Chicago Rallies Heading Into Three Day Weekend
17/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.67 1/2, up 9 1/4 cents; Nov 12 Soybeans closed at USD12.62, up 6 3/4 cents; Mar 12 Soybean Meal closed at USD332.50, up USD1.70; Mar 12 Soybean Oil closed at 53.40, up 35 points. On the week as a whole front month beans gained 38 1/2 cents, meal USD12.50 and oil 87 points. The Argentine Ministry forecast their soybean harvest at 43.5 to 45 MMT compared to the USDA's estimate of 48 MMT. The USDA reported 173,000 MT of beans sold to China for 2011/12 and a further 2.75 MMT of new crop beans also sold to China. In addition to that there was 20,000 MT of soyoil sold to Morocco. The markets are closed Monday for the President's Day holiday.
Corn: Mar 12 Corn closed at USD6.41 3/4, up 5 1/2 cents; Dec 12 Corn closed at USD5.68 1/4, up 1/4 cents. On the week as a whole front month Mar 12 was up 10 cents and Dec 12 up 8 1/2 cents. Following on from yesterday's robust weekly export sales the USDA today announced the sale of 132,000 MT of US corn to South Korea. Funds were said to have bought 8,000 contracts on the day which would have them adding around 15,000 contracts on the week. The USDA Outlook Forum takes place Thursday/Friday next week when we will get a preliminary guide to planting intentions for the spring. A corn area of 94-95 million acres could be on the cards, a sharp increase from the 91.9 million planted in 2011.
Wheat: Mar 12 CBOT Wheat closed at USD6.44, up 15 1/4 cents; Mar 12 KCBT Wheat closed at USD6.89 1/2, up 6 1/2 cents; Mar 12 MGEX Wheat closed at USD8.22 1/4, up 4 1/2 cents. On the week overall nearby Chicago wheat was up 14 cents, Kansas up 13 1/2 cents and Minneapolis 8 cents firmer. The market seems happy that US wheat is now competitive following back to back successes in two Egyptian tenders this week. The USDA announced 120,000 MT of US wheat sold to unknown. Ukraine is virtually out of the market and even Russia has gone quiet too. Saudi Arabia and Iraq tender for wheat this weekend, it will be interesting to see which way that business goes.
EU Wheat Price Movements Getting More Erratic
17/02/12 -- EU grains finished higher with Mar 12 London wheat up GBP1.00/tonne to GBP164.00/tonne and Mar 12 Paris wheat climbing EUR4.50/tonne to EUR217.25/tonne.
On the week overall front month London wheat fell GBP1.00/tonne, yet Mar 12 Paris wheat rose EUR6.75/tonne. In another curious move the gap between Mar 12 and May 12 London wheat has widened from being a GBP1.75/tonne premium a week ago to one of GBP4.00/tonne at the close of play today.
You could say that this reflects the lack of physical interest in the nearby position. Yet in stark contrast Mar 12 Paris wheat has gone from being a EUR4.00/tonne premium over May 12 a week ago to one of EUR7.50/tonne today.
Ukraine appears to have set some kind of voluntary cap on wheat exports for the remainder of the season, which will likely limit them to no more than 5.0 MMT, which is 1 MMT less than the USDA currently estimate.
Russia will be back in the export market as soon as weather conditions improve is what some are saying, although they were curiously absent from yesterday's Egyptian tender - and that was for April shipment.
Maybe there's one last shot at some "technical tightness" for those still sitting on their hands with wheat to sell, looking enviously at GBP200/tonne in their tractor rear view mirrors? We shall see, I wouldn't set my sights too high though as there is potentially a tidal wave of new crop on the way.
The EU-27 wheat crop is seen 3% higher in 2012, carryover into 2012/13 will also be increased as exports currently lag last season's levels by more than a third.
Last week the USDA forecast an increase in US winter wheat acres of 30% to just under 42 million acres, harvesting of that begins in just three months.
India will begin harvesting a record wheat crop of it's own in a matter of weeks.
Meanwhile Agriculture and Agri-Food Canada say that growers there will plant 24 million acres of wheat for the 2012 harvest, up 14% from 21.1 million in 2011. Rapeseed plantings will also jump 7% to a record 19.8 million acres, they estimate.
EU Rapemeal Prices
17/02/12 -- Rapemeal prices on the continent remain steady, with a significant front end premium in evidence due to tight availability.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb12 | unq | n/a |
| Mar12 | 190.00 | +1.00 |
| Apr12 | 185.00 | unch |
| May/Jul12 | 177.00 | -2.00 |
| Aug/Oct12 | 164.00 | unch |
| Nov12/Jan13 | 168.00 | unch |
| Feb/Apr13 | 170.00 | unch |
Early Call On Chicago
17/02/12 -- The overnight grains closed higher with beans up 10-12 cents, corn up 4-5 cents and wheat up 7-9 cents. Crude is almost a dollar higher and the USD is weaker.
There's not much change on the week as a whole for corn and wheat but beans are up around 40 cents including the overnights.
In a raft of export business the USDA have announced the sale of 132,000 MT of corn to South Korea, 120,000 MT of wheat to unknown, 20,000 MT of soyoil to Morocco, 173,000 MT of beans to China and a further 2.75 MMT of new crop beans also sold to China.
There seems to be plenty of business about as you can see, and America seems to be the cheapest shop in town right now.
There are signs that Ukraine are more or less done selling wheat, although a private Israeli group is said to have bought Ukraine wheat and Russian corn this week. The latter was also conspicuous by it's absence in yesterday's Egyptian tender.
South American crop conditions appear to have stabilised. EU wheat probably hasn't suffered as much damage as the market thought, but we don't know that for certain yet.
Monday is President's Day in the US so the markets there are closed.
Once again (how many times is this?) there is optimism that Greece will get it's wretched bailout money approved on Monday. If it does then I'm sure I'm not alone in wanting to go over there and insert it one euro at a time up the entire Greek cabinet's back passage.
It looks like we are going higher tonight, if however the Greek deal turns out to be yet another false dawn all bets could be off and back down we go again when Chicago resumes trading again on Monday night.
Early calls for this afternoon's CBOT session: corn up 3-5 cents, wheat up 7-9 cents, beans up 10-12 cents.
The Morning Rant
17/02/12 -- Like snogging your aunty some things are just plain wrong. I once accidentally walked in on the ex sister-in-law only to find her in the bath round at our house one time when she'd come to stay. That was wrong, but what came next was worse.
Now MrsN#1 was a twin as it happens, and I don't know what it was, something just came over me. The sight of her there naked and vulnerable, and these feelings inside that I suddenly realised that I'd been suppressing for years and I did something I now know I'd been dying to do for a very long time. I drowned her.
Another thing that's just plain wrong has happened to me this week. I went to the local greasy spoon the other day, only to discover that "Julie" has sold out to "Michel". Yes I looked carefully at his pristine apron and it was "Michel" not "Michael".
"Large breakfast no egg please," I order. Eggs are the food of the Devil, we all know that. They come out of chicken's arses. End of. The large breakfast is two of everything, bacon, sausage, egg (normally but not on this occasion), toast etc. So the girl behind the counter (no name badge - "Michel" obviously doesn't consider her worthy of one) says "would you like something else instead, some more bacon perhaps?"
Being a bacon aficionado I immediately seize the opportunity to double up on my bacon consumption and say "yes, a couple more rashers of bacon would be great".
"Michel" turns out not to be a classically-trained French chef covertly working in a greasy spoon cafe as you may have thought via the name, but no "Michel" is in fact a Septic Tank. He immediately pipes up with "you'll have to charge him extra for one of those bacons."
Miss No-name looks at him incredulously. Secretly inside she's saying "what are you on about you Septic buffoon, Julie always used to work like this, lose two eggs, gain two bacon. It's simple." (If she was into irony she may have thought "do the math as you lot say" but I suspect that she probably wasn't that deep).
"Bacon is a lot dearer than eggs," explains chef "Michel". I wonder at this point if he's imported a specialist baked bean counting device from America, but I decide to let that one go.
I am tempted to point out to chef "Michel" that he is working in a greasy spoon cafe where the tramps come to keep warm not La Gavroche, but I also decide to keep that piece of information and a list of America's long history of military inadequacies to myself. I just want my large breakfast and I want it now.
So I pay my extra bacon money and sit and wait.
Five minutes later Miss No-name appears with my breakfast and there it is. Christ what in the name of God is this? Four bacon. Check. Two sausage. Check. One black pudding. It should be two surely, but as I'm not going to eat it I'm not bothered. Beans. Check. There are more than two of them, about a hundred at a guess, but I'm too busy to count them individually. Check again. Tomatoes. Two. Check.
Then on a separate plate comes the toast. Two rounds of toast. Check. But then, accompanying the toast what sweet baby Jesus is this. It can't be surely can it? It looks like it, but what the hell is it doing there on my plate. It seems that chef "Michel" has decided to jazz up my plate of toast with a slice of orange!
Four pieces of toast and a slice of orange. He's probably seen it on MasterChef or something. Maybe that's how they do it in America? I wouldn't know as I've never been, and based on this weird combination of ingredients I never want to go.
Some things are just plain wrong, and this is right up there with helping to unclip your granny's bra or trying your Mums false teeth on.
The Morning Vibe
17/02/12 -- The overnight grains are a bit firmer with beans and wheat around 5 cents higher and corn up 2-3 cents.
UkrAgroConsult say that only 26% of winter crops in Ukraine are rated "good" compared to 56% this time last year. It's being suggested in some quarters that they may plant up to 5 million ha of corn there this spring, that would be a 43% increase on 2011 if they did.
February shipments out of Ukraine have slowed right up with only around 600,000 MT of grain being exported in the first half of the month. Less than 100,000 MT of that was wheat. It is being reported that traders there have agreed with the government not to ship more than 1.7 MMT of wheat between now and the end of the 2011/12 marketing year.
India's Minister of Agriculture says that the country will probably beat the official forecast for a record wheat crop of 88.3 MMT this year, without saying by how much.
The Buenos Aires Cereals Exchange kept it's forecasts for soybean and corn production in Argentina unchanged yesterday at 46.2 MMT and 21.3 MMT respectively. There are some decent rains in the forecast for most days in the week ahead.
Another day, another deadline. The Greek job will all be sorted on Monday, some are now saying. If it is America may miss out on the news, they have a nice little three day weekend coming up as it's President's Day on Monday.
The dollar is weaker as "risk on" returns to the markets, with the pound rising above 1.5850 against the greenback. Crude is steady on optimism that Greece is finally going to get the cash it desperately needs.
Chicago Closing Comments - Thursday
16/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.58 1/4, down 2 3/4 cents; Nov 12 Soybeans closed at USD12.55 1/4, down 5 1/4 cents; Mar 12 Soybean Meal closed at USD330.80, down USD2.00; Mar 12 Soybean Oil closed at 53.05, down 30 points. The USDA reported weekly export sales of 436,700 MT for 2011/12 and 178,000 MT for delivery in 2012/13 - in line with the predicted 600-750 TMT. A Chinese trade delegation is said to have agreed to buy 8.62 MMT of US soybeans, with that amount maybe rising to around 12 MMT, but this is more of a publicity stunt than fresh business. Weather conditions in South America appear to have stabilised the crop there.
Corn: Mar 12 Corn closed at USD6.36 1/4, up 9 1/4 cents; Dec 12 Corn closed at $5.68, up 8 1/4 cents. Weekly export sales of 1,005,900 MT for 2011/12 and a further 61,500 MT for delivery in 2012/13 were significantly higher than the 550-750 TMT expected. Funds were said to have bought 12,000 contracts on the day. Having taken a dip last week the weekly ethanol grind was back up again, which proved to be something of a surprise. Production was 928,000 barrels/day during the past week. China are said to have struck an accord with Argentina to import corn.
Wheat: Mar 12 CBOT Wheat closed at USD6.28 3/4, up 2 3/4 cents; Mar 12 KCBT Wheat closed at USD6.83, up 13 cents; Mar 12 MGEX Wheat closed at USD8.17 3/4, up 6 3/4 cents. Weekly export sales of 420,400 MT for old crop and 7,500 MT for new crop were a bit lower than the 450-650 TMT expected. Weekly shipments were better at 479,100 MT but generally still lag the level required to hit the USDA's 2011/12 final target. Still, US wheat did pick up a second success in a week in today's Egyptian tender selling 180,000 MT. French wheat proved too expensive and Russian/Black Sea wheat wasn't even offered.
EU Wheat Mixed, Exports Drag
16/02/12 -- EU grains finished mixed with front month Mar 12 London wheat falling GBP1.00/tonne to GBP163.00/tonne and Mar 12 Paris wheat rising EUR3.75/tonne to EUR212.75/tonne.
Paris wheat was supported by a sharply weaker euro on signs that the Greek saga is far from over yet. For London wheat this was actually the lowest close for a front month in eighteen trading sessions.
Meanwhile Brussels granted just 47,000 MT of soft wheat export licences this week, easily the lowest weekly total of the marketing year so far, highlighting the uncompetitive nature of EU wheat prices.
That brings the 2011/12 marketing year to date total to 8.4 MMT compared to 13.12 MMT at this time a year ago.
Strategie Grains said that, for all the hype, the recent EU-wide cold snap probably won't have caused any more damage than in a normal year. They peg the 2012/13 EU-27 all wheat crop at 141.5 MMT, 3% up on last year. Barley production is seen at 54.6 MMT and corn output at 62.6 MMT.
They also said that EU exports will be curtailed in the remainder of 2011/12 by the resurgence of US wheat. To emphasize that point Egypt bought 180,000 MT of US wheat in a tender today, passing on more expensive French offers.
In further evidence that EU wheat is pricing itself out, Bloomberg reported that shipments out of France's main export port of Rouen fell 46% in the week ended yesterday - their lowest total in five weeks.
Whilst the futures market continues to hold up well the differential with cash prices is widening, particularly in the north. End-user interest is minimal at these levels.
The Small Ads
16/02/12 -- As some of you may know I've been having a bit of bother with the motor lately which seems to have picked up one of those annoying "we can't quite say exactly what the problem is" kind of problems.
So I was browsing the small ads in the paper today and saw this:
CHEAP! High mileage old style Escort, orange, handles well, just been serviced, some rear end damage & a bit tatty hence the price: just £150 ono.
So I rang the number and was surprised to hear MrsN#1 answer the phone!
Early Call On Chicago
16/02/12 -- The overnight grains see beans 6-7 cents lower, corn around 2 cents easier and wheat flat to a cent lower. Crude is down 77 cents.
The dollar is firmer as the market adopts a bit more of a risk off strategy, with the Greek problem now looking like rumbling on past elections there in April.
The USDA have reported corn weekly export sales of 1,005,900 MT for 2011/12 and a further 61,500 MT for delivery in 2012/13, significantly higher than the 550-750 TMT expected. Wheat sales were 420,400 MT for old crop and 7,500 MT for new crop, a bit lower than the 450-650 TMT expected. Soybean sales were 436,700 MT for 2011/12 and 178,000 MT for delivery in 2012/13 - in line with the predicted 600-750 TMT.
Egypt bought three cargoes of US wheat at USD259/tonne FOB, confirming that US wheat prices are at last competitive into North Africa. Taiwan has also bought US wheat today.
Early calls for this afternoon's CBOT session: beans down 6-8 cents, wheat and corn flat to down 2 cents.
EU Rapemeal Prices
16/02/12 -- Rapemeal prices on the continent are a bit firmer today in line with modest gains in CBOT soymeal last night. Spot availability is tight.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | unq | n/a |
| Mar12 | 189.00 | +2.00 |
| Apr12 | 185.00 | +2.00 |
| May/Jul12 | 179.00 | +4.00 |
| Aug/Oct12 | 164.00 | +1.00 |
| Nov12/Jan13 | 168.00 | unch |
| Feb/Apr13 | 170.00 | unch |
Morning News Snippets
16/02/12 -- A Chinese trade delegation to the US has signed a "shop window" deal to buy 8.62 MMT of US soybeans. More is expected to be done before they fly home. That might sound impressive but in reality the significance of this is minimal, these are beans that we all knew that they were going to buy anyway.
Saudi Arabia is in the market for 330,000 MT of optional origin 12.5% protein milling wheat. Egypt are also tendering for wheat again today.
Strategie Grains are forecasting that the recent EU-wide cold snap will not have caused any more damage than in a normal year. They peg the 2012/13 EU-27 all wheat crop at 141.5 MMT, 3% up on last year. Barley production is seen at 54.6 MMT and corn output at 62.6 MMT.
Despite the recent freeze said to be disrupting grain movements out of the Black Sea, Bloomberg are reporting that shipments out of France's main export port of Rouen fell 46% in the week ended yesterday to the lowest total in five weeks.
The pound is back up above 1.20 against the euro as EU finance ministers play a bit more hardball with Greece. Just 24 hours after the news that Holland and Italy are now officially in recession we discover that Spain's economy shrank for the first time in two years in Q4 of 2011.
Chicago Soybeans Up, Grains Down
15/02/12 -- Soybeans: Mar 12 Soybeans closed at USD$12.61, up 6 cents; Nov 12 Soybeans closed at USD12.60 1/2, up 3 cents; Mar 12 Soybean Meal closed at USD332.80, up USD2.70; Mar 12 Soybean Oil closed at 53.35, up 33 points. Funds were said to have bought 5,000 soybean contracts on the day, pushing them higher for the fourth session in a row. The USDA announced the sale of 116,000 MT of soybeans to China for 2011/12 delivery. Weekly export sales from the USDA tomorrow are expected to be in the range of 600 to 750 thousand MT. The expected meeting of EU financial leaders to approve the new Greek austerity measures was downgraded to a conference call as that particular circus drags on.
Corn: Mar 12 Corn closed at USD6.27, down 6 1/2 cents; Dec 12 Corn closed at USD5.59 3/4, down 4 1/2 cents. Funds were said to have sold 9,000 corn contracts on the day. Corn looks overbought heading into a long weekend in the US - it's President's Day on Monday. Also coming up next week is the USDA's annual February Outlook Forum when we get often a fairly accurate idea on US planting ideas for the spring. A significant increase on last year's 91.9 million acres is expected with prices above six dollars, although soybeans are staging something of a mini fight back. Trade estimates for tomorrow’s weekly export sales report range from 550 to 750 thousand MT.
Wheat: Mar 12 CBOT Wheat closed at USD6.26, down 9 cents; Mar 12 KCBT Wheat closed at USD6.70, down 5 1/2 cents; Mar 12 MGEX Wheat closed at USD8.11, down 1 cent. Funds were said to have sold 4,000 Chicago contracts on the day. Egypt are tendering for wheat again tomorrow, it will be interesting to see if the US can build on last weekend's victory there. The world is not short of wheat. Global ending stocks are expected to be at all time highs in 2011/12 and Australia has just announced record production and exports for the current marketing year. Tomorrow's weekly export sales are expected to come in around 450 and 650 thousand MT.
EU Wheat Ends Mostly Lower
15/02/12 -- EU grains finished mostly lower with front month Mar 12 London wheat flat at GBP164.00/tonne and Mar 12 Paris wheat down EUR2.00/tonne to EUR209.00/tonne.
News, once again, that the Greek "deal" on austerity was maybe not quite all that it originally seemed sent the euro lower. There's talk now of some form of "pro-tem" deal being done to avoid a Greek default in March, but not hand over anything but the bare minimum of cash until after the elections that are due there due in April take place.
It is now being quietly suggested that opposition to their membership of the eurozone bloc is privately increasing amongst unnamed member countries.
News that Holland and Italy are now officially in recession and that Germany has just had its first negative growth quarter since 2009 added to the general feeling of discontent. UK unemployment at 8.4% is now at the highest level in 16 years hardly improved things either.
The feeling is still that European wheat is overvalued on the world stage. Most of the UK merchants meanwhile are bemoaning the stagnant end-user interest and general lack of business around at the moment.
After the close Egypt announced a second wheat tender within a week, US wheat won the last one hands down.
The recent cold snap across Europe and the Black Sea area, the effects of which are still to be evaluated, appears to have abated for now.
Early Call On Chicago
15/02/12 -- The overnight grains were mostly steadier with beans ending around 5-7 cents higher, with wheat up 2-3 cents and corn flat to a cent firmer. Crude is around a dollar or so higher.
I've just heard an unconfirmed report on the radio that today's meeting of EU financial leaders to ratify Greece's austerity "deal" has been cancelled, saying that further assurances are required first. I can't find confirmation of that on the BBC or Reuters though.
This has all the hallmarks of the largest and most ludicrously false application for a loan in history. With an election due in April it would seem that the Troika are looking for assurances that a new government won't simply turn round and say "I think you'll find that it was the last lot that signed that agreement, not us."
Not only is a Greek exit from the eurozone now being openly discussed, a bit like Carlos Tevez, the BBC are now reporting that some eurozone team-mates no longer want them in the bloc.
Soybeans look the strongest of the three, indeed wheat and corn have only closed lower that night's closing levels once this month.
China has bought 116,000 MT of US soybeans for 2011/12 delivery today, say the USDA.
Oil World have cut their Brazilian soybean estimate from 70.0 MMT to 69.5 MMT and also their forecast for Parguay from 6.0 MMT to 4.6 MMT. They've increased their Argentine estimate from 46.5 MMT to 47 MMT. All three figures are below the USDA's 72 MMT, 6.4 MMT and 48 MMT respectively.
Ukraine says they have no plans to limit grain exports. There were however suggestions last week that the government had "asked" shippers to lighten up on wheat exports due to doubts over the health of the current over-wintering crop.
Regardless of the state of the 2012 wheat crop in Ukraine there is no shortage of the grain elsewhere around the globe with Western Australia state saying that they have had a 15 MMT record grain harvest this year, backing up ABARES forecast of a record 29.5 MMT wheat crop in 2011/12 released yesterday. With forecasts of exports at 22.3 MMT that would make them second only to the US in terms of being the world's largest wheat seller.
Corn is what Ukraine has plenty of, and that situation looks like being replicated in 2012/13 by virtue of a large increase in planted area this spring due to the failure of winter wheat and rapeseed.
Early calls for this afternoon's CBOT session: beans up 6-8 cents, corn flat to 2 cents firmer, wheat up 1-3 cents.
EU Rapemeal Prices
15/02/12 -- Been away for a few days, hence the lack of blogging, so I've no idea if these prices are up, down or sideways.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb12 | unq | n/a |
| Mar12 | 187.00 | n/a |
| Apr12 | 183.00 | n/a |
| May/Jul12 | 175.00 | n/a |
| Aug/Oct12 | 163.00 | n/a |
| Nov12/Jan13 | 168.00 | n/a |
| Feb/Apr13 | 170.00 | n/a |
Chicago Close - Tuesday
14/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.55, up 3 cents; Nov 12 Soybeans closed at USD12.57 1/2, down 1 1/2 cents; Mar 12 Soybean Meal closed at USD330.10, down USD0.40; Mar 12 Soybean Oil closed at 53.02, down 3 points. Soybeans continue to look the strongest of the three main grains/oilseeds to my mind. Support today came from the USDA announcing the sale of 215,000 MT of soybeans for 2011/12 delivery and 68,000 MT for 2012/13 delivery to unknown. Funds were said to have bought 4,000 soybean contracts on the day.
Corn: Mar 12 Corn closed at USD6.33 1/2, down 6 cents; Dec 12 Corn closed at USD5.64 1/4, down 2 3/4 cents. Weighing on the market was yesterday's USDA baseline forecast of 2012/13 ending stocks almost doubling to 1.623 billion bushels together with production at a record 14.235 billion bushels. Funds sold an estimated 6,000 contracts on the day on the back of that. The USDA see food. seed and industrial usage of corn rising to more than 6 billion bushels in 2012/13 with demand from the ethanol sector also increasing. I wonder if either is achievable.
Wheat: Mar 12 CBOT Wheat closed at USD6.35, down 6 1/4 cents; Mar 12 KCBT Wheat closed at USD6.75 1/2, down 7 3/4 cents; Mar 12 MGEX Wheat closed at USD8.12, down 3 1/2 cents. Funds were said to have sold 2,000 CBOT contracts on the day, as Australia increased the size of it's recently harvested wheat crop, and it's export potential, to all-time highs. The notion that US wheat has finally got itself competitive on the world export stage is however supportive. Russia looks like it's done the majority of it's selling the the first half of the season and Ukraine's exports have never really got going.
EU Wheat Closing Comments - Tuesday
14/02/12 -- EU grains finished higher with Mar 12 London wheat ending up GBP0.50/tonne to GBP164.00/tonne and Mar 12 Paris wheat climbing EUR4.25/tonne to EUR211.00/tonne. New crop London wheat was GBP2.75/tonne higher, yet Nov 12 Paris wheat was only EUR0.25/tonne firmer.
Clearly EU wheat didn't know what to do today. Rising Chicago wheat should be supportive, you'd have thought, but indications that European wheat is too expensive relative to American wheat isn't helpful.
News that Australia's equivalent of the HGCA, ABARES, had increased the size of the 2011/12 wheat crop there to a record 29.5 MMT was hardly friendly. Wheat exports are also pegged at a record 22.3 MMT, 1.8 MMT higher than the USDA predicted last week, and also an all-time high.
Winterkill doubts still linger though following the recent cold snap across Europe.
"The so far the mild winter prevented winter cereals partially from hardening and they were vulnerable to frost kill damage in western Europe but also in western Poland, Czech Republic and around the Black Sea.
"Frost kill due to the current cold spell is very likely to occur in eastern France, the Benelux countries, Germany, Poland and Czech Republic as well as in Ukraine," say EU research centre MARS.
Elsewhere doubts remain over Greece's commitment to the recently announced "done deal" on austerity, especially in the light of April elections immediately following the next tranche of bailout money due next month.
Chicago Ends Higher
13/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.52, up 23 cents; Nov 12 Soybeans closed at USD12.59, up 19 1/2 cents; Mar 12 Soybean Meal closed at USD330.50, up USD10.50; Mar 12 Soybean Oil closed at 53.05, up 52 points. The USDA issued a preliminary forecast of US plantings for the 2012 harvest pegging beans at 74 million acres, lower than other private estimates which have been roughly unchanged from 2011 at around 75 million. Funds came in for an estimated 8,000 soybean contracts on the day encouraged by news that Greece was a step closer to pushing through it's austerity measures.
Corn: Mar 12 Corn closed at USD6.39 1/2, up 7 3/4 cents; Dec 12 Corn closed at USD5.67, up 7 1/4 cents. The USDA suggested that US corn plantings would reach 94 million acres this spring, a bit lower than Informa's 94.75 million but still a significant increase on 2011's 91.9 million. If that baseline projection is correct then we'd see 2012/13 ending stocks double to 1.623 billion bushels. The USDA weekly export inspections report was a pretty poor 29.016 million bushels. Nevertheless funds came in for an estimated 10,000 contracts on the day.
Wheat: Mar 12 CBOT Wheat closed at USD6.41 1/4, up 11 1/4 cents; Mar 12 KCBT Wheat closed atUSD$6.83 1/4, up 10 1/4 cents; Mar 12 MGEX Wheat closed at USD8.15 1/2, up 1 1/4 cents. Funds bought an estimated 4,000 CBOT contracts on the day. A first success of the 2011/12 season for US wheat in Egypt's weekend tender encouraged belief that US wheat is now competitively priced with European and Black Sea origin. The USDA predicteded that the US wheat area for the 2012 harvest would come in at 56.7 million acres, a little below some other suggestions. Even so that's a significant increase on last year and would place stocks to use at almost 41% in 2012/13.
EU Wheat Looking Too Expensive
13/02/12 -- EU grains finish sharply lower with Mar 12 London wheat down GBP1.50/tonne to GBP163.50/tonne and Mar 12 Paris wheat slumping EUR3.75/tonne to EUR206.75/tonne.
Paris wheat took the hardest hit on news that it was USD20-25.00/tonne inferior to US wheat in an Egyptian weekend tender. The recent slump in the freight market is clearly helping wheat travel further for less, with Argentine wheat also featuring into North Africa of late.
Last week's widespread reports of 200,000 MT of US wheat sold to Spain will also be fresh in traders minds. European wheat is still looking too expensive to export and domestic demand is sluggish to say the least.
Nearby Mar 12 London wheat fared better than other months which closed with losses of GBP2.05-2.85/tonne.
The euro was a bit firmer on news that Greece had cleared one more hurdle as it strives to jump through hoops to qualify for the next tranche of Troika bailout money.
The Morning Rant
13/02/12 -- Greece finally got it's austerity vote through parliament I see, as protesters and police clashed outside. Eurozone ministers now need to ratify the proposed measures on Wednesday. Saying that you are going to do x,y and z to get your hands on EUR130 billion is not the same as actually doing x,y and z once you've got your greasy little mitts on the money of course, but I don't suppose that anyone has thought of that. That's just too ludicrous to contemplate isn't it?
US wheat won a rare victory in Egypt's latest tender over the weekend, coming in around USD20-25/tonne cheaper than French material. That's the first win for US wheat in the current marketing year, even if it was for only one cargo. It also seems to suggest that Paris wheat prices have got a little ahead of themselves.
My chums in the US are telling me that the effects of the removal of the ethanol blenders tax credit are finally starting to bite. That should mean reduced demand for corn from that sector, but also lower DDGS production. You could argue that to be either bullish or bearish for wheat there.
What you can't really argue against though is world wheat stocks at an all-time high, US winter wheat acres sharply higher and potentially massive US corn plantings to come.
Chicago Wheat Sharply Lower
10/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.29, up 1 1/2 cents; Nov 12 Soybeans closed at USD12.39 1/2, up 1 cent; Mar 12 Soybean Meal closed at USD320.00, down USD1.00; Mar 12 Soybean Oil closed at 52.53, down 1 points. Beans rebounded from double digit losses at one point to close the week overall 3 1/2 cents lower on the March, with meal down a more significant USD8.60 and oil closing up 88 points. The USDA announced the sale of 120,000 MT of soybeans to China. They cut soybean imports by the latter 1 MMT to 55.5 MMT yesterday, but that figure is still up more than 3 MMT on 2010/11. Year to date Chinese imports are however more than 3 MMT lower than at this time a year ago, suggesting that the USDA's 2011/12 target may have to be lowered further yet.
Corn: Mar 12 Corn closed at USD6.31 3/4, down 5 1/4 cents; Dec 12 Corn closed at USD5.59 3/4, down 8 1/4 cents. On the week corn was 12 3/4 cents lower on the March. Weakness in wheat spilled over into corn which saw the March contract close below key support at USD6.33/bu. Renewed fears of a Greek default saw the dollar sharply higher in a "risk off" move, with weaker crude oil also a negative influence. Funds were said to have sold 8,000 contracts on the day despite the USDA reporting the sale of 240,000 MT to Egypt. Ethanol margins are getting squeezed tightly with reports coming through of slowdowns and shutdowns amongst producers in the US now that the 45 cent tax break has gone.
Wheat: Mar 12 CBOT Wheat closed at USD6.30, down 16 cents; Mar 12 KCBT Wheat closed at USD6.73, down 19 cents; Mar 12 MGEX Wheat closed at USD8.14 1/4, down 17 1/2 cents. For the week as a whole Chicago wheat was down 30 3/4 cents, with Kansas dropping 39 cents and Minneapolis losing 24 1/4 cents. In amongst yesterday's USDA data was a forecast increase in US winter wheat acres of 30% to just under 42 million acres. That's why Kansas wheat took the biggest hit for the past couple of sessions. World wheat ending stocks at the highest level in history can't be anything but bearish for wheat either. Under the circumstances wheat at over six dollars/bushel looks a big price, especially if the Greek farce turns into a tragedy before long.
