Chicago: Soybeans Look The Strongest Leg
24/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.79, up 2 1/4 cents; Nov 12 Soybeans closed at USD12.70 3/4, up 3 cents; Mar 12 Soybean Meal closed at USD333.60, up USD0.70; Mar 12 Soybean Oil closed at 54.29, up 9 points. On the week as a whole beans were up 11 1/2 cents, with meal up USD1.10 and oil rising 89 points. Funds were said to have bought around 4,000 soybean contracts on the day. They added 15,000 to their net long position in the week through to Tuesday, according to today's Commitment of Traders report and are reckoned to have subsequently added around a further 12,000 since, including today's activity. The conclusion from the USDA's Outlook Forum looks bullish going into next season with 2012/13 US ending stocks seen tightening to just 205 million bushels. Heavy weekly export sales today were also supportive as was surging crude oil prices.
Corn: Mar 12 Corn closed at USD6.40 3/4, up 1 1/4 cents; Dec 12 Corn closed at USD5.58, down 3/4 cent. On the week old crop Mar corn was down a cent, with new crop Dec down 10 1/4 cents. Can you spot the trend? Whilst old crop supplies remain tight thye outlook for 2012/13 is looking increasingly bearish. The USDA forecast the now oft quoted "largest corn acreage since WWII" adding in record production and a doubling in carryout for next season. The Commitment of Traders report shows fund money getting out of corn and wheat and into soybeans in the week ending Tuesday. Today's weekly export sales report came in at 840,800 MT for corn, at the low end of expectations and with no sign of China as a featured buyer.
Wheat: Mar 12 CBOT Wheat closed at USD6.41, down 3/4 cent; Mar 12 KCBT Wheat closed at USD6.81, up 1 cent; Mar 12 MGEX Wheat closed at USD7.86 1/2, down 14 1/2 cents. On the week as a whole Chicago wheat was down 3 cents, Kansas down 8 1/2 cents and Minneapolis stumbling 35 3/4 cents. Once again, can you spot the trend? Minneapolis wheat continues to erode away at the massive premium it has built up over Kansas & Chicago wheat, ending at its lowest levels in nearly 14 months. The market is looking for a sharp rebound in spring wheat output this year as many acres got flooded out and were never planted in 2011. The opposite is true this time round with dryness the concern. Rain and snow for northern areas across the weekend and into early next week should alleviate some of those worries, whilst still allowing planting to begin in a timely fashion. Funds are showing up as adding to their CBOT short position in the week through to Tuesday.
EU Wheat Ends Close To Lowest Levels In A Month
24/02/12 -- EU grains finished lower with front month Mar 12 London wheat falling GBP1.75/tonne to GBP164.25/tonne. Mar 12 Paris wheat down EUR2.25/tonne to EUR207.50/tonne.
Paris wheat ended within less than a euro of it's lowest close in a month, with London wheat not too far away - within GBP1.25/tonne of it's lowest close since Jan 23rd.
On the week as a whole Mar 12 London wheat was actually GBP0.25/tonne higher despite Mar 12 Paris wheat slumping EUR9.75/tonne. Euro strength in the second half of the week can maybe account for some of that discrepancy.
Crude oil offered some outside support surging to fresh nine month highs and the highest in euro and sterling terms ever. Tensions between Iran and the West cranked up another notch on news that the Arab nation had stepped up it's nuclear activities.
Elsewhere though the news was bearish for wheat and corn with the concluding day of the USDA's Outlook Forum cranking up production and 2012/13 ending stocks for both.
A decent slug of rain and snow is seen moving across the the north central and northern Midwest today through to Tuesday which should benefit this dry area ahead of spring planting, adding to the bearish tone for grains.
The picture for soybeans however is more bullish, with 2012/13 ending stocks seen falling to 205 million bushels, a reduction of 25% on this season.
Early Call On Chicago
24/02/12 -- The overnight grains closed mixed with wheat 4-6 cents lower, corn down 2-3 cents and soybeans flat to 1 1/2 cents higher. Crude is up again and the dollar is a bit weaker.
The USDA's Outlook Forum suggests a record 362.5 MMT of corn coming out of the US this year, 40 MMT more than they've ever produced. Ending stocks for 2012/13 are seen more than doubling to 41 MMT.
Wheat production in 2012 is seen rebounding 8.3% to 58.9 MMT and soybean output is expected to come in at 88.5 MMT, up 6.4% on last year. Lower production in South America this year should mean the increased availability US soybeans will have a minimal effect on prices.
US 2012/13 ending stocks for soybeans are pegged at 205 million bushels (5.6 MMT), a reduction of 25% on this season. US wheat ending stocks next season are seen at 957 million bushels, or 26 MMT, an increase of 13% on this year.
Today's weekly export sales report came in at 840,800 MT for corn, at the low end of the expected range of 800,000 to 1,250,000 MT. China didn't feature as a buyer.
For soybeans old crop sales were a marketing-year high of 1,159,400 MT, with China taking around half of that (521,100 MT). There were also sales of 2,873,000 MT for delivery in the 2012/2013. Expectations were for combined sales of around 3.5 MMT.
Wheat sales of 701,600 MT were up 67 percent from the previous week plus an additional 55,800 MT for delivery in the 2012/2013 fell into line with expectations of 500 to 900 thousand MT.
The tug of war between mildly bullish/friendly soybeans and a more bearish slant going forward on wheat and corn continues. I'd expect new crop on the latter to come under particular pressure as we go forward - starting with this afternoon! The wheat fundamentals are bearish for both old and new crop.
Meanwhile, despite crude oil hitting nine month highs on the old reliable stalwart of "tensions in the Middle East" US ethanol stocks have never been higher at 21.5 million barrels.
Early calls on this afternoon's CBOT session: Beans mixed up 1 to down 1, corn down 3 to 5 cents, and wheat down 4 to 6 cents. I'd look for a weaker performance from new crop corn & wheat.
What's That Coming Over The Hill, Is It A Monster?
24/02/12 -- On the concluding day of their Outlook Forum the USDA have given out some serious food for thought with a 2012 monster US corn crop of a record 14.27 billion bushels, that's 362.5 MMT in English money beating the previous all-time high set in 2009 by 30 MMT. It also represents an increase of 48.5 MMT on output in 2011, or 15.4%.
Soybean production will weigh in at 3.25 billion bushels, they say. That's 88.5 MMT the way we like to say it, 5.3 MMT more than in 2011, an increase of 6.4%.
Wheat production in the US this year will be 2.165 billion bushels, or 58.9 MMT. That's 8.3% more than last year.
As far as stocks are concerned US 2012/13 corn ending stocks are seen more than doubling to 1.616 billion bushels, or 41 MMT.
Here's One For You
24/02/12 -- An interesting bit of trivia, brought to my attention by my chum Phil Baynes of Baynes Nutrition. Cast your mind back to the heady summer days of mid-July 2011. I certainly remember it well as British Unfairways were attempting to leave me stranded in Kiev the bastards, but I digress.
Yes, in the middle of July last year the USDA were pegging world wheat production for 2011/12 at 662 MMT, and now they say 692 MMT. Back then ending stocks for this season were estimated at 182 MMT and now they are seen at 213 MMT. So we have both wheat production and stocks 30 MMT higher than we thought last summer, give or take.
What was front month London wheat trading at in the middle of July I hear you ask. The answer, GBP166/tonne the same as it closed at last night!
Ah, but there's a lot less corn kicking around, you're only telling us half a story here, I also see flash through your head. True, the USDA's world corn production number is lower than it was then, but only by 8 MMT, and guess what, their ending stocks estimate is 10 MMT higher than it was back then.
Discuss.
PS for the pedants amongst you Nov12 London wheat was trading around GBP155/tonne last July, just GBP4/tonne more than last night's close.
The Morning Vibe
24/02/12 -- The German parliament is set to vote to block any further increases to the existing EUR750 billion bailout fund. In it's clearest "we've had enough" statement yet the draft text says: "European solidarity is not an end in itself and should not be a one-way street. Germany’s engagement has reached it limits," reports today's Telegraph.
The euro has been as high as 85p against the pound this morning, it's best level since before Christmas. I'd have thought that this news, which the Telegraph sees as "vastly complicating Greece’s rescue package" will put paid to any further rises.
The Buenos Aires Grain Exchange has left its forecasts for Argentine soybean and corn production unchanged this week at 46.2 MMT and 21.3 MMT respectively.
Iran has bought 500,000 MT of Russian wheat and 300,000 MT from Australia this week, according to Reuters. The purchases are said to have been made at "premiums well over international prices". Reuters also report that Iran are in negotiations with Pakistan to barter 1 MMT of Pakistani wheat in exchange for iron ore and fertiliser.
Brent crude hit an all-time high in both euro and sterling terms yesterday, surpassing even the highs seen during the oil price surge of mid-2008.
Makes you think "I wonder why Ensus isn't open then" that bit of news doesn't it? There's no news on that front though as far as I am aware. As for Vivergo "late spring" still seems to be the official line, but I wouldn't put your money on that let alone my own.
Mar 12 Paris wheat is down EUR1.50/tonne in early trade, that puts it within EUR1.50/tonne of it's lowest close in a month.
Soybeans are a little higher in overnight trade with Mar 12 up 1 1/4 cents to USD12.78/bu. A front month hasn't closed that high since September 2011.
So, we still seem to have a tug of war between beans wanting to go higher and corn & wheat looking a bit top heavy.
Chicago Closing Comments - Thursday
23/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.76 3/4, up 4 1/2 cents; Nov 12 Soybeans closed at USD12.67 3/4, up 3 3/4 cents; Mar 12 Soybean Meal closed at USD332.90, up USD1.60; Mar 12 Soybean Oil closed at 54.20, down 2 points. Fund buying continues to support beans - they were in for an estimated 5,000 contracts today. The Rosario Grain Exchange reduced their 2012 Argentine soybean crop estimate by a hefty 5 MMT from last month to 44.5 MMT. That is also well below the USDA's current figure of 48 MMT. Trade estimates for tomorrow’s weekly export sales report are around 3.5 MMT, a big number following heavy Chinese buying. Going forward the USDA pegged 2012 US soybean plantings at 75 million acres at their Outlook Forum. Tomorrow they will give us their ideas on ending stocks for 2012/13.
Corn: Mar 12 Corn closed at USD6.39 1/2, up 1 1/4 cents; Dec 12 Corn closed at USD5.58 3/4, down 5 3/4 cents. New crop months fell as the USDA confirmed that they expect US farmers to plant the largest corn acreage since the war this spring. They also said that they see demand from the ethanol sector declining in 2012/13. That should mean a sharp rebound in ending stocks for next season, they are due to reveal by exactly how much tomorrow. The USDA reported the sale of 120,000 MT of old crop corn to China, and 110,744 MT of similar to "unknown". Estimates for tomorrow’s weekly export sales report range from 800,000 to 1,250,000 MT. The Rosario Grain Exchange have reduced their 2012 Argentine corn production estimate to "no more than 20 MMT" from 21.4 MMT last month. In Brazil planting of 2nd crop corn is tearing ahead with Celeres reporting rapid growth and germination rates amongst this early planted winter corn.
Wheat: Mar 12 CBOT Wheat closed at USD6.41 3/4, down 2 3/4 cents; Mar 12 KCBT Wheat closed at USD6.80, down 5 cents; Mar 12 MGEX Wheat closed at USD8.01, down 17 1/4 cents. Funds were thought to have sold around 3,000 Chicago contracts on the day as the USDA said they expect all wheat plantings for the 2012 harvest at 58 million acres, 1.5 million above last week's number and 6.6% up on last year. Areas of the northern Plains that got flooded out last year are expected to be responsible for a large increase in spring wheat plantings this time round. Estimates for tomorrow’s weekly export sales report range from 500 to 900 thousand MT. Sales have suddenly picked up as the US finds itself well-priced on the world wheat export stage. Unconfirmed reports suggest sales to Spain and possibly Egypt have been made in the past few days.
EU Wheat Ends Mixed But Longer Term View Looks Bearish
23/02/12 -- EU grains finished all over the place with front month Mar 12 London wheat up GBP1.25/tonne to GBP166.00/tonne and Mar 12 Paris wheat down EUR2.25/tonne to EUR209.75/tonne.
Most active May 12 London wheat opened GBP3.00/tonne higher, but was never able to hold at that level and finished the day GBP0.10/tonne lower. Other London months ranged for GBP2.00/tonne lower on Mar 13 to GBP3.00/tonne higher on Jul 13.
London wheat fared generally a bit better than Paris wheat as the pound slipped below 1.18 against the euro for the first time in 10 weeks, despite the European Commission forecast of a shrinking euro-zone economy in 2012, on the Greek debt deal and ideas it has become too heavily oversold.
Brussels granted 298 TMT of soft wheat export licences this past week, whilst far from stunning that's the best weekly total for some time. When compared to last week's paltry 47 TMT, things could surely only have improved.
Even so, that only brings the year-to-date total to 8.7 MMT fully 34 weeks into the 2011-12 marketing year, a figure that still leaves us languishing 36% behind last season's levels.
Reports suggest that Spain has bought two cargoes (85,000 MT) of soft wheat from the US in the past 24 hours, further highlighting the currently uncompetitive nature of European prices.
The International Grains Council upped their estimate for the 2011/12 world wheat crop by 5 MMT to 695 MMT, which is around 2 MMT higher than the USDA currently forecast. The global corn crop was increased 3 MMT to 864 MMT, which now matches the USDA's thinking.
Corn production in Brazil and Argentina is seen at 60.5 MMT and 22 MMT respectively by the IGC. The Brazilian number would be a record despite drought in the south, aided by increased plantings and optimism over yields from early planted second crop corn which is going into the ground now.
The USDA predicted an all wheat area for the 2012 US harvest of 58 million acres, 1.5 million above last week's number and 6.6% up on last year. They also reiterated last week's corn area at the highest since 1944 at 94 million acres.
The market is looking for direction, balancing tight corn supplies and an assortment of weather worries around the world nearby, against potentially record corn production and record large wheat stocks going forward.
The IGC increased their estimate for 2011/12 world wheat ending stocks by 7 MMT to 211 MMT, adding that larger corn and barley production in the year ahead will probably reduce feed wheat consumption, meaning that 2012/13 wheat ending stocks will only see a modest decline from the predicted record levels of this season.
Late Call On Chicago
23/02/12 -- The overnight grains ended with beans 2-3 cents higher, wheat down 2-4 cents and corn narrowly mixed. Crude is a bit weaker.
The USDA's Outlook Forum pegged corn acres at 94 million, soybeans at 75 million and wheat at 58 million. All three look a bit bearish although none are stunning in their own right.
As well as potentially a record corn crop in 2012 the USDA also sees demand from the ethanol sector dipping off a little in 2012/13. With Ukraine now looking like it will have the potential for a record corn area of it's own this spring we may be seeing the start of a few cracks appearing in corn's armour.
Traders in Ukraine say that they are confident of exporting 14-15 MMT of corn in the current marketing year (the USDA say 14 MMT), and that they will at least match that total in 2012/13.
That would see them suddenly propelled into second place as the world's largest exporter of the grain, shipping more than a third of the volume that America normally sells abroad.
It seems entirely possible that given the likely large scale spring replant that will take place in Ukraine that they could easily beat 2011's production of 22 MMT given favourable growing conditions, leaving them the potential to export significantly more than 14-15 MMT.
If we know anything about Ukraine, it is that when they have a hefty surplus of anything they will take whatever price the market is willing to pay to turn it into cash.
Record US and Ukraine corn production competing head-to-head for sales, immediately after the northern hemisphere's wheat harvest has just wrapped up, fits in quite nicely with my long held vision of the grain markets setting the lows of 2012 around October/November time.
Sure, we may see some higher levels on offer in the short term on technical tightness, but longer term I think we are going lower (insert caveat about Mother Nature playing ball and unforeseen circumstances etc). Knowing what we know now, the market is setting itself up for a low in the last quarter of 2012, that's my belief.
Anyway, back to today. The USDA have confirmed the sale of 120,000 MT of old crop corn to China, and 110,744 MT of similar to "unknown".
Celeres reports Brazil’s soybean harvest at 19% complete as of Friday. They also peg 2nd crop corn plantings well ahead of year ago levels at 33.5% (nearly twenty points up on 2011), giving this crop the maximum amount of time to make up for yield losses in the main summer crop.
Corn planting in Mato Grosso is already 59% complete versus 18.7% this time last season. Celeres data also shows rapid growth and germination rates amongst this early planted winter corn.
The Rosario Grain Exchange have reduced their 2012 Argentine soybean crop estimate by a hefty 5 MMT from last month to 44.5 MMT. Corn production is now seen at "no more than 20 MMT" from 21.4 MMT last month.
Late calls on this afternoon's CBOT session: corn 1-3 cents firmer, beans up 2-3 cents, wheat flat to 2 cents lower.
USDA Acreage Numbers Are Out
23/02/12 -- Day one of the USDA's Outlook Forum is underway, and it's begun with early thoughts on plantings for the 2012 US harvest. I thought that they usually came out with the acreage numbers on day two, but apparently not.
Corn acres came in bang on expectations (and in line with last week's baseline projections) at 94 million acres, up 2.3% from last season's 91.9 million and the largest area given over to corn since 1944. Soybean area came in similar to last season, but a million above the baseline figure at 75 million acres. Wheat area was 1.5 million above last week's number and 6.6% up on last year at 58 million acres.
Using an average 8% abandonment rate, if yields were to return to the trendline 164 bu/acre then that would give us a record 14.2 billion bushel crop in 2012, That's 360.7 MMT, a jump of nearly 15% on 2011. Corn demand from the ethanol sector is seen falling in 2012/13 which would lead to a very sharp rebound in ending stocks if US growers were to conform AND be able to get yields at 164 bu/acre, but they've only achieved the latter once before - in 2009 when yields averaged 164.7 bu/acre.
The USDA went on to say that they see an average corn price of USD5/bu in 2012/13.
On the face of it the numbers are bearish, even if not surprising, so it will be interesting to see how the market reacts this afternoon.
EU Rapemeal Prices
23/02/12 -- Rapemeal prices on the continent are flat to a little easier today, although nearby availability remains very tight.
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 | 199.00 | -1.00 |
| Apr12 | 193.00 | -1.00 |
| May12 | 187.00 | unch |
| May/Jul12 | 182.00 | -2.00 |
| Aug/Oct12 | 167.00 | unch |
| Nov12/Jan13 | 172.00 | unch |
| Feb/Apr13 | 173.00 | -1.00 |
Morning Snippets
23/02/12 -- The Chinese Ministry say that a newly discovered outbreak of "type O" foot & mouth disease in the in the northwestern Ningxia Hui region is under control after 22 cows were slaughtered. What else would you expect them to say? This one wants watching.
Credit Agricole has reported a hefty EUR3 billion Q4 loss on exposure to Greek debt. RBS are showing their support by reporting a 2011 loss of GBP2 billion, up from GBP1.1 billion the year before. Way to go lads.
Russian wheat exports in the 2011/12 marketing year to date have slowed to 16.3 MMT hampered by the recent and ongoing cold spell. Things should pick up again in the second half of March.
Kazakhstan reckons it will export 10.5 MMT of wheat/wheat products in 2011/12 which is 2 MMT more than the USDA currently predict. Almost 7 MMT has already been shipped, they say.
Despite jumping through enough hoops (any systematically lying through it's back teeth) to get it's bailout money, an unimpressed Fitch has cut Greece’s credit rating by two notches to C from CCC, saying a default is "highly likely in the near term," that's money well spent then.
Continued evidence that European wheat is too expensive comes from news that Spain bought 30,000 MT of US soft wheat overnight. Tunisia are tendering today, it will be interesting to see if US wheat gets a foot in the door there too. Algeria are also in the market for 125,000 MT.
Iraq is said to have bought 400,000 MT of Canadian wheat.
Tonight we will get to find out what volume of wheat export licences were granted by Brussels this week following last week's appallingly low 47 TMT.
Ongoing tensions between Iran and the West see Brent and NYMEX WTI crude at nine month highs. Brent has risen above USD124/barrel this morning, with the gap between it and WTI now almost USD18/barrel.
Chicago Reverses Tuesday's Losses
22/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.72 1/4, up 1 1/4 cents; Nov 12 Soybeans closed at USD12.64, up 1 3/4 cents; Mar 12 Soybean Meal closed at USD331.30, up USD1.10; Mar 12 Soybean Oil closed at 54.22, up 16 points. Funds were said to have bought 2,000 soybean contracts as beans closed higher for the third session in a row. China "bought" 175,000 MT of soybeans for 2012/13, although this recent spate of new crop sales is only individual confirmation and pricing of last week's business done when the Chinese delegation was in tow.
Corn: Mar 12 Corn closed at USD6.38 1/4, up 8 3/4 cents; Dec 12 Corn closed at USD5.64 1/2, up 3/4 cent. For corn and wheat it was "Turnaround Tuesday" a day late due to the President's Day holiday. Funds were said to have bought 10,000 contracts today, a reversal from selling 12,000 yesterday. Talk of Japan switching corn purchases back to the US following shipping delays from Ukraine added support. Despite drought in the south, Brazil is still expecting a record 60-61 MMT corn crop this year. The USDA will likely forecast a sizeable jump in US corn plantings for 2012 and ending stocks for 2012/13 later this week.
Wheat: Mar 12 CBOT Wheat closed at USD6.44 1/2, up 11 1/2 cents; Mar 12 KCBT Wheat closed at USD6.85, up 8 cents; Mar 12 MGEX Wheat closed at USD8.18 1/4, up 1 1/2 cents. Wheat also completely reversed Tuesday's losses with funds stepping in for an estimated 3,000 Chicago contracts having sold 4,000 yesterday. Snow and rain for the PNW and Northern Plains should improve moisture deficits there. Reuters report that Canadian farmers intent to increase their spring wheat sowings this year. Last season's plantings were curtailed by flooding, this season it's much drier, maybe too dry, only time will tell. Things can go from one extreme to the other very quickly here.
EU Wheat Recovers As Weather Concerns Remain
22/02/12 -- EU grains finished mixed but mostly higher. Mar 12 London wheat closed down GBP2.25/tonne to GBP164.75/tonne and Mar 12 Paris wheat climbed EUR0.25/tonne to EUR212.00/tonne.
Today was a day of consolidation after some fairly sizable losses yesterday. EU weather concerns have switched from winter kill to drought. Large parts of the US have also experienced a unseasonably dry winter, whilst virtually no rainfall at all during Sep/Oct/Nov means that a third of Ukraine's winter crops will need replanting in the spring.
The trade is anticipating significant increases in corn and wheat plantings from the USDA's Ag Forum which starts tomorrow. Ending stocks of both for the season ahead should also increase, with corn carryout potentially doubling. Their thoughts are less likely to be bearish for soybeans though, with plantings seen a million acres lower, reducing carryout to around 250 million bushels from 275 million this season.
There's a major winter storm coming for very dry areas of US Upper Plains on Feb 26-27 and maybe again Mar 2-3, say WXrisk.com. That will help replenish depleted soil moisture ahead of spring plantings of wheat, corn and soybeans but plenty more is needed.
"The soil profile is dry through a very deep layer. Thus, much more precipitation is needed in the Upper Midwest before corn is planted, usually the first week of May," say Martell Crop Projections.
Ukraine's Ag Minister says farmers there need to resow nearly 3 million ha of winter grain areas and nearly 0.5 million ha of winter rapeseed this spring. They estimate the 2012 grain harvest in a fairly wide 42-50 MMT range (from a record 56.7 MMT in 2011). Of that wheat is expected to account for 15-16 MMT, around 30% down on last year.
Ukraine and Russia will stay cold over next 8 days, with a possible big snow event for eastern Ukraine western Russia March 2-3, say WXrisk.com. That looks like continuing to disrupt grain exports out of the Black Sea.
Western & central Europe and the UK will be largely warm and dry for the next 7-10 days, which will spread East into Eastern Europe by days 9-10, say WXrisk.com. Of the "Big 3" EU grain producers, Germany is currently the only one with adequate field moisture, say Martell Crop Projections. "France has grown dry over the past 7-8 weeks receiving only scanty precipitation in the farm belt," they add.
Meanwhile, much of the heavier rain that fell across the UK today was confined to northern and western areas, with only lighter showers for the Home Counties.
There are probably enough weather-related question marks in amongst that lot to underpin the market for now.
Early Call On Chicago
22/02/12 -- The overnight grains closed lower with beans falling around 4-6 cents and wheat and corn 2-3 cents weaker. Crude is down a tad and the dollar is slightly firmer.
The USDA have announced the sale of 175,000 MT of new crop soybeans to China.
The USDA's Annual Outlook Conference will take place on Thursday and Friday, with the final day giving us some early thoughts on US plantings for this year's harvest. The trade is expecting 94 million acres for corn, 74 million for soybeans and 56.5 million for wheat.
A return to anything close to trendline yields would give us a record corn crop in 2012.
Evidence is building that corn demand from the all important ethanol sector is starting to get choked off with corn at these levels and the blenders' tax credit now history.
Concerns over dryness in the northern Plains hampering spring plantings should be partially alleviated by forecast precipitation this week and into the first half of next week.
Tunisia is tendering for 50,000 MT of optional origin soft wheat, Bangladesh is in for 60,000 MT and Taiwan has bought 58,000 MT of Brazilian soybeans.
European weather has warmed up, fostering belief that any potential winter kill damage will not have been any worse than in a normal year.
Early calls for this afternoon's CBOT session: beans down 4-6 cents, corn and wheat 1-3 cents lower.
EU Rapemeal Prices
22/02/12 -- Rapemeal prices on the continent are mostly a little easier today, consolidating a touch after recent steep gains. Nearby availability remains very tight.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | unq | n/a |
| Mar12 | 200.00 | unch |
| Apr12 | 194.00 | unch |
| May12 | 187.00 | -1.00 |
| May/Jul12 | 184.00 | -1.00 |
| Aug/Oct12 | 167.00 | -2.00 |
| Nov12/Jan13 | 172.00 | -1.00 |
| Feb/Apr13 | 174.00 | -1.00 |
Nogger's Newsround
22/02/12 -- Kazakhstan's Ag Ministry say that the country will only have an average grain harvest of 13-15 MMT in 2012, around half of the post Soviet era record 2011 output as yields return to "normal" levels.
The country will export 15 MMT of grain in 2011/12, they add. They'd better get their skates on then. The 2012 wheat planted area will fall 2% to 13.5 million ha, they say.
Taiwan has bought 58,000 MT of Brazilian soybeans for Mar/Apr shipment overnight.
Japan says it's returned to buying US corn of late due to existing purchases from Ukraine being delayed by bad weather in the Black Sea.
Russia says that it won't stop shipping grain to Iran unless told to do so by the UN as to do so would be "inhuman".
Every man, woman and child in Australia ate an average 213 eggs each in 2011 I read with incredulity. Sales of senna pods must also be booming Down Under.
Stick insects can go a million years without sex, according to this report from the BBC. If you'd been married to MrsN#1 you wouldn't find that very hard to believe at all.
Other fascinating trivia is the news that the male water boatman insect "sings" with his penis. Any special requests? Pull the other one.
Chicago Soybeans Buck Trend
21/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.71, up 3 1/2 cents; Nov 12 Soybeans closed at USD12.62 1/4, up 1/4 cent; Mar 12 Soybean Meal closed at USD330.20, down USD2.30; Mar 12 Soybean Oil closed at 54.06, up 66 points. Beans managed to close in positive territory despite the negative influence of sharply lower corn and wheat, with funds said to have bought around 2,000 soybean contracts on the day. Private exporters announced the sale of 250,000 MT of new crop soybeans to China. Outside markets offered some support with crude closing above USD106/barrel for the first time since April 2011 when Libya was in turmoil. Tensions with Iran are the reason this time round.
Corn: Mar 12 Corn closed at USD6.29 1/2, down 12 1/4 cents; Dec 12 Corn closed at USD5.63 3/4, down 4 1/2 cents. Funds sold an estimated 12,000 contracts on the day in anticipation of the USDA reporting a significant increase in potential US spring corn plantings on Friday. The largest acreage since WWII is what the trade is pricing in. If we were to get a return to trendline yields, as the USDA projected in last week's baseline numbers, then we'd be in for a huge crop come the autumn. That would see 2012/13 ending stocks at much more comfortable levels. In other news private exporters announced the sale of 110,744 MT of corn to unknown.
Wheat: Mar 12 CBOT Wheat closed at USD6.33, down 11 cents; Mar 12 KCBT Wheat closed at USD6.77, down 12 1/2 cents; Mar 12 MGEX Wheat closed at USD8.16 3/4, down 5 1/2 cents. Chicago wheat traded 17 cents lower at one stage, but managed a minor recovery late in the session. Rabobank peg the US wheat planted area at 57 million acres, half a million more than the USDA currently project. Some rain is in the forecast for dry areas of the northern Plains starting Thursday. Algeria are tendering for 125,000 MT of optional origin wheat and Egypt may be back in the market again later in the week if prices fall much further.
EU Wheat Falls Despite Greek Deal
21/02/12 -- EU grains finished mostly lower with front month Mar 12 London wheat inexplicably bucking the trend and climbing GBP0.50/tonne to GBP167.00/tonne. Mar 12 Paris wheat slumped EUR5.25/tonne to EUR211.75/tonne.
Other London months closed with losses of GBP1.90/tonne on old crop and GBP2.20/tonne on new crop.
Mar 12 Paris corn closed down EUR3.75/tonne to EUR206.25/tonne, having finished at a five month closing high for a front month yesterday.
The market was lower throughout the morning, racing to close at or near session lows in late afternoon trade as US wheat and corn futures quickly capitulated on their first day back after a three day weekend.
Greece finally got it's second bailout deal, although already there is a felling that this particular tragedy is a long way from being over. The euro was a little firmer on the back of the news, but not dramatically so.
A warmer outlook for Europe eased any lingering winter kill concerns.
Rabobank forecast the US wheat acreage at 57 million, half a million higher than the USDA. The USDA are expected to indicate US corn plantings at around 94 million acres when it concludes it's Outlook Forum on Friday, a rise of more than 2 million.
The Food and Agriculture Organization say that Brazil will have a record 60 MMT corn crop in 2012, drought or no drought. High prices mean that production will be aided by an significant increase in planted area, particularly for second season corn, they say.
Russia reported that it has exported 19.8 MMT of grain so far this marketing year. They also sold 35,000 MT of wheat to Ethiopia overnight.
In Europe, consumers remain well covered with demand sluggish. "Feed orders is what I need, not more raw materials," said one fairly typical compounder today. March is a long and usually busy month, so we will have to wait and see how demand goes then, Easter then falls quite early. If the weather co-operates then offtake could fall off a cliff after that.
Early Call On Chicago
21/02/12 -- The overnight grains are mixed but mostly lower on the first trading day of trading after the long weekend with beans narrowly either side and corn & wheat around 6 cents easier.
Greece has got its bailout approved but the market is already wondering if it will be enough before the ink is even dry. That last one wasn't, so why should this second one in less than two years be any different? All it has done is maybe bought a bit more time.
The market is now turning its attention to the upcoming USDA Outlook Forum, although it seems most likely that they will simply re-iterate last week's baseline numbers of 94 million acres of corn and 74 million acres of soybeans getting sown in the US this spring. It's more than a month off before we get a set of more official figures with the March 30 planting intentions report.
European weather has warmed up, easing any further winter kill fears.
Pakistan says that it expects wheat production and exports there to match last year's bumper levels. India will also shortly begin harvesting an anticipated record crop of it's own.
Russia has exported 19.8 MMT of grain to date in the current marketing year, according to the Ag Ministry there, leaving 7.2 MMT to go before they hit their newly revised 27 MMT cap.
My agronomist mate in Ukraine, Mike Lee, reports that the Agrarian Confederation there estimate that 3.5 million ha of winter crops will need resowing this spring but that yields will be at the 5-year average. He also suggests that corn seed "is getting hard to come by."
Beans look set to remain the strongest leg of the complex. They were up by 3.1% last week, compared to wheat rising 2.2% and corn increasing by only 1.6%.
The USDA have just reported 250,000 MT of soybeans sold to China for 2012/13 and 110,744 MT of corn to "unknown" for 2011/12.
Early calls for this afternoon's CBOT session: beans flat to 2 cents firmer, corn and wheat down 5-7 cents.
Drought!
21/02/12 -- It seems strange to be talking about drought in February, but just about every tabloid newspaper and even our own beloved BBC have jumped on this particular bandwagon this week it seems.
Already 2012 is being talked of as the driest for decades with comparisons with 1976 abounding. It may surprise you to hear that I was alive in 1976, contrary to my youthful appearance. We went to Scarborough for our holidays in fact as I clearly recall. And it pissed it down so hard one day that we had to sit and wait in the car (posh see, had our own car we did) for it to ease off a bit before we got out.
"It's not rained here for three days," one concerned farmer in a small village deep in the heart of Cambridgeshire said. "I've filled both the indoor and outdoor pools up to the brim as well as all seventeen baths in our fourteen bedroom Jacobean Manor House, I've also washed all the Range Rovers, the Merc, the little run around Porche and the Jag as well just in case," he added.
"I remember 1976 well, the Wurzels topped the charts with their beautiful haunting ballad I Got A Brand New Combine Harvester and Daddy bought Essex," he reminisced.
"Things were tough back then. Daddy had to do quite a lot of the work himself in those days you know. He didn't have SatNav or TomTom like we do these days. There they are over there, give them a little wave. Good workers these Eastern European types, do anything for you. Good boy TomTom. Look, stick, stick. Fetch. Go get it SatNav. Good boy."
EU Rapemeal Prices Continue To Rise
21/02/12 -- Rapemeal prices on the continent continue to rise, with front-end premiums getting larger by the day. Mar 12 is alreay EUR10/tonne higher on the week so far.
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 | 200.00 | +5.00 |
| Apr12 | 194.00 | +3.00 |
| May12 | 188.00 | +3.00 |
| May/Jul12 | 185.00 | +3.00 |
| Aug/Oct12 | 169.00 | +2.00 |
| Nov12/Jan13 | 173.00 | +2.00 |
| Feb/Apr13 | 175.00 | +2.00 |
An Australian Take On The Grain Market
21/02/12 -- Be honest, it's not every day that you read a grain market report that includes the expression "and we’ve all got poo on our socks" is it?
Well, we're obviously not reading enough reports from Down Under, where PentAG Nidera say that this is exactly how the Australian grain market feels right now.
Intrigued? I though so: And these were clean on this morning as well
Morning Snippets
21/02/12 -- Well, the Greek deal has finally been approved although it comes bundled with so many caveats and conditions that Agrimoney are already reporting this morning that they "might severely dent its economy, besides scaring off investors, meaning a third rescue package might eventually be needed."
The euro is barley changed on the widely expected news. Most of the grains are a little lower in what seems to be a "buy the rumour, sell the fact" trade.
Elsewhere, Pakistan says that it (like neighbouring India) is expecting a bumper wheat harvest this year - somewhere in the region of 24 MMT. That will be it's third "bumper" crop in a row.
China says that it imported 4.61 MMT of soybeans in January, a 10% fall on January 2011.
The Russian Ministry say that the country has exported 19.8 MMT of grain in the 2011/12 marketing year to date.
The USDA's Outlook Forum on Thursday/Friday will report on what they think US farmers might plant for the 2012 harvest. Last week's baseline projections of 94 million acres of corn and 74 million acres of soybeans were made on data gathered in November. Out of interest, last season's Outlook Forum gave us 92 million acres of corn (pretty much spot on) and 78 million acres of soybeans (3 million too high).
EU Wheat Mostly Higher To Kickstart The Week
20/02/12 -- EU grains finished mostly higher with front month Mar 12 London wheat up GBP2.50/tonne to GBP166.50/tonne and Mar 12 Paris wheat down EUR0.25/tonne to EUR217.00/tonne.
Crude oil and outside markets rose on optimism that Greece would finally get its bailout money and on news that China had lowered bank reserve requirements over the weekend.
The euro was firmer, helping London wheat gain more than it's Parisian counterpart with America closed for a public holiday.
Another bit of supportive news for wheat this side of the Channel may have been a Defra announcement that much of southern and eastern England is officially in a state of drought.
It's somewhat premature to be talking about crop losses yet, but the nation's students have promised to assist by bathing and brushing their teeth even less frequently than normal.
Saudi Arabia bought a mixture of 330,000 MT of US, Canadian, Australian and European wheat over the weekend without specifying how the order was split.
Ukraine announced that it had exported 62% more grain so far this season, although the majority of that has been corn. Wheat shipments are only up 12.5% whereas corn exports have increased by more than 200%.
EU Rapemeal Prices
20/02/12 -- Rapemeal prices on the continent continue to climb with nearby availability particularly tight.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | unq | n/a |
| Mar12 | 195.00 | +5.00 |
| Apr12 | 191.00 | +6.00 |
| May/Jul12 | 182.00 | +5.00 |
| Aug/Oct12 | 167.00 | +3.00 |
| Nov12/Jan13 | 171.00 | +3.00 |
| Feb/Apr13 | 173.00 | +3.00 |
Greece Is The Word
20/02/12 -- Today is supposed to be the day that Greece gets its second bailout approved by Brussels. It feels like it will actually get pushed through at long last. If so, there's a list of concerns as long as your arm to follow, not the least of which surely has to be how are they going to push through with the austerity measures promised to obtain this EUR130 billion?
Another key issue is the target of getting it's debt-to-GDP ratio down to 120% by 2020. Am I the only one who suspects that in reality they won't be putting a lot of effort into achieving that particular goal? Why should a country that's cooked the books and lived well beyond it's means for the last decade worry about what might happen in eight years time?
Nevertheless, the euro is higher on the back of short-term optimism.
Other fresh news is thin on the ground with America closed for President's Day.
Ukraine's Ag Ministry say that the Black Sea nation has exported 12 MMT of grain so far this marketing year, an increase of 62% on last season. Wheat only accounts for a quarter of that total, with corn responsible for 58%. That's a big shift from a year ago when corn accounted for less than 30% of all grain exports as at this date.
Drought in the UK is suddenly all over the media as "parts of England struggle with groundwater levels lower than in 1976," say the BBC. There's an interesting map of the UK here from the Met Office, showing 2011 rainfall as a percent of normal.
The recent snow won't have helped too much as 10cm of the white stuff is only the equivalent of 1cm of rain, according to an expert that I've just heard on the radio. If we learnt anything from last year it should surely be not to write the crops off as lost just yet though.
