of the European part of the country is lying under 35cm of snow, according to the Federal Hydrometeorological Centre.
There's been no official announcement yet on the export situation in Russia, although the market is expecting something today. Reading between the lines of what has been said I don't think that they will be introducing an export ban.
Today's meeting regarding the export situation may be more of a review of the maximum volume that the government will be happy to see sold abroad. So don't be surprised to see the figure of 24-25 MMT getting increased a little.
Given that exports have slowed substantially, that domestic prices are said to have risen significantly and much of their remaining stocks are supposed to be held well away from the ports I think that they will be hoping that the market regulates itself. Introducing a second export ban in the space of two years could be seen as being too damaging.
Well below zero temperatures are on the cards for France, Poland and Germany today and through the weekend, raising concerns of crop damage there.
India has revised it's 2012 wheat production estimate up to a record 88.3 MMT, a 2.8% increase on last year. Harvesting begins next month.
The USDA has lowered it's Mexican corn production estimate by 2.1 MMT to 18.4 MMT due to drought. Imports are now forecast at 10.5 MMT from 9.8 MMT previously.
The longest "formality" in history drags on, with still no deal on the table between Greece and it's private bond holders.
A side issue, but one of interest nevertheless, is that the Baltic Dry Index has plumbed to a new all-time low of 651 today. The grain market will be hoping that the BDI isn't the great indicator for the health of the global economy and forecaster of the future for commodities that many say it is.
Early calls for this afternoon's CBOT session: corn down 5-6 cents, beans down 6-8 cents wheat down 8-10 cents.
EU Rapemeal Prices
02/02/12 -- Rapemeal prices on the continent are a couple of euro's firmer following a rise in CBOT soymeal last night.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | 188.00 | +1.00 |
| Mar12 | 186.00 | +2.00 |
| Apr12 | 184.00 | +2.00 |
| May/Jul12 | 176.00 | +2.00 |
| Aug/Oct12 | 164.00 | +2.00 |
| Nov12/Jan13 | 169.00 | +2.00 |
| Feb/Apr13 | 171.00 | +2.00 |
The Inside Story From Ukraine
02/02/12 -- Are things really so bad that they may need to replant as much as 50% of their winter crops in the spring? I asked my agronomy mate over there, who apart from being a rabid Kopite is actually a really nice bloke, and this is what he came back with:
"It was a very dry autumn - we didn't see any rain in Sep, Oct and Nov - which will have done more damage than the current cold period. There is plenty of snow about to protect plants but many of those plants are very small and will struggle to put much growth on come the spring.
"To put a figure on it I am anticipating 20% replanting come the thaw."
Chicago Ends Higher
01/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.15 1/4, up 16 1/4 cents; Nov 12 Soybeans closed at USD12.18 1/4, up 16 3/4 cents; Mar 12 Soybean Meal closed at USD322.30, up USD3.00; Mar 12 Soybean Oil closed at 51.18, up 31 points. Funds were said to have bought 6,000 soybean contracts on the day. Oil World cropped their estimate for Argentine soybean output by 2 MMT to 46.5 MMT, and also cut Brazil by a similar amount to 70.0 MMT. China bought 120,000 MT of US beans for 2011/12 delivery. There's rain in Argentina with more in the forecast. Estimates for tomorrow's weekly export sales are in the range of 450 to 750 thousand MT.
Corn: Mar 12 Corn closed at USD6.42, up 3 cents; Dec 12 Corn closed at USD5.76 3/4, up 7 1/4 cents. Funds bought an estimated 8,000 corn contracts on the day. Reports suggest that at least 25% of Ukraine's winter crops will have to be replanted in the spring, with some estimates as high as 50%. Whilst some of that area will go into sunflower production the majority will probably be corn. That however is some time off, and the trade is concentrating on matters nearby. Trade estimates for tomorrow’s weekly export sales report range from 700 to 1100 thousand MT.
Wheat: Mar 12 CBOT Wheat closed at USD6.74 1/4, up 8 1/4 cents; Mar 12 KCBT Wheat closed at USD7.22 1/2, up 7 cents; Mar 12 MGEX Wheat closed at USD8.36 3/4, up 9 cents. Funds were said to have covered in a further 4,000 of their Chicago short position. The USDA announced the sale of 120,000 MT of SRW wheat to unknown. Argentina released 2 MMT of wheat for export. Black Sea exports have ground to a halt due to temperatures well below freezing. As well as affecting Russia and Ukraine bitter cold is now seen moving into France, Germany and Poland. Trade estimates for tomorrow's weekly export sales are 500 and 700 thousand MT.
EU Wheat Volatile
01/02/12 -- EU grains finish mixed after posting strong gains in early trade with Mar 12 London wheat ending down GBP1.40/tonne at GBP167.10/tonne and Mar 12 Paris wheat rising EUR1.25/tonne to EUR216.75/tonne.
The days highs were set early in the session with London wheat jumping GBP4.35/tonne on the Nov12 position at one stage. Mar 12 Paris wheat was up six euros to a seven month high mid-morning.
Short-covering of losing positions seemed to be the order of the day as end users stand aside from a market where London wheat has risen GBP16.35/tonne in just four weeks. Funds were said to have been featured buyers of Paris wheat in the past few sessions.
There is now some talk of as much as 50% of Ukraine's winter cropping area needing to be replanted in the spring, and of a winter wheat crop of no more than 15 MMT at best (from 22 MMT in 2011).
A deep freeze is also slowing up exports from the Black Sea, with Ukraine exporting 1.9 MMT of grain in January, down 27% from December. Russia's exports also shrank markedly last month.
For the July/Jan period Ukraine's grain exports stand at 11.6 MMT, of which more than half was corn, with wheat only accounting for 28%, or 3.3 MMT. Russia has exported just over 19 MMT of grains in the same period, up 80% on last year.
Some reports suggest that a Russian export ban is imminent, with a decision on that likely to be made tomorrow even though we are still 5-6 MMT away from their suggested export maximum.
Early Call On Chicago
01/02/12 -- The overnight grains continued to build on last night's solid gains with beans closing around 8-10 cents firmer, corn up 8-9 cents and wheat 8-12 cents higher. Crude is a bit higher too and the dollar weaker, both adding support.
Oil World became the latest analyst to downgrade crop production in South America, issuing a forecast for soybean output in Argentina of 46.5 MMT and in Brazil of 70.0 MMT. Both estimates are down 2 MMT on previously and towards the low end of other trade forecasts.
The USDA are reporting 120,000 MT of soybeans sold to China and a similar volume of SRW wheat sold to unknown.
Extreme cold is already in place in Ukraine and Russia, effectively bringing exports out of the Black Sea to a halt. Similar Arctic conditions are now setting in for much of the rest of Europe.
Russia is said by some to be reviewing it's stance on grain exports tomorrow.
Greece says that a deal with private bond holders is "a formality" to be be concluded in a "matter of days" which is buoying European stock markets.
The early call for this afternoon's CBOT session: corn up 8-10 cents, wheat and soybeans up 10-12 cents. There's also an element of "new month, new money" kicking about today.
A Couple Of Thoughts On Russia
01/02/12 -- The latest customs information coming out of Russia says that they've exported just over 19 MMT of grains in the July/Jan period. As of 29th Dec that figure was 17.9 MMT, meaning that little more than a million tonnes has been shipped out during January.
That's a far cry from the early season pace. Undoubtedly some of that is due to adverse weather conditions restricting the physical movement of grain. The reports we are hearing though of a lack of available grain in close proximity to the ports must also be a factor.
Maybe we are starting to see Russian exports doing a good job of capping themselves, without the need for government to step in? After all, they would surely want to avoid the negativity that would be generated by slapping two export bans on in the space of two years?
They are, at this stage at least, expecting another fairly bumper harvest on their hands in 2012, and they will be expecting to sell a chunk of that into North Africa again.
The flip side of this is IF they were to shortly introduce an export ban or some form of restriction on sales, and then subsequently produce a harvest in 2012 similar to last seasons then:
a) the carryover left from this season would leave them with even more grain to sell in 2012/13.
b) what marketing tactics do you think they'd employ to subsequently tempt buyers like Egypt back to the table?
c) how keen a seller do you think they would be once the ban gets lifted?
The combined answer to all three is that they'd surely urinate all over the market again just as they did in the second half of 2011.
EU Rapemeal Prices
01/02/12 -- Rapemeal prices on the continent are higher in line with decent gains last night 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 | 187.00 | +3.00 |
| Mar12 | 184.00 | +4.00 |
| Apr12 | 182.00 | +4.00 |
| May/Jul12 | 174.00 | +5.00 |
| Aug/Oct12 | 162.00 | +5.00 |
| Nov12/Jan13 | 167.00 | +5.00 |
| Feb/Apr13 | 169.00 | +5.00 |
Blimey! Shiny Happy Wheato's
01/02/12 -- What a morning it's been already with London wheat jumping GBP4.35/tonne on the Nov12 position at one stage. Paris wheat was up EUR6.00/tonne early doors too, before falling back a little to currently trade around EUR3-4.00/tonne higher.
There's not actually a great deal of new news in the marketplace this morning. It would seem that there were more shorts out there on wheat than was generally realised, and they're taking an unforeseen pasting.
Maybe they can't afford the margin calls? Or maybe they've just decided to get out of a market that's looking too volatile and too unpredictable to operate in?
Yes, there is a sharp cold snap on the way, or already arrived for some, in Europe, Ukraine and Russia. There's no proof of any damage done yet though it's all conjecture. We already knew that a large percentage of Ukraine would need to be replanted in the spring.
We also already knew that Russia was planning on capping it's grain exports at 24-25 MMT. That's been in the market for months.
It certainly seems that the bulls are back in charge though. It also looks like we've had a hefty reminder just how illiquid the London wheat market in particular really is.
Simply put, feed wheat is not worth GBP170/tonne in the current market, never in a month of Sundays. It may say GBP170/tonne on the board, but you try finding a buyer who wants the physical wheat at that, not a short closing out his paper position because he's had enough of operating in a market that defies logic.
That will create an even less liquid market, which is ultimately not a good thing for anyone.
Bear in mind Ensus is shut, due at least in part to wheat being at these levels, and they're not the only ones. Icklingham has gone, Rotherham has also packed up.
Scottish bakery firm Kingdom Bakers, based in Kirkcaldy, went into receivership last week and this morning the word on the streets is that a leading east Midlands flour miller Smiths has gone into administration.
So if you're long wheat give yourself a little pat on the back, and take a stroll down to the shed to admire the shiny stuff. And take a spoon and a bowl of milk with you because you might just have to eat your expensive asset yourself, because there won't be an orderly queue forming at this price. Unless you want to swap it for a Greek or Portuguese bond that is, they're worth a lot - on paper.
Chicago Rebounds Tuesday
31/01/12 -- Soybeans: Mar 12 Soybeans closed at USD11.99, up 13 3/4 cents; Nov 12 Soybeans closed at USD12.01 1/2, up 7 cents; Mar 12 Soybean Meal closed at USD319.30, up USD6.60; Mar 12 Soybean Oil closed at 50.87, up 62 points. Funds bought an estimated 8,000 soybean contracts on the day, spurred on by yet more renewed hopes that Greece would finally sort a deal out with its creditors. Rising crude and other outside markets added support, although decent rains in Argentina were a negative, capping gains.
Corn: Mar 12 Corn closed at USD6.39, up 7 1/4 cents; Dec 12 Corn closed at USD5.69 1/2, up 4 3/4 cents. Funds were said to have bought 12,000 contracts on the day enthused by a renewed appetite for risk. The market believes that Argentine rains have come too late for corn, with local analyst Agroconsult now estimating the corn crop there at 18.8 MMT. Crude oil was up sharply, although Brazil's Sao Paulo state announced that it was temporarily putting at 25% duty on imported ethanol. Brazil currently takes over 33% of US ethanol exports.
Wheat: Mar 12 CBOT Wheat closed at USD6.66, up 21 1/4 cents; Mar 12 KCBT Wheat closed at USD7.15 1/2, up 18 cents; Mar 12 MGEX Wheat closed at USD8.27 3/4, up 8 3/4 cents. Funds covered in an estimated 4,000 of their Chicago shorts in part of a broad-based commodity rally. Widespread talk that Russia will shortly introduce an export ban/duty has got the bears nervous, as too has much below normal temperatures this week across much of the FSU and Europe. Chicago wheat looks set to remain the leader of the pack here given the size of the short that still remains, and its discount to Kansas and Minneapolis.
Twitter Ye Not
31/01/12 -- A 26-year-old bar managing Brit who said that he was going to "destroy America" on Twitter, found that he and his female travelling companion were promptly turned round and sent home soon after landing in Los Angeles.
It seems fairly clear that he effectively meant "get destroyed in America" but the sensitive Septics wouldn't buy it. I'm sure that that computer geek guy from Sheffield who set up the pirate website TV Shack from his bedroom that the US are now trying to extradite will find this story of interest.
EU Wheat Presses On To Multi-Month Highs
31/01/12 -- EU grains finish posting strong gains with Mar 12 London wheat up GBP3.50/tonne to GBP168.50/tonne and Mar 12 Paris wheat rising EUR6.50/tonne to EUR215.50/tonne.
For the month of January as a whole that puts London wheat up GBP16.25/tonne and Paris wheat EUR13.00/tonne higher in a rise that very few saw coming. For London wheat this was the highest close for a front month since September, and for Paris the best since June.
Extreme cold in Russia, Ukraine and Eastern Europe is the latest weather scare, following on from dryness in Argentina which got the market spooked earlier in the month.
Have the market fundamentals really changed that much from a month ago? Local analyst in Argentina Agroconsult are now estimating the corn crop there at 18.8 MMT due to the drought, around 10 MMT lower than the USDA were forecasting last month. In round figures that means that we've seen London wheat prices rise 10.7% this month on the back of a 1% reduction in the size of the world corn crop. I'll let you decide if that's justified or not.
Meanwhile, a spin-off of autumn dryness and probable winterkill in Ukraine is likely to be increased corn production there in 2012. Spring corn plantings are likely to rise 25% to 4.5 million hectares, according to the Ukrainian Agribusiness Club. That will probably mean a second record corn crop in a row for the Black Sea nation later this year.
One theory doing the rounds is that heavy buying in the futures market today both sides of the Atlantic was due to shorts getting squeezed into stop-loss buying with margin calls starting to bite.
Certainly the differential between the cash and the futures market has widened, which would appear to confirm that this rally isn't end-user demand-led. UK interest domestically, and on the export front too, was said to be non-existent today as in fact it was for most of last week.
A sideline point of interest is that Nov13 London wheat closed at a slim GBP1.15/tonne discount to Nov12 today, whereas a year ago that differential was over GBP25.00/tonne.
Early Call On Chicago
31/01/12 -- The overnight grains were higher in classic Turnaround Tuesday style. Beans finished with gains of around 4-5 cents, corn was up 6-7 cents and wheat leading the way 10-12 cents firmer. Broad-based commodity buying sees crude rise more than USD2/barrel.
All those that forecast 2012 to be another year of great volatility in the grain markets have certainly got off to a flyer.
A ludicrously naive wave of optimism, which appears to be grossly underestimating the enormity of the European debt crisis, appears to the fore. Prudence has been swept aside by a tsunami of money searching for a quick buck.
Longer term I think you have to be bearish, but there'd have to be a strong element of King Canute in me in attempting to order back this particular wave.
It's been some time since every snippet of bullish information was seized upon with such vigour, but that is certainly the mood that the market seems to be in today.
Very cold in Russia and Ukraine. Buy, buy. Increased corn plantings in the latter resulting in likely record crop later this year. Ignore, ignore. Rains forecast every day this week in Argentina. Ignore that as well. Russia may, or may not, introduce some form of export restrictions at some indeterminate time in the future. Yes, let's have that on board. Buy, buy.
Comments from Greece that a deal is close (how long has it been "close", and what real good will it do anyway other than nurse Greece through to it's next cardiac arrest?) with private bond holders is being greeted as if the entire eurozone crisis has been resolved, aided by a bit of back slapping and palm squeezing in Brussels.
Early calls for this afternoon's CBOT session: beans up 4-6 cents, corn up 6-8 cents, wheat up 10-12 cents with exasperated sort-covering in the latter a feature.
News Snippets
31/01/12 -- Iraq are tendering for "at least" 50,000 MT of wheat (they usually end up buying significantly more) of which US and Romanian origins are not permitted for "technical" reasons they say.
Japan says it has unusually bought around half of it's corn requirements for Q1 of 2012 from Europe. For Q2 it is also buying Argy corn and sorghum, in both cases it's because the price is cheaper than buying from it's normal supplier, the US.
There's plenty of rain showing up on the maps for Argentina today through to Friday.
The Ukrainian Agribusiness Club says that winterkill losses in wheat could see the country up corn plantings by a quarter this spring, giving them the potential to reap a record 25 MMT crop in 2012.
Kazakhstan managed to export around 1.3 MMT of wheat in December, it's highest monthly total of the 2011/12 marketing year so far, I gather. As ever, logistics are it's problem when it has a bumper crop.
David Eudall, a thoroughly nice chap from the HGCA whom I met last week, interestingly points out on Twitter this morning that Nov13 London wheat right now stands at a GBP2.10/tonne discount to Nov12, whereas a year ago that differential was over GBP25.00/tonne.
See, that's why you should get on Twitter, to pick up interesting snippets like that. You can follow David at @djeudall. Others worthy of note that I haven't already mentioned are @Fengrain, @Noggersdog (yes, he's on there now), @QTWeather, @FintecGroup, @BritWeatherSvcs etc.
EU Rapemeal Prices
31/01/12 -- Rapemeal prices on the continent are down today, reflecting last night's sharp fall in CBOT soymeal, although those declines are tempered somewhat by gains in the overnight Globex session.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | 184.00 | -2.00 |
| Mar12 | 180.00 | -3.00 |
| Apr12 | 178.00 | -2.00 |
| May/Jul12 | 169.00 | -4.00 |
| Aug/Oct12 | 157.00 | -3.00 |
| Nov12/Jan13 | 162.00 | -3.00 |
| Feb/Apr13 | 164.00 | -3.00 |
The Morning Vibe
31/01/12 -- Yes folks it's Turnaround Tuesday, with the overnight beans, and corn & wheat all up around 8-10 cents. Crude is up a dollar or so and even London wheat has put on 2-3 snots this morning. Everything in the garden is coming up roses.
Eurozone leaders have had a bit of a meeting, shook hands and sorted out their differences. So all's well that ends well. Phew!
The Greek thing is a done deal, so don't let that worry you. Neither should you be concerned that unemployment in the eurozone ended 2011 at a new record euro-era high of 10.4 percent. Portugal are only little, so they're of no concern either.
Spain and Italy are OK, apart from raging unemployment and strikes.
The Fed have their finger on the pulse and know what they are doing. Out of all the other options they had available to them they've kindly opted to keep interest rates low to help aid the global economic recovery that we are in the middle of.
China have just got back off their holidays, where they had a lovely time apart from the mozzies, and now need to restock the larder.
Chill out. We are not riding for a fall here, we're on our way back to the new normal. Repeat three times after me "we are not riding for a fall here, we're on our way back to the new normal. We are not riding for a fall here..."
Chicago Soybeans Crash On Argentine Rains
30/01/12 -- Soybeans: Mar 12 Soybeans closed at USD11.85 1/4, down 33 3/4 cents; Nov 12 Soybeans closed at USD12.94 1/2, down 27 3/4 cents; Mar 12 Soybean Meal closed at USD312.70, down USD9.50; Mar 12 Soybean Oil closed at 50.25, down 134 points. Beans crashed lower on forecasts for a week of rain and cooler temperatures in Argentina. Whilst they may come too late to be of much use to corn they could certainly help beans recover and turn in a decent crop. Weekly export inspections of 41.5 million bushels were above trade expectation but the year-to-date pace is still well behind year ago levels. That may ultimately mean increased carryout at the end of the season.
Corn: Mar 12 Corn closed at USD6.31 3/4, down 10 cents; Dec 12 Corn closed at USD5.64 3/4, down 6 1/4 cents. Weekly corn export inspections of 22.7 million bushels were below expectations of 28-35 million. None of that total was for China either. They were open for business again today, having been closed for their Lunar New Year celebrations last week, but the Dalian futures whilst rising failed to match gains seen in Chicago last week. Funds sold an estimated 11,000 contracts on the day, the first time they've been sellers on a Monday since Christmas which maybe suggests a bit of month-end positioning going on. It was also corn's first decline in eight trading sessions, suggesting that some consolidation was perhaps overdue.
Wheat: Mar 12 CBOT Wheat closed at USD6.44 3/4, down 2 1/2 cents; Mar 12 KCBT Wheat closed at USD6.97 1/2, down 2 1/2 cents; Mar 12 MGEX Wheat closed at USD8.19, down 7 1/4 cents. Chicago wheat managed to hold up rather well given weakness in corn and beans, with funds only light sellers of 2,000 lots. That means that the hefty fund short position has been added to today, which could continue to support wheat, and Chicago wheat in particular, relative to the other grains. Weekly export inspections of 18.7 million bushels were in line with expectations. Year-to-date shipments lag last season by around 100 million. Icy cold temperatures for eastern Europe this week are seen as maybe causing some winter crop damage.
EU Wheat Close - Monday
30/01/12 -- EU grains finished mixed with front month Mar 12 London wheat up GBP0.45/tonne to GBP165.00/tonne but other old crop months GBP0.50/tonne lower. Mar 12 Paris wheat was unchanged at EUR209.00/tonne.
The markets drifted sideways. Negative influences were another bout of Eurozone jitters with the newswires awash with stories of Portugal getting dragged further into the mire.
Their borrowing costs rose to new euro-era highs today, as they are starting to look more and more like Greece #2. The latter hasn't yet managed to pull off a deal with private bond holders despite insisting that one is "very close" - weekend reports that their Eurozone exit strategy plan is at an advanced stage are also unsettling.
Underpinning the market however is concern developing over the ability of wheat in eastern Europe, Russia and Ukraine to withstand very cold temperatures this week, with Moscow's daytime high on Wednesday forecast to be a frigid -19C.
"A prolonged period of unseasonably warm weather has come to an abrupt end in Russia. Bitter cold is affecting the entire winter wheat zone not only the Volga and Central district, but also southern Russia wheat near the Black Sea," say Martell Crop Projections.
"The cold wave is expected to continue for another week with temperatures 15-20 F below normal," they add.
In contrast, things are looking up in Argentine with widespread rains in the forecast this week, although most seem to think that for corn the damage is done there is still time to see soybean prospects improve.
Early Call On Chicago
30/01/12 -- The overnight grains began the week lower for the first time in seven weeks. Beans finished the Globex session around 14 cents lower, with corn down 7-8 cents and wheat down 6-10 cents. Crude is a bit weaker and the US dollar a little firmer.
There was apparently some rain for parts of Argentina over the weekend, with the Rosario Grain Exchange saying that some areas have had up to 25mm in the past 72 hours. A decent amount more in the forecasts from today through to Thursday.
With month-end looming it seems that some consolidation is due. Wheat has added 53 cents since the 18th of the month, with corn putting on 48 1/4 cents and beans 35 cents, so maybe there will be a bit of profit-taking too.
Temperatures in Russia and Ukraine are raising a few eyebrows. Wednesday's high, yes high, of the day in Moscow is reported to be -19C by the BBC. See here: Brrrrr
As ever European debt concerns are never far away. Greek insists that it will sort a deal out with private bond holders, but it hasn't quite managed it yet. It's a heavy week for bond auctions across Europe this week as EU leaders meet in Brussels. Portuguese yields are through the roof and more 16-24 year olds in Spain are unemployed than employed.
Early calls for this afternoon's CBOT session: beans down 10-15 cents, wheat down 5-7 cents and corn down 6-8 cents.
EU Rapemeal Prices
30/01/12 -- Rapemeal prices on the continent are slightly easier in the main today, only partially reflecting Friday night's and this mornings losses 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 | 186.00 | -1.00 |
| Mar12 | 183.00 | -1.00 |
| Apr12 | 180.00 | unch |
| May/Jul12 | 173.00 | -1.00 |
| Aug/Oct12 | 160.00 | -1.00 |
| Nov12/Jan13 | 165.00 | -1.00 |
| Feb/Apr13 | 167.00 | unch |
Paris Rapeseed
30/01/12 -- Feb Paris rapeseed goes off the board tomorrow so we may be in for some erratic trade, especially given the monster differential between it and what will become the new front month - May.
How Feb delivery can be worth more than EUR30.00/tonne over May is beyond me.
It's Groundhog Day (Again)
30/01/12 -- Fitch cut the ratings of five more EU countries late on Friday I hear, including Belgium, Italy and Spain. Nouriel Roubini, the economist famous for seeing the 2008 sub-prime led market meltdown coming first, says that the eurozone will collapse within the year. Greece and Portugal will be first out of the door, he forecasts.
Elsewhere I read over the weekend that Greece is already making plans to do a moonlight flit in "as orderly a fashion as possible" which I suspect won't include putting the hoover round and emptying the bins before they go.
This morning on Radio 4, Yanis Varoufakis - a prestigious economist who heads the Department of Economic Policy at the University of Athens - said that the Greek austerity plans wouldn't work "even if God and his angels were to descend upon Athens and put them in place."
A German proposal to give the EU control of Greece's budget has not surprisingly met with fierce opposition from the debt laden country. "You can't tell us how to spend your money."
Meanwhile Greece insists that a deal with private bondholders will be finalised this week as European leaders meet in Brussels with most member states, but not the UK, expected to sign up to a new treaty.
On a different note has anyone noticed the Baltic Dry Index falling out of bed lately. Mid-December it was over 1900 points and on Friday it closed at 726 - a drop of almost two thirds in six weeks!
The theory goes that the BDI is an indicator for the potential performance of the world economy as it reflects demand for commodities around the globe. It's not been below 1000 since the dark wrist-slashing depths of late 2008/early 2009 when NYMEX crude fell to under USD35/barrel.
A wet week is in store for Argentina by all accounts, which seems to be influencing the overnight grains which see beans around 13 cents lower, corn down 4-5 cents and wheat 4-7 cents easier.
Extreme cold for Ukraine and Russia is the new weather scare to worry about. "The cold wave is expected to continue for another week with temperatures 15-20 F below normal," say Martell Crop Projections.
