USDA Nuggets
10/03/12 -- With a bit more time on my hands to sift through the finer detail of Friday's USDA report, here's a few things you maybe haven't spotted mentioned elsewhere.
WHEAT
Projected 2011/12 EU-27 wheat ending stocks were raised 1.5 MMT to 14.2 MMT, courtesy of reduced consumption here. China's wheat ending stocks were cut 3.5 MMT to 61.5 MMT, consumption was up 2.5 MMT to 116 MMT.
Australia, Kazakhstan and Brazil will each export 0.5 MMT more wheat than anticipated last month. Australia is now the world's second largest wheat exporter overtaking Russia.
Iran's wheat imports were upped from 200 TMT to 2 MMT.
CORN
The EU-27 will consume 1 MMT more corn in 2011/12 than predicted last month, imports were increased by 0.5 MMT, cutting ending stocks by 0.5 MMT to 5.4 MMT.
Brazil will export 0.5 MMT more corn that previously thought at 9.5 MMT.
South Africa's corn production was cut 0.5 MMT and India's raised by a similar amount.
SOYBEANS
Lower soybean production in Brazil is forecast to be partially offset by a 1 MMT reduction in the domestic crush from last month and 0.9 MMT fewer exports. Ending stocks there are seen down 1.3 MMT.
In Argentina the 1.5 MMT drop in output comes almost completely straight off the bottom line in ending stocks which are reduced by 1.45 MMT.
Production in Paraguay was cut 1.4 MMT to 5.0 MMT - a 40% reduction on last year.
European imports were reduced 0.5 MMT to 11.0 MMT which is 12% down on last year and 27% less than we were importing four years ago. The EU crush is seen falling 1 MMT from last year in 2011/12.
Chicago Market Shrugs Off USDA Report To Concentrate On Chinese Whispers
09/03/12 -- Soybeans: Mar 12 Soybeans closed at USD13.31 3/4, down 3/4 cent; Nov 12 Soybeans closed at USD13.05 1/4, up 5 3/4 cents; Mar 12 Soybean Meal closed at USD358.60, down USD4.60; Mar 12 Soybean Oil closed at USD53.95, up 93 points. Despite seeming to have gone up every day Mar 12 only closed the week 3 1/2 cents higher than it ended last week. Meal added just USD1.30 and oil only 19 points. All of this despite the USDA report being the most bullish for soybeans out of the big three grains. Does that mean we are bouncing on the ceiling? Only time will tell. Soybean production in both Brazil and Argentina was cut by more than anticipated, as too were world ending stocks. The disappointment came from US ending stocks unchanged and reduced Chinese, EU-27 and Brazilian usage. Mid-session Informa Economics upped their US 2012 soybean planting estimate from 74.6 million acres to 75.128 million.
Corn: Mar 12 Corn closed at USD6.54, up 9 cents; Dec 12 Corn closed at USD5.62 1/2, up 5 1/4 cents. Corn ended the day higher on widespread but unconfirmed reports of significant Chinese buying of US corn. That swept away a bearish slant to the USDA's numbers which increased production in Brazil and left Argentina's on hold, contrary to expectations for reductions to both. US ending stocks were also surprisingly left unchanged and world inventories cut by less than anticipated. Still, the Chinese rumours were enough to get funds money coming in for an estimated 10,000 contracts on the day. The Commitment of Traders report showed large funds as having increased their longs by more than 26,000 lots on the week through to Tuesday's close. Incidentally those same funds added almost 34,500 contracts of length to their soybean portfolio in the same period. Despite the firmer close Mar 12 was down 5 cents on the week. Informa now peg 2012 US corn acres as the most in 75 years.
Wheat: Mar 12 CBOT Wheat closed at USD6.38 3/4, up 8 1/4 cents; Mar 12 KCBT Wheat closed at USD6.79 1/2, up 6 1/4 cents; Mar 12 MGEX Wheat closed at USD8.01 3/4, up 1/2 cent. For the week overall Chicago wheat fell 32 cents, Kansas 31 cents and Minneapolis 26 cents. Interesting then that EU wheat has risen on the week, particularly as the euro put in an overall gain on the dollar. Corn dragged wheat higher on the day, although some perceived the USDA report as supportive. World ending stocks were reduced a little, but even so at 209.6 MMT they are still within less than a million tonnes of being the highest of all time. US wheat ending stocks were cut by more than expected to 22.5 MMT by virtue of exports increasing by 1 MMT to 26.5 MMT. The latter looks a rather tall order given the relatively sluggish shipment levels over the past few months. Informa cut their acreage estimate for the 2012 harvest slightly, although it is still 3.3 million higher than last year.
EU Wheat Gains But Trend Remains Sideways
09/03/12 -- EU grains finished mixed but mostly higher. Mar 12 London wheat was unchanged at GBP166.00/tonne, but other old crop months were GBP1.35/tonne firmer with new crop up GBP1.45/tonne. Mar 12 Paris wheat, which goes off the board on Monday, was up EUR6.50/tonne to EUR220.00/tonne, with May 12 EUR5.00/tonne higher to EUR208.75/tonne.
On the week as a whole Mar 12 London wheat gained GBP0.70/tonne and Mar 12 Paris wheat EUR3.00/tonne. This is the fourth week in a row that front month London wheat has posted a net change of GBP1.00/tonne or less, highlighting the sideways nature that this market has at the moment.
Brussels announced yesterday that they'd issued soft wheat export licences for 269 TMT this past week, bringing the year-to-date total to 9.4 MMT, way below last season's levels.
In it's March WASDE report the USDA trimmed world wheat ending stocks for 2011/12 from 213.1 MMT to 209.6 MMT, taking them back just below the record high of 210.3 MMT set in 1999/00.
A little surprisingly though they raised their Brazilian corn production estimate for this year by 1 MMT to 62 MMT and also left Argentine output unchanged at 22 MMT. World ending stocks were trimmed, but not as much as anticipated. US ending stocks were left unchanged when a reduction was expected. Overall it was quite a bearish report for corn.
By late afternoon trading in Europe, Informa Economics came out with their March US planting estimates for the 2012 harvest. They'd already given us a post-WWII record figure of 94.7 million acres for corn last month, today they raised that to more than 95.5 million - the highest in 75 years.
Some of that extra acreage is seen coming from wheat, with Informa trimming it's estimate slightly to 57.745 million acres, even so that still represents an increase of more than 6% on 2011. They also upped their soybean planting estimate by more than half a million acres to 75.128 million, a small rise on last year.
Early Call On Chicago
09/03/12 -- The USDA report contained a bit of something for everyone, bulls and bears alike. Twitter is awash with conflicting suggestions as to whether this afternoon will have a bullish or bearish theme.
My take on it is that the soybean numbers are bullish overall, with slightly larger cuts than anticipated to the crops in South America. I think that the trade will shrug off the USDA leaving US ending stocks unchanged and cutting Chinese demand slightly.
The corn numbers are bearish, there's no two ways about it. A raise in output for Brazil, despite being hinted at by CONAB yesterday, was not expected and neither was production in Argentina thought likely to be left unchanged. US ending stocks weren't reduced at all, and although world ending stocks were it was not by as much as expected. Add in the fact that a bullish report was expected and that possibly "doubles up" the bearish nature of this report.
The wheat numbers look mildly friendly, but given that world ending stocks are now only marginally less than record highs and that for corn the report is bearish then I'd expect wheat to get dragged lower this afternoon.
Soybeans up, corn down taking wheat with it, that's how it looks to me. A situation not unusual this past few weeks. EU wheat seems to have moved a bit higher since the report came out though, so what do I know? Bear in mind also that soybeans are already heavily overbought and we do have a weekend coming up.
On the weather front "A more active subtropical jet stream is giving the Southern Great Plains winter wheat a good chance for rainfall. Texas and Oklahoma are expecting soaking rain over the next few days," say Martell Crop Projections.
"Rainfall of .75 inch is expected, but over 1 inch locally. On the other hand, the Kansas forecast is dry except perhaps the south-central district," they say.
Further north "temperatures in the northern United States are expected to turn unseasonably warm in the next several days. Sioux City, Iowa will reach the mid 60s F next week. The windy and warm weather would serve to dry out the topsoil in the Northern United States. Some fieldwork may even begin with a stretch of sunny open weather," they add.
Another influence this afternoon is that Informa are due out around an hour after the opening with their revised planting estimates. The recent price movements in beans relative to corn may see some additional soybean acres getting added.
Early calls for this afternoon's CBOT session: beans up 10-12 cents, wheat up 3-5 cents, corn flat to 2 cents firmer. Where we close will be of more importance than where we open.
The USDA Numbers
09/03/12 -- The USDA's eagerly awaited raft of important numbers are out. Here's the gist of it:
CORN
Brazil's crop raised, not lowered, by 1 MMT to 62 MMT. Reflects what CONAB had to say yesterday. Hopes of a large second crop coming to the rescue it would seem. Argy production left unchanged at 22 MMT, that will disappoint the bulls. US corn exports seen holding steady at 43.2 MMT. World corn ending stocks cut to 124.5 MMT, but that's a million more than the trade expected. US corn ending stocks unchanged at 801 million bushels, a cut to 785 million was expected. Overall a bit bearish for corn.
SOYBEANS
Argentina cut 1.5 MMT to 46.5 MMT, a tad lower than the 46.8 MMT average guess. Brazil's crop cut by more than anticipated too, to 68.5 MMT vs the average trade guess of 69.3 MMT and 72 MMT from the USDA last month. World ending stocks pegged at 57.3 MMT, which is 3 MMT down on last month and half a million less than anticipated. US ending stock though are left unchanged at 275 million bushels, contrary to expectations of a cut to 260 million. Despite lower output in South America, US exports left unchanged. Chinese imports cut slightly from 55.5 MMT to 55 MMT. Overall these numbers are a bit bullish though, especially when following on from yesterday's bumper export sales.
WHEAT
World wheat ending stocks reduced from 213.1 MMT to 209.6 MMT, meaning that they aren't now seen as being the highest on record. US wheat ending stocks cut by more than anticipated too, by 20 million bushels to 825 million. Australian production raised from 28.3 MMT to a record 29.5 MMT. Mildly friendly.
EU Rapemeal Prices
09/03/12 -- Rapemeal prices on the continent remain fully steady posting gains of EUR4-6.00/tonne today following gains in Chicago soymeal last night and again this morning.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Mar12 | 215.00 | +5.00 |
| Apr12 | 208.00 | +4.00 |
| May/Jul12 | 197.00 | +6.00 |
| Aug/Oct12 | 175.00 | +4.00 |
| Nov12/Jan13 | 179.00 | +4.00 |
| Feb/Apr13 | 180.00 | +4.00 |
| May/Jul13 | 178.00 | +4.00 |
| Aug/Oct13 | 164.00 | +4.00 |
The Morning Vibe
09/03/12 -- Hurrah! Greece gets a more than 75% agreement from its bondholders to take a "voluntary" 53.5% haircut. So that's that all sorted done & dusted and we can forget about it then?
Erm, not quite. Booooo! As ever the devil is in the detail.
The Greek government have said that they now plan to implement the so-called collective action clauses (CACs) which will force those investors who refused to sign up to exchange their debt anyway.
However, apparently not all these bonds are governed by Greek law, some of them are subject to international law it would seem. Of the latter only 69% of bondholders accepted the deal, so Greece has now extended the deadline for them to agree to the debt swap by another fourteen days.
We now also need to see if the ratings agencies see this enforced haircut to be a selective default anyway. S&P's cut Greece's rating to "selective default" at the end of February so it's quite likely that others will now do the same I'd say.
Meanwhile Australia's Bureau of Statistics say that the nation exported 22% more wheat than last year in January at 2.14 MMT. That brings the 2011/12 YTD total (starting Oct 2011) to 7.1 MMT, a 28% increase on last season.
Rabobank yesterday pegged Australia's wheat exports in 2011/12 at a record 21.2 MMT, 14% up on last season.
Now we sit and wait for the USDA, with the trade seemingly very confident of a bullish report for soybeans, fairly confident for corn and mildly optimistic for wheat. What could possibly go wrong?
As a recap here is what the market is expecting.
US ending stocks: Corn 785m bu (from 801m last month); soybeans 260m (275m); wheat 836m (845m).
Argentina: Corn 21.25 MMT (22.0 MMT); Soybeans 46.8 MMT (48 MMT).
Brazil: Corn 60.2 MMT (61 MMT); Soybeans 69.3 MMT (72.0 MMT).
World ending stocks: Corn 123.5 MMT (125.35 MMT); Soybeans 57.8 MMT (60.3 MMT); Wheat 212.6 MMT (213.1 MMT).
Chicago Mixed Heading Into USDA Report
08/03/12 -- Soybeans: Mar 12 Soybeans closed at USD13.32 1/2, up 11 cents; Nov 12 Soybeans closed at USD12.99 1/2, up 8 cents; Mar 12 Soybean Meal closed at USD363.20, up USD2.30; Mar 12 Soybean Oil closed at 53.02, up 41 points. Weekly export sales were large at 1,015,200 MT for 2012/13 and 630,800 MT for 2012/13 - well above expectations for combined sales of 600-900 TMT. CONAB dropped their Brazilian soybean crop forecast to 68.75 MMT versus the previous estimate of 69.23 MMT. China bought 165,000 MT of new crop soybeans. All eyes are now on the USDA tomorrow, the trade is expecting a bullish report but has been disappointed before now.
Corn: Mar 12 Corn closed at USD6.45, up 1 1/4 cents; Dec 12 Corn closed at USD5.57 1/4, down 3/4 cent. The USDA reported 106,680 MT of old crop corn sold to Japan. Weekly export sales of a combined 505,700 MT were at the low end of expectations for sales of 500 to 700 TMT. CONAB estimates the Brazilian corn crop at record 61.7 MMT compared to their previous estimate of 60.83 MMT. The Buenos Aires Grains Exchange estimated Argentina’s 2011/12 corn crop at 20.8 MMT versus their previous estimate of 21.3 MMT. The trade is looking for a supportive USDA report tomorrow, with decreases in South American corn production and lower US ending stocks than the 801 million bushels they gave us last month.
Wheat: Mar 12 CBOT Wheat closed at USD6.30 1/2, down 2 1/2 cents; Mar 12 KCBT Wheat closed at USD6.73 1/4, down 4 1/2 cents; Mar 12 MGEX Wheat closed at USD8.01 1/4, down 3 1/4 cents. Wheat remains a laggard with funds finding enough encouragement to increase their short by an estimated 3,000 CBOT contracts heading into tomorrow's USDA report. Egypt bought 60 TMT US SRW wheat for April shipment. Weekly export sales were a combined 578,100 MT for wheat, a bit better than the 300 to 500 TMT expected. Weekly shipments now need to be almost 542 TMT/week to hit the USDA's 2011/12 MY target of 25.5 MMT, it's been fully nineteen weeks since they beat that.
EU Wheat Declines As UK And German Plantings Rise
08/03/12 -- EU grains finished mixed with May 12 London wheat down GBP0.30/tonne to GBP165.20/tonne and May 12 Paris wheat EUR1.75/tonne easier to EUR203.75/tonne.
The HGCA said that the English and Welsh cereal planted area was up 5% as at December 1st 2011, 5% higher than in December 2010 at 2.984M ha.
"The expansion in area comes following generally favourable autumn weather conditions in 2011, which allowed plantings to progress. Relatively strong forward crop prices at planting could also have been a factor," they said.
Wheat plantings are up 3% overall, with the strongest growth in the north and the east. Barley plantings are up 9%, with the largest increase coming in the south east where sowings are up a hefty 26%. This is due to "Strong malting premiums, mixed farms looking to produce more home-grown feed and bedding, improved relative profitability of winter barley and farmers wanting to spread harvest workloads," they added.
The winter oilseed rape area planted by 1 December 2011 is estimated 6% higher than the previous December at 0.698M ha, they estimated.
Elsewhere German analysts DBV said that the wheat harvest there will rebound 6.3% to 24.2 MMT by virtue of an increase in plantings and a return to average yields. Barley production will increase 13.3% to 9.9 MMT and rapeseed output is expected to come in 25.6% higher ay 4.8 MMT, they added.
Now we await on news due from Greece first thing in the morning if it has managed to persuade the required 75% plus of bondholders to partake in their debt swap deal. After that we have the USDA's March WASDE report due at 13.30 London time. The market expects a small reduction in world wheat ending stocks for 2011/12, but even so they are still expected to be at record levels.
News Snippets
08/03/12 -- The USDA reported weekly export sales of a combined 578,100 MT for wheat, a bit better than the 300 to 500 thousand MT expected. For corn they gave us a combined 505,700 MT, at the low end of expectations of 500 to 700 thousand MT. Soybean sales were the real star with 1,015,200 MT of old crop and 630,800 MT of new crop, far higher than the expected 400 to 700 thousand MT.
The FAO forecast the 2012/13 global wheat crop at 690 MMT down 10 MMT from 2011.
CONAB forecast the Brazilian soybean crop at 68.75 MMT versus the previous estimate of 69.23 MMT. They peg the corn crop at 61.69 MMT, which is actually an increase on their previous estimate of 60.83 MMT.
They say that 35.89 MMT of that will come from the now being harvested summer crop and 25.8 MMT from the now being planted "safrinha" corn. So that's almost 42% coming from 2nd crop corn this season.
The Buenos Aires Grains Exchange estimate Argentina’s 2011/12 corn crop at 20.8 MMT versus the previous estimate of 21.3 MMT.
Egypt's GASC has bought 60 TMT US SRW wheat for April shipment. they also report 165,000 MT of new crop soybeans sold to China and 106,680 MT of old crop corn sold to Japan.
Both the BoE and ECB left interest rates on hold today, as was widely expected.
The Greek government is making all the right reassuring noises that enough bondholders will commit to the debt swap to enable them to get their next bailout. Confirmation is due first thing in the morning.
EU Rapemeal Prices
08/03/12 -- Rapemeal prices on the continent show little change today as the market treads water awaiting tomorrow's all important USDA numbers.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Mar12 | 210.00 | n/a |
| Apr12 | 204.00 | -2.00 |
| May/Jul12 | 191.00 | unch |
| Aug/Oct12 | 171.00 | unch |
| Nov12/Jan13 | 175.00 | +1.00 |
| Feb/Apr13 | 176.00 | unch |
| May/Jul13 | 174.00 | -1.00 |
| Aug/Oct13 | 160.00 | -5.00 |
Chicago Falls As Funds Exit Ahead Of USDA Report
07/03/12 -- Soybeans: Mar 12 Soybeans closed at USD13.21 1/2, down 8 1/4 cents; Nov 12 Soybeans closed at USD12.91 1/2, down 1 3/4 cents; Mar 12 Soybean Meal closed at USD360.90, down USD2.20; Mar 12 Soybean Oil closed at 52.61, down 31 points. Even soybeans can't go up every day it would seem, although you would hardly call this a capitulation ahead of Friday's USDA report. Funds were said to have sold around 6,000 soybean contracts by the end of the day on profit-taking. Given the weakness in corn and wheat in the past couple of sessions you could say that the soy complex has performed with remarkable resilience. The market is expecting a bullish report Friday, with the USDA thought likely to reduce world ending stocks for beans from 60.3 MMT to 57.8 MMT. US ending stocks are forecast to be reduced from 7.5 MMT last month to 7.0 MMT. Trade estimates for the weekly export sales out tomorrow range from 400 to 700 thousand MT.
Corn: Mar 12 Corn closed at USD6.43 3/4, down 14 1/4 cents; Dec 12 Corn closed at USD5.58, down 5 1/2 cents. This was corn's worst day since the January USDA report came out surprisingly bearish and corn closed limit down as the funds dumped 18,000 contracts. Today they were said to have ditched even more than that, with some estimates as high as 24,000 lots. Weekly export sales for tomorrow are forecast around 500 to 700 thousand MT. Friday's USDA report is expected to show Brazilian and Argentine corn production falling to 60.4 MMT and 21.3 MMT respectively (from 61.0 MMT and 22.0 MMT last month). US corn ending stocks are forecast down from 20.3 MMT to 20.0 MMT. World ending stocks are seen down 2 MMT from last month to 123.5 MMT.
Wheat: Mar 12 CBOT Wheat closed at USD6.33, down 21 cents; Mar 12 KCBT Wheat closed at USD6.77 3/4, down 9 3/4 cents; Mar 12 MGEX Wheat closed at USD8.04 1/2, down 5 1/2 cents. Wheat had another bad day at the office with funds selling an estimated 3,000 Chicago contracts on the day. The dollar was higher on yet more Greek jitters as tomorrow's deadline for bondholders to accept the offer on the table looms. Friday's USDA report is seen dropping world wheat ending stocks slightly from 213.1 MMT to 212.6 MMT, although some analysts are forecasting and increase to as high as 216 MMT. US ending stocks are seen falling slightly from 23.0 MMT to 22.8 MMT. Estimates for tomorrow's weekly export sales report are 300 to 500 thousand MT.
EU Wheat Declines On Market Jitters
07/03/12 -- EU grains finished mostly lower with front month Mar 12 London wheat falling GBP1.35/tonne to GBP165.65/tonne and Mar 12 Paris wheat down EUR2.25/tonne to EUR214.50/tonne.
The market is more than a little nervous ahead of tomorrow night's deadline for Greece to get it's required 75% of bondholders to agree to swap their existing bonds for new debt.
We also have the USDA out on Friday with their latest world supply & demand numbers.
Considering that world wheat stocks are currently projected to be at their levels in history these are still pretty lofty heights for wheat. Hence profit-taking ahead of the next couple of days in the absence of fresh supportive fundamental news was probably understandable.
ABARES yesterday said that after two back-to-back record harvests in Australia they will end 2011/12 with 10 MMT of wheat to carryover into next season, around three or four times more than normal.
The size of this carryin plus an estimated production of 26 MMT in 2012/13 dwarf domestic consumption of around 7 MMT, meaning that Australia looks set to be an aggressive exporter again next season.
Early Call On Chicago
07/03/12 -- After a bit of consolidation yesterday the overnight grains were very lifeless with little change for beans, wheat or corn.
Brent crude is around 75 cents firmer with WTI up half a dollar or so after China said it would boost energy imports this year.
The dollar is firmer on it's "safe haven" status on nervousness that Greece won't get enough of it's bondholders to agree to take a more than 50% haircut on the debt they hold. The deadline is 20.00 GMT tomorrow, with a minimum of 75% needing to agree to swap their existing Greek government bonds for new debt.
Brazil's soybean crop is generally forecast in the range of 68-71 MMT versus 72 MMT from the USDA last month. Argentina's production is expected at around 45-48 MMT compared to 48 MMT from the USDA last month.
These lower production numbers should be more than priced into a market that's seen CBOT soybean prices up for 14 of the last 16 sessions during which time Mar 12 has risen by more than a dollar a bushel.
Brazil's corn crop is seen around the 60 MMT mark, aided by hopes for a strong performance from "safrinha" corn, 1 MMT less than the USDA said last time. Argentina's corn crop is expected to come in around 20 MMT, some 2 MMT lower than the current USDA number.
Once we get Friday's report out of the way we will no doubt end up in limbo again waiting for the planting intentions numbers at the end of the month.
Prior to that though, could Friday's WASDE report be usurped by Greece taking one step closer to a default if it fails to persuade enough bondholders to go for their debt swap?
Early calls for this afternoon's CBOT session: wheat flat to 2 cents lower, corn and soybeans mixed 2 cents higher to 2 cents lower.
EU Rapemeal Prices
07/03/12 -- Rapemeal prices on the continent remain steady, with no offers on nearby March today as front month availability stays tight.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Mar12 | unq | n/a |
| Apr12 | 206.00 | +1.00 |
| May/Jul12 | 191.00 | -2.00 |
| Aug/Oct12 | 171.00 | unch |
| Nov12/Jan13 | 174.00 | +1.00 |
| Feb/Apr13 | 176.00 | +1.00 |
| May/Jul13 | 175.00 | +1.00 |
| Aug/Oct13 | 165.00 | +2.00 |
A Year Ago...
07/03/12 -- I thought I'd take a quick check back to see what the USDA report had to say last March. If you're interested it was neutral to slightly bearish on corn and soybeans and bearish for wheat.
Back then 2011/12 world wheat ending stocks were pegged at 181.9 MMT vs the 177.77 MMT expected by the trade. Now we are expecting that figure to be around 30 MMT, or 16.5%, higher than that.
Front month London wheat closed just under GBP185/tonne the day the March USDA report came out, and it's Parisian counterpart was EUR234/tonne.
Within a couple of days London wheat was to close at GBP167.35/tonne and Paris wheat at EUR203/tonne in the immediate aftermath of the Japanese earthquake, tsunami and explosions at the Fukushima nuclear plant.
The Morning Vibe
07/03/12 -- Not a lot to get excited about so far this morning after a bit of a shake out in wheat and corn last night. London and Paris wheat are modestly lower this morning, reflecting some of the weakness in Chicago ahead of Friday's USDA report.
Tomorrow is D Day for the Greek Greek debt-swap deal.
Beans comfortably hold the yellow jersey, last night's close was the highest for a front month since mid-September.
Oil World have cut their Brazilian soybean crop estimate to 68 MMT from 69.5 MMT. Smaller production in South America should see the USDA raise US exports and reduce ending stocks on Friday, at least that's the way the market sees it.
Reuters are reporting that the market is expecting them to also cut world wheat ending stocks slightly from 213.1 MMT to 212.6 MMT. Even so that would still be a record.
Two back-to-back record harvests in Australia mean that logistics are the only limitation to how much wheat they can export in 2011/12. Plantings are seen falling 3% for next season, a return to average yields would see production fall 13% to around 26 MMT, ABARES said yesterday. A whopping 80% of that will be destined for the world export market they reckon.
Some of that lost wheat acreage will go into rapeseed where plantings are forecast 5% higher due to attractive prices, the barley area will also increase by 3%, they added.
Libya apparently bought 65,000 MT of Russian wheat yesterday.
Chicago Soybeans Rise As Corn And Wheat Slump
06/03/12 -- Soybeans: Mar 12 Soybeans closed at USD13.29 3/4, up 10 1/2 cents; Nov 12 Soybeans closed at USD12.93 1/4, up 4 1/4 cents; Mar 12 Soybean Meal closed at USD363.10, up USD6.90; Mar 12 Soybean Oil closed at 52.92, down 49 points. Beans bucked a general commodities shake out to maintain their place as easily the strongest leg of the grains sector as corn and wheat slumped. Funds were said to have bought 6,000 soybean contracts on the day. ABARES estimate the Brazilian soybean harvest at 71 MMT this year, despite the drought in the south that's still the second largest on record. Argentina's harvest will come in at 48 MMT, they add. The USDA will issue revised forecasts on Friday.
Corn: Mar 12 Corn closed at USD6.58, down 8 1/4 cents; Dec 12 Corn closed at USD5.63 1/2, down 7 3/4 cents. unlike soybeans corn succumbed to outside market weakness, with crude and equities sharply lower, and concerns over Europe and China. There was also some evidence of unwinding of long corn, short soybean spreads. Funds were said to be net sellers of 12,000 contracts on the day. ABARES forecast both world and US production at record levels in 2012/13 at 887 MMT and 333 MMT respectively.
Wheat: Mar 12 CBOT Wheat closed at USD6.54, down 13 3/4 cents; Mar 12 KCBT Wheat closed at USD6.87 1/2, down 18 cents; Mar 12 MGEX Wheat closed at USD8.10, down 21 1/4 cents. Wheat posted significant losses in all three exchanges as outside influences dragged prices lower and funds sold an estimated 3,000 CBOT contracts on the day. With record large world stocks there's little to support wheat on a day like this. ABARES forecast a 58 MMT US wheat crop this year, an increase of 6% on 2011. Output in Europe, Russia and Canada is also seen rising.
EU Wheat Closing Comments - Tuesday
06/03/12 -- EU grains finished mixed but mostly lower. Mar 12 London wheat was up GBP0.50/tonne to GBP167.00/tonne, but other old crop months were down GBP1.30/tonne. Mar 12 Paris wheat fell EUR3.75/tonne to EUR216.75/tonne, with May down EUR2.25/tonne to EUR209.00/tonne.
Soon to expire Mar 12 Paris wheat continues to behave erratically, posting daily movements that are out of proportion with the other months, it looks like Mar 12 London wheat may be joining the club.
There was a general risk off feel about the market with crude oil down quite sharply, and stocks down significantly too. Concerns over economic growth in China and Europe were behind much of that.
Australia's ABARES released a slew of data for the year ahead in which they said 2012/13 global wheat production would fall by 2% to around 682 MMT, largely by virtue of reductions in output from Kazakhstan, Ukraine, Australia and India.
Three of those four, excluding Ukraine, are seen having yields return to "normal" levels after record production in 2011/12. Despite that they see 2012/13 world wheat ending stocks rising to a record 210 MMT.
Most of the remaining major producing nations will see increases in output in the season ahead, led by US production up 6% to 58 MMT and that in Russia up 5% to 59 MMT. The EU-27, Canada and China will all see production increases of 2% to 140 MMT, 26 MMT and 120 MMT respectively, they said.
The world corn crop will be a record 887 MMT in 2012/13, aided by a jump of 6% in US production, boosting ending stocks.
World barley production is seen 6% higher to 147 MMT, with the EU-27 crop up 8% to 56 MMT. They also forecast a record world oilseed crop of 467 MMT in the coming year.
"The world wheat indicator price (based on US hard red winter, fob Gulf) is forecast to fall by 7% in 2012/13 to average around USD275/tonne, reflecting record world opening stocks and expected high global production for a second year," they said. Coarse grains and oilseed prices are also seen falling by a similar amount, they added.
Panorama
06/03/12 -- And what a panorama it as as another Scottish farmer and his squeeze set down to another hard day's graft filling in their subsidy application forms!
Mind you, the guys on that programme were "farmers" in the loosest sense of the word, not that most of them even disputed that. Panorama is seemingly the televisual version of the Sunday Sport, there's more investigative journalism in the dog.
Early Call On Chicago: Risk Off
06/03/12 -- The overnight grains are lower with wheat leading the way down 10-13 cents. Corn is down 6-8 cents and beans, still the strongest leg, 3-4 cents weaker. Crude is 60-75 cents easier too in a general "risk off" mode.
Concerns about a slowdown in Chinese growth has the market a little worried, as they are the ones that have kept the demand Juggernaut on the road.
There are also a few jitters ahead of the Mar 8th deadline for private bondholders to agree to take a short, back & sides from Greece. Nobody seems to know how many of these guys would stand to qualify for an insurance payout if they simply say no. For those that are insured that has to be better than a more than 50% loss.
Whilst we are on that subject how many of these bondholders can't say yes, because their balance sheets can't take a 53.5% haircut?
And whilst we are talking about some being insured against a Greek default, who are they insured with and can they afford to pay out or is that going to make them insolvent too?
There are always more questions than answers with the Greek issue.
Given the price gains that we've seen of late in the grains, and the impending USDA WASDE report on Friday it is perhaps therefore not surprising that we should see a bit of profit-taking and "risk off" strategy coming into play.
A quick look at the fundamentals:
Agrimoney.com report that "US hard red winter wheat crops have bucked historical trend by leaving dormancy in better shape than they went into it" with good/excellent conditions in Kansas, Oklahoma and even Texas improving across the winter.
In other news a monster 230 page report from ABARES throws all sorts of interesting data our way today. So much so that it's difficult to know where to start, but I will try my best.
Starting in South America they see the Brazilian soybean harvest at 71 MMT this year, despite the drought in the south that's still the second largest on record. Argentina will chip in with 48 MMT, they add.
For wheat they see the US producing a crop of 58 MMT this year, a 6% increase on 2011. Europe's crop will amount to 140 MMT, up 2%, with Canada's rising by a similar amount to 26 MMT. Russia's output will increase 6% to 59 MMT, whilst Kazakhstan's will drop by almost a third to 16 MMT as yields there return to normal.
For corn they are forecasting both world and US production at record levels at 887 MMT and 333 MMT respectively.
World oilseed production in 2012/13 is also seen coming in at a record 467 MMT.
Nothing overly bullish in amongst that lot is there?
The USDA has reported the sale of 126,000 MT of old crop corn to South Korea overnight.
Early calls for this afternoon's CBOT session: wheat down 10-12 cents, corn down 6-8 cents, beans down 2-4 cents.
EU Rapemeal Prices
06/03/12 -- Rapemeal prices on the continent are a touch easier in line with modest falls in Chicago last night and again this morning. Large front-end premiums remain.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Mar12 | 209.00 | -1.00 |
| Apr12 | 205.00 | -2.00 |
| May/Jul12 | 193.00 | -1.00 |
| Aug/Oct12 | 171.00 | -1.00 |
| Nov12/Jan13 | 173.00 | -2.00 |
| Feb/Apr13 | 175.00 | -2.00 |
| May/Jul13 | 174.00 | -1.00 |
| Aug/Oct13 | 163.00 | unch |
Burning Question Of The Day
06/03/12 -- In honour of it being British Pie Week, I kid you not, what's been troubling me today is this: Is a Holland's steak & kidney pudding a pie? In a court of law?
If it is then I'd like to nominate it as the creme de la creme of the pie world. Pork pies have their place, I'll grant you that one. A nice steak & ale pie can also be a thing of beauty, but you simply cannot beat a Holland's steak & kidney pudding for all round balance of texture, meaty goodness and gravy content.
Ladies and gentlemen, raise your glasses to the King of pies, the "babies head" of culinary perfection, the Holland's steak & kidney pudding. My freezer is full of them, simmer for 45 mins in a pan of gently boiling water with the lid on.
The dog loves them too. When it's pie night in our house the plates don't need washing afterwards I can tell you, he'll lick the pattern off and everything. Northern dogs love gravy.
The Morning Vibe
06/03/12 -- For once this isn't far off what it looks like here in North Yorkshire this morning. We had a frost overnight with temps falling to -5C Mrs N#3 tells me without disclosing where she acquired this information. The car says it's 1C out there now although it feels warmer than that in the sunshine.
So, I pop out to walk the dog and get myself a bacon butty and the overnight wheat market is 3 cents or so down, I return to find it 10-11 cents weaker. London wheat has opened GBP1.50-1.80/tonne lower, with Paris wheat down EUR2-3.00/tonne. So what's happened between 9-10am?
The dollar is a bit firmer and crude a touch weaker, some are saying that it's Chinese growth that's the worry. I'm sure it said on the BBC news last night that growth of 7.5% would be the lowest since the 1990's, not 2004 as most of the popular newswires are saying.
It seems odd that the market is down today on something that was known yesterday morning though.
It seems more likely that we are back on the Greek jitters track with just two days to go to the deadline for private investors to agree to take a 53.5% debt haircut. If they don't agree then Italy and Spain could be dragged into the smelly stuff rather quickly.
In other news, my Dutch mate Lourens emails me with the following info from his contact in Bell Ville, 200 km west of Rosario, the region most severely hit by the summer drought.
"We finished the maize harvest we started 1 February. (more or less 1500 hectares; LG). It was a very bad harvest with just 3.700-5.000 kilo/ha. (normal average 7.500; LG).
"We had the last rains on 28 November and after that the first rains came 20 February. It was never seen before in our region. Since 20 February until now we have 230 mm rains. Maize harvest is bad in all of prv Cordoba. The North of Buenos Aires, prv Santa Fe, and Prv Chaco are somewhat better, but in general rains came too late.
"We now started soy harvest with only 700-1400 kilo/ha (normal is double). Very bad indeed."
That doesn't sound too great does it, even allowing for the fact that this is at the heart of the drought area.
Elsewhere Bangladesh are said to be looking to do an intergovernmental deal with Ukraine for 100,000 MT of wheat.
Chicago Corn Higher, Wheat And Soybeans Lower
05/03/12 -- Soybeans: Mar 12 Soybeans closed at USD13.19 1/4, down 9 cents; Nov 12 Soybeans closed at USD12.89, down 9 cents; Mar 12 Soybean Meal closed at USD356.20, down USD1.10; Mar 12 Soybean Oil closed at 53.41, down 35 points. Beans were in positive territory at one stage, threatening to extend their gains for the eleventh session in a row, but gave way to light profit-taking ahead of Friday's upcoming USDA report. Funds sold an estimated 5,000 beans, 2,000 meal and 3,000 soyoil on the day. There were a rash of Brazilian soybean crop estimates out today, with Safras & Mercado coming in at 68.23 MMT, Celeres said 69.83 MMT and Aboive 69.5 MMT. The USDA were 72 MMT last month. The Food and Agriculture Policy Research Institute estimated 2012 US soybean plantings at 75.1 million acres, slightly higher than last month's USDA's Outlook Forum. They pegged 2012/13 US ending stocks almost 100 million bushels higher at 301 million.
Corn: Mar 12 Corn closed at USD6.66 1/4, up 7 1/4 cents; Dec 12 Corn closed at USD5.71 1/4, up 1 1/4 cents. As funds were getting out of the soy complex they were piling in for corn, buying an estimated 8,000 contracts on the day despite weekly export inspections being a dull 31 million bushels. That means that funds have added around 50,000 to their corn length since the February USDA report, that's the equivalent of 6.35 MMT. Tightness in old crop sees March continue to run at around a dollar premium to new crop December. The Food and Agriculture Policy Research Institute estimated 2012 US corn plantings at 93.5 million acres, half a million less than the USDA's Outlook Forum suggestion with production coming in at 13.9 billion bushels, 12.6% up on 2011.
Wheat: Mar 12 CBOT Wheat closed at USD6.67 3/4, down 3 cents; Mar 12 KCBT Wheat closed at USD7.05 1/2, down 5 cents; Mar 12 MGEX Wheat closed at USD8.31 1/4, up 3 1/2 cents. Funds were thought to have been net sellers of around 2,000 Chicago contracts on the day. Weekly export inspections were 4.7 million bushels lower than the same week a year ago, and shipments also lag even though the pace has picked up a little in recent weeks. Recent rains and snowfalls in northern and central areas of the US should aid spring planting conditions. Iraq, Morocco and Syria are all tendering for wheat. As ever at this time of year Friday's USDA report is likely to be less influential for wheat direction than for corn or soybeans, so for now wheat remains a follower until we get a better idea on how the crop in the northern hemisphere emerges from winter dormancy.
EU Wheat Ends Higher
05/03/12 -- EU grains finished higher with front month Mar 12 London wheat up GBP1.20/tonne to GBP166.50/tonne and Mar 12 Paris wheat EUR3.50/tonne firmer to EUR220.50/tonne.
The market shrugged off the news that China's PM had warned that "the road to global economic recovery will be tortuous," reducing his estimate on growth there to 7.5%. Whilst that's more than respectable by most standards, but it would be the lowest for China since 2004.
Still, undeterred Paris wheat managed to close higher for a fifth session in a row. The premium between March and May continues to widen, ending at EUR9.25/tonne tonight, a week ago that was only EUR4.00/tonne. That may be technical as the former goes off the board a week today when May becomes the sole remaining old crop month.
March London wheat has almost three weeks to go before it expires. Given the very small open interest in that position, it is maybe not surprising that it didn't trade at all today. Most active May closed GBP0.60/tonne firmer at GBP167.80/tonne.
Reports that Morocco, a regular buyer of French wheat, is likely to be in the market to import 1 MMT by the end of May was supportive for Paris. A dry winter is also likely to have a negative impact on wheat production there this year further boosting the need for imports, according to Agritel.
Northern Central America is picking up some much needed moisture, say Martell Crop Projections. "Corn producers in Minnesota and South Dakota also are feeling better about corn planting following a serious of winter storms that have increased ground moisture," they add.
The Ukraine Ag Ministry have lowered their 2011/12 grain export projection a little to 25.4 MMT from 26 MMT previously. Having only exported just over 13 MMT in the first two thirds of the marketing year, that means they'll have to shift almost the same volume again in the remaining four months of the marketing year. A tall, and pretty unlikely order.
EU Rapemeal Prices
05/03/12 -- Rapemeal prices on the continent continue to rise, mimicing gains in soymeal in Chicago, but also reflecting tightness in rapeseed availability.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Mar12 | 210.00 | +5.00 |
| Apr12 | 207.00 | +8.00 |
| May/Jul12 | 194.00 | +4.00 |
| Aug/Oct12 | 172.00 | +3.00 |
| Nov12/Jan13 | 175.00 | +2.00 |
| Feb/Apr13 | 177.00 | +2.00 |
| May/Jul13 | 175.00 | +2.00 |
| Aug/Oct13 | 163.00 | +1.00 |
Moving
04/03/12 -- No, Mrs N#3 hasn't finally seen the light and chucked me out. Have you seen the price of bin bags these days, you'd think that they were made of gold leaf or something. So it looks like I'm too expensive to get rid of and she's stuck with me.
No, I've been moving a few things around on the old blog. A bit of spring cleaning. I decided that the widget and charts that have been living in the right hand column more or less since I started the blog were cluttering things up.
We've also had a few instances of one or two people "borrowing" some of this content to put on their own websites. Yes shocking I know, but that is the world we live in today. Too many people want something for nothing.
I was reading a market report the other week from a Turkish-based outfit called Avacommerce.com, ever heard of them? Well I got part-way through their in depth 10-page market report and thought hmmm, that sounds familiar, and so it should it was written by me and simply copied and pasted in there without a donation to the "buy Nogger a beer" fund or balls all let alone any permission. Not attributed to anyone but themselves.
So a few things have moved. Partly to attempt to stop them being so easily nicked, partly to expand a little on what's available and partly just to try out some new stuff. (Colin - the forex rates are only still there for you alone, but will also be relocating as soon as I sort them out too). It also means that there are one or two new advertising slots available for those who don't expect something for nothing every day of the week 24/7. Maybe the plagiarising sweaty Turks would like to get in touch?
For all you one man bands out in cyberspace, this isn't a begging letter (!!) keep your money in your pocket and sit back and enjoy. Click the market info link at the top of the page to access the widget and view a few new-look charts.
Incidentally, whilst putting this page together I noticed that these charts can be a bit slow to load up in IE, so if that is your browser of choice then have a little patience. If you are using Firefox they are much faster to load and almost instantaneous in Chrome.
