Calm Down, Calm Down
31/03/12 -- After yesterday afternoon's excitement I think that a quiet, calm, sober look at the acreage numbers might be a good idea. The Prime Minister, bless him, probably today thinks that it's a good idea for us all to empty our jerry cans of petrol down the drain and refill them with soybeans, corn and wheat. How close to reality are these estimates likely to be?
I don't know about you, but at times like this I always ask myself "what would R. Kelly do?" That's Robert Sylvester Kelly (born January 8, 1967), the American singer-songwriter and record producer better known by his stage name R. Kelly, not to be confused with me sister, Our Kelly. There's no point asking her about the grain market is there? She works on the wet fish counter in Asda. Stinks she does. Smelly Kelly the kids call her, and that's just the nice ones.
No I'll tell you what a sensible lad like R. Kelly would do, he'd turn back the hands of time, that's what he'd do (the jury is still out on whether he can fly by the way, but more of that later).
R. Kelly says that twelve months ago the USDA pegged all wheat plantings at 58 million, corn plantings at 92.2 million and soybean plantings at 76.6 million. In the end what we got was 54.4 million for wheat, 91.9 million for corn and only 75 million for soybeans.
So as it turns out they were pretty wide of the mark on beans and wheat, but fairly close to the bullseye on corn. Much of the reason behind that being the very soggy conditions that were around in the spring that persisted through until the early summer resulting in many "prevent plant" insurance claims.
What was the situation in 2010? The March 2010 planting intentions report gave us 53.8 million all wheat acres (the final USDA figure proved to be 53.6 million so they were pretty close with that); corn was estimated at 88.8 million (88.2 million in the end); soybeans 78 million (subsequently 77.4 million). So, they weren't too bad a guess back in 2010, although it is noted that they were above the final planted figure on all three, just as they were again in 2011. Let's hope that that isn't a trend.
Can R. Kelly turn the hands of time even further back? Let's see, go on son....
...Yes he can! In 2009 they gave us all wheat 58.6 million (in the end this proved to be 59.1 million); corn 85 million (86.5 million) and soybeans 76 million (77.5 million).
Hang on, look at this boy go, she's still not his so he's turning them back even further...In Mar 2008 the all wheat area was estimated at 63.8 million (which finally became 63.1 million); corn 86 million - spot on, finally, get these boys a virtual coconut and a goldfish in a plastic bag; soybeans 74.8 million (75.7 million).
So there we have it, let me reach for my calculator....
In March, for three of the past four years the USDA have over estimated the all wheat area. They've over estimated corn twice, under estimated it once and been spot on once. For beans they've over estimated twice and under estimated twice.
Four estimates were within half a million acres (one was exactly 0.5 million out) of the accepted final planted area. Four were out by 0.6-0.9 million acres and a further four were off target by a million acres or more.
Statistically then, there's a 75% chance of the final planted area for corn, beans and wheat being at least half a million acres different to what the USDA placed in front of us on Friday. But which way, and for which commodity? If only we knew that bit...it's a pity that R. Kelly can't turn the hands of time forward a bit isn't it?
Footnote: it must have been quite a handy little knack of his when bedtime was coming up when he was a kid. "Come on R. Kelly, it's way past your bedtime..." "No it isn't Ma." "Yes it chuffin well is, you go to bed at half past eight young man and look it's nearly a quarter to nine and you haven't even brushed your teeth yet." "No it isn't Ma look it's only half past five, I've got another three hours playtime yet." "Well I'll be buggered so I will, I must hop meself off down to SpecSavers first thing in the mornin son, so I shall. Go on then, another three hours it is, but you can get down off that wardrobe you cheeky little rapscallion. You cannot fly, right, you cannot touch the sky and they are most definitely NOT wings. Never you mind what they are, they're not wings OK. I don't care if you can flap them boy, put them away. Look at the time, it's only a quarter past three, you shouldn't even be home from school yet."
Chicago Market Surges Following USDA Report
30/03/12 -- Soybeans: May 12 Soybeans closed at USD14.03, up 47 1/2 cents; Nov 12 Soybeans closed at USD13.58, up 53 1/4 cents; May 12 Soybean Meal closed at USD388.70, up USD13.70; May 12 Soybean Oil closed at 55.10, up 151 points. Soybeans poked their head above USD14/bu for the first time in more than six months following today's bullish USDA numbers. US farmers will plant 73.9 million acres of soybeans this year, they said. That's over a million lower than last year and well below the 75.3-75.5 million that the trade was expecting. Soybean stocks were also below the average trade estimate at 1.37 billion bushels. Funds, already heavily long soybeans, piled in for an estimated 15,000 bean contracts on the day and were said to have bought 40,000 lots across the entire grains sector. At the end of a topsy turvy week, beans gained 37 1/4 cents, meal USD15.70 and oil 22 points overall.
Corn: May 12 Corn closed at USD6.44, up 40 cents; Dec 12 Corn closed at USD5.40 1/4, up 16 cents. Despite today's rally May 12 corn was actually 2 1/2 cents lower on the week, with Dec 12 down 17 1/4 cents. The USDA numbers were bearish for new crop corn with an acreage of 95.9 million, higher than the highest trade estimate, the largest since 1937 and up 4 million on 2011. March 1 corn stocks were 6.01 billion bushels, 149 million lower than the average trade guess - giving us an even tighter old crop situation than we had before. It was the stocks number that the trade decided to focus on, with funds wading in for an estimated 40,000 contracts on the day, having ditched an estimated 50-60,000 lots in the first four days of the week.
Wheat: May 12 CBOT Wheat closed at USD6.60 3/4, up 48 1/4 cents; May 12 KCBT Wheat closed at USD6.97 1/2, up 43 1/2 cents; May 12 MGEX Wheat closed at USD8.37 1/2, up 48 3/4 cents. Wheat rallied on the back of a USDA acreage estimate of 55.9 million, more than 2 million lower than they'd indicated at last month's Outlook Forum and towards the low end of trade estimates. The spring wheat acreage estimate came in at 11.976 million, which was well below the average trade guess of 13.313 million. Mar 1 wheat stocks also came in a bit below trade expectations at 1.2 billion bushels. Funds were said to have bought 10,000 Chicago contracts on the day, although that would still leave them with a significant short on wheat. On the week overall Chicago wheat put in a modest gain of 6 1/2 cents, with Kansas wheat gaining 3 cents and Minneapolis adding 20 1/4 cents.
EU Wheat Rises Boosted By Bullish USDA Data
30/03/12 -- EU grains finished generally sharply higher with May 12 London wheat ending up GBP3.75/tonne at GBP174.75/tonne, and May 12 Paris wheat climbing EUR5.50/tonne to EUR212.75/tonne.
The long awaited USDA report was the catalyst to send futures scurrying higher in afternoon trade. On the week overall May 12 London wheat was GBP2.25/tonne firmer whilst May 12 Paris wheat was actually EUR1.25/tonne lower.
London feed wheat is punching well above it's weight at the moment, based on tonight's close it is only around EUR3.00/tonne cheaper than Paris milling wheat.
Today's USDA numbers were particularly bullish for soybeans, with spring plantings pegged well below anticipated levels at 73.9 million acres, lower than the lowest trade estimate and 1.1 million below the USDA's February Outlook estimate.
Corn plantings were seen at close to 96 million acres, but old crop stocks were said to be tighter than anticipated. Wheat plantings at 55.9 million were towards the low end of what was expected and more than 2 million below last month's USDA Outlook Forum.
In Europe Coceral, in its first forecast for the 2012-13 harvest, pegged soft wheat production 2.1% down on last year at 126.76 MMT.
UK output is estimated marginally higher than in 2011 at 15.58 MMT, French production is also forecast up a tad at 34.08 MMT, with Germany chipping in with 22.37 MMT, a fraction less than a year ago.
The Coceral number is well below the figure of 131.1 MMT issued by Strategie Grains just a fortnight ago and would appear to confirm concerns that the damage cause by the February deep freeze and subsequent drought has indeed caused more damage than originally thought.
USDA Reaction: Pyrotechnic Extravaganza
30/03/12 -- We were expecting fireworks, and as usual Uncle USDA didn't disappoint, buying the biggest box in the shop and deciding to let them off all at the same time.
For corn they gave us a planting number even higher than the highest trade estimate, close to 96 million acres of the stuff. But those acres have to come from somewhere, and soybeans and wheat are seen providing them with soybean plantings seen at 73.9 million acres, lower than the lowest trade estimate and 1.1 million below the USDA's February Outlook estimate. All wheat acres are pegged at 55.9 million, towards the low end of what was expected and more than 2 million below last month's Outlook Forum.
For stocks, all three came in below the average trade guess.
The vibe now is that this is very bullish for soybeans per se, especially when you consider with a shudder what the market might do if and when we get a weather scare or two across the summer.
For corn it's a mixed bag, for sure almost 96 million acres is bearish, but we have an even tighter old crop situation than we had before. Any weather scares across the summer could also impact on production potential here, and don't forget that the USDA have already set the bar pretty high for corn with an ambitious return to trendline yields.
There are already some saying that these figures are a little out of date. Corn has fallen 50 cents this month, whilst beans have risen 33 cents. Some of these corn acres are already in the ground though thanks to the near ideal early spring weather.
For wheat we have 1.5 million more acres than last year, but that isn't as much as the trade was expecting. We also have the spectre of European production getting cut, with Coceral today coming out with a soft wheat estimate 2.1% down on last year at 126.76 MMT.
The vibe is for soybeans to trade 50 cents higher at the opening. Corn is seen 20 cents higher on old crop and even new crop could get dragged higher despite the monster acreage number. Wheat is called 15-20 cents higher, there are some big shorts around on the latter don't forget.
The USDA Numbers
30/03/12 -- The USDA's eagerly awaited numbers are out.
The corn planting number is the highest in 75 years and above even the highest trade estimate. The soybean figure on the other hand is below the lowest trade estimate. The wheat number is towards the low end of expectations, although still 1.5 million up on last year.
Mar 1st stocks have all come in a bit lower than expectations.
Plantings:
| Mln Acres | USDA | Avg Est | Range | USDA Feb | USDA 11/12 |
| All Wheat | 55.9 | 57.4 | 55.5-58.2 | 58.0 | 54.4 |
| Corn | 95.9 | 94.7 | 93.6-95.6 | 94.0 | 91.9 |
| Beans | 73.9 | 75.4 | 74.0-76.7 | 75.0 | 75.0 |
Mar 1st Stocks:
| Bln bu | USDA Mar 12 | Avg Est | Range | USDA Mar 11 |
| Wheat | 1.201 | 1.223 | 1.181-1.251 | 1.425 |
| Corn | 6.009 | 6.150 | 5.925-6.288 | 6.523 |
| Beans | 1.372 | 1.387 | 1.270-1.585 | 1.249 |
Ask Nogger
30/03/12 -- Today's problem comes A Plonker of Hull, he writes:
Q: Where's your widget gone Nogger? I used to like that, and that interactive roll over chart thingy.
A: You obviously haven't been paying attention have you, you Muppet? The new improved widget and his sexy, heavily stacked sister charts have been moved to their own page as their "double tops" were getting so large. Click "Market Info" in the menu bar above to see them in all their naked unabandoned glory.
EU Rapemeal Prices
30/03/12 -- Rapemeal prices on the continent are lower for once, in line with sharp losses overnight in Chicago soymeal.
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 | 235.00 | -2.00 |
| May/Jul12 | 228.00 | -2.00 |
| Aug/Oct12 | 196.00 | unch |
| Nov12/Jan13 | 199.00 | -1.00 |
| Feb/Apr13 | 201.00 | -1.00 |
| May/Jul13 | 192.00 | -4.00 |
| Aug/Oct13 | 164.00 | -4.00 |
| Nov13/Jan14 | 173.00 | -5.00 |
News Snippets
30/03/12 -- The Commonwealth Bank of Australia say that favourable soil moisture and high prices will see rapeseed plantings surge this year, with production estimated at a record 3.2 MMT in 2012/13.
The Russian PM says that winter crop conditions are better than normal.
The spring sowing campaign is underway in Ukraine with 600,000 hectares already planted, according to Agritel. They say that a total 14.4 million hectares will be sow this year, up 20% from last year due to winter losses.
Just 24 hours after Moritz Kraemer, the head of sovereign ratings at S&P, said that there was a significant possibility of a future Greek debt restructuring, the Greek PM admits that the need for a third bailout package couldn't be ruled out.
Meanwhile, the much larger problem of Spain is filling our TV screens.
Whilst the queues are still forming Unite has today ruled out the possibility of strike action over Easter by UK tanker drivers. Demand for petrol was up 172% yesterday, and a York woman suffered 40% burns when petrol she was decanting in her kitchen ignited, according to the BBC. Thanks, Mr Cameron.
The Morning Vibe
30/03/12 -- Heavy fund liquidation saw corn take a bit of a pasting last night. The May 12 close of USD6.04 was within 3/4 cent of session lows. Indeed front month corn has only closed lower than this twice this year, and aside from a brief period below USD6/bu in late November through to mid-December, there were only four other days in the whole of 2011 when corn was lower than this.
I read this morning that funds have exited around 80,000 Chicago corn contracts this month and corn is down 70c, or 10%, from it's March 13 high.
Meanwhile as of last Tuesday they were long 211,000 soybean futures & options contracts. In mid-December, when the market bottomed, they were long just 8,000 lots. Soybeans are up USD2.50 during this time.
Either they are exceptionally good at reading things, or the weight of their money, whether coming in or getting out, is unable to be easily absorbed by the combined might of the other market participants.
I know which one my money is on!
So we now all sit and wait for the USDA's latest offerings, yet predicting the fund's next move seems more important than studying the fundamentals these days.
Chicago Sharply Lower As Funds Exit
29/03/12 -- Soybeans: May 12 Soybeans closed at USD13.55 1/2, down 12 cents; Nov 12 Soybeans closed at USD13.04 3/4, down 15 3/4 cents; May 12 Soybean Meal closed at USD375.00, down USD2.70; May 12 Soybean Oil closed at 53.59, down 101 points. Funds were said to have been net sellers of 8,000 soybean contracts on the day on profit-taking ahead of tomorrow's USDA report. Weekly soybean export sales of 471,900 MT for old crop and 120,400 MT for new crop were within the range of trade estimates for a combined 450-750 TMT. In tomorrow's USDA data the trade is expecting 2010 US soybean plantings at around 75.3-75.5 million acres, and a March 1st stocks number of 1.387 billion bushels.
Corn: May 12 Corn closed at USD6.04, down 16 1/4 cents; Dec 12 Corn closed at USD5.24 1/4, down 12 cents. Funds were said to have liquidated around 17,000 contracts on the day, which would have them exiting some 50-60,000 lots on the week going on floor estimates. As well as risk off ahead of tomorrow's USDA report, the weekly export sales numbers were very disappointing. Old crop sales of 130,700 MT were a marketing-year low and new crop sales were only 27,000 MT. That's way below the anticipated combined total of 600-900 TMT. Even the sale of 120,000 MT of corn for 2011/12 delivery to China and 120,000 MT to "unknown" for new crop couldn't save corn today. Tomorrow the trade is expecting spring corn plantings of 94.7 million acres, with March 1st stocks at around 6.2 billion bushels.
Wheat: May 12 CBOT Wheat closed at USD6.12 1/2, down 18 1/4 cents; May 12 KCBT Wheat closed at USD6.54, down 16 cents; May 12 MGEX Wheat closed at USD7.88 3/4, down 9 cents. Wheat is following corn, and for now that means lower. Weekly export sales for wheat of a combined 403,100 MT were below expectations of 450-750 TMT. Tomorrow the trade is expecting all wheat plantings at 57.4 million bushels and March 1st stocks of 1.22 billion bushels. Beneficial rains in the Southern Plains having improved HRW wheat conditions substantially in recent weeks. Funds were said to have been net sellers of 4,000 Chicago wheat contracts on the day, and seem quite relaxed about carrying a significant short position into tomorrow's report.
EU Grains End Lower, But Outperforming US Wheat And Corn
29/03/12 -- EU grains finished mostly lower ahead of tomorrow's all important USDA reports with May 12 London wheat down GBP1.65/tonne to GBP171.00/tonne and May 12 Paris wheat falling EUR4.25/tonne to EUR207.00/tonne.
The USDA will give us some guidance tomorrow on US plantings for the 2012 harvest and also March 1st US stocks. Whilst wheat is probably the least likely to spring a surprise what they have to say for corn will almost certainly influence wheat prices too.
Whilst weather conditions are bordering on ideal across the Atlantic things don't look quite so rosy here in Europe. That is reflected by the recent price action for wheat and corn here compared with in the US.
Chicago corn prices have fallen 8% in less than a fortnight, with wheat prices there declining 6% in the same period, based on last night's closing levels. Yet at last night's prices Paris wheat was only down 1% and London wheat was actually marginally higher on where it stood back then.
It's not surprising then that French wheat was overlooked in yesterday's Egyptian tender in favour of much cheaper US and Argentine wheat.
This lack of competitiveness of European wheat is also maybe reflected in the fact that Brussels only issued 210,683 MT worth of soft wheat export licences this past week, the lowest total of the past six weeks.
The 2011/12 marketing year to date total now stands at 10.47 MMT, 32% lower than a year ago with only 13 weeks left to go.
In tender news, Bangladesh bought 50TMT of Indian wheat for April/May shipment. The latter isn't normally an eager exporter but has plentiful carryover stocks left over from last year and has just begun what it expects to be a record wheat harvest in excess of 90 MMT for 2012.
As I am about to hit the "publish" button May 12 Chicago corn trades lower for the seventh session out of the last nine at USD6.11 1/2. A quick look at the weekly chart shows that it has only closed lower than that four times out of the past fifty two weeks. In other words we are trading within the bottom 8% of where US prices have been across the whole of last year.
In stark contrast at GBP171.00/tonne May 12 London wheat has been lower on no less than 36 occasions on the weekly chart in the past year. That means we are currently trading within the top 31% of where prices here have been over the last twelve months.
Early Call On Chicago
29/03/12 -- The overnight grains saw beans 2-3 cents higher, with corn 3-5 cents lower and wheat down a cent or so.
Crude oil is a bit weaker on talk that France, the US and the UK are in discussions with the International Energy Agency about a potential release of strategic oil reserves.
In addition US stocks rose by 7.1 million barrels to 353.4 mln last week, the biggest weekly increase since July 2010 and inventories are now at their highest level in seven months.
The USDA reported weekly export sales for wheat of a combined 403,100 MT, below expectations of 450-750 TMT. Shipments of of 440,900 MT were down 20 percent from the previous week.
For corn we got old crop sales of 130,700 MT - a marketing-year low - and new crop sales of only 27,000 MT. That's way below the anticipated 600-900 TMT.
Soybean sales of 471,900 MT for old crop and 120,400 MT for new crop were within the range of trade estimates of 450-750 TMT. China took 209,900 MT of the old crop and 55,000 MT of the new crop. In addition, the USDA have reported 120,000 MT of soybeans sold to China overnight under the daily reporting system.
Despite the funds having already liquidated an estimated 35-40,000 corn contracts heading into tomorrow's USDA reports these numbers may encourage some further load lightening this afternoon. In addition, despite plenty of rumours to the contrary, there was no sign of China as a featured corn buyer.
That may drag wheat a bit lower with it as US weather remains non-threatening with no frost in the 7-10 day forecast. We also have very favourable conditions for fieldwork in the Midwest and beneficial rains in the Southern Plains having improved HRW wheat conditions substantially in recent weeks.
Concerns remain over Western European dryness though, some moisture is in the forecast for Eastern Europe in the week ahead.
The USDA have just reported the sale of 120,000 MT of US corn to unknown. Interesting. There are all sorts of things you could read into that.
Early calls for this afternoon's CBOT session: corn down 3-5 cents, wheat down 1-3 cents, beans up 2-4 cents.
EU Rapemeal Prices
29/03/12 -- Rapemeal prices on the continent continue to rise with attention now starting to focus on potential crop losses due to ongoing drought in France, Germany, Poland and the UK.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Mar12 | unq | n/a |
| Apr12 | 237.00 | +6.00 |
| May/Jul12 | 230.00 | +7.00 |
| Aug/Oct12 | 196.00 | +5.00 |
| Nov12/Jan13 | 200.00 | +6.00 |
| Feb/Apr13 | 202.00 | +7.00 |
| May/Jul13 | 196.00 | +9.00 |
| Aug/Oct13 | 168.00 | +3.00 |
| Nov13/Jan14 | 178.00 | +3.00 |
The Morning Vibe
29/03/12 -- It's all very exciting isn't it boys and girls, only one more sleep to go to the Big Day. To clarify on something I read yesterday but couldn't confirm. Corn has staged a limit move on six of the last seven times that the quarterly stocks report has been released. This week's stocks report just happens to coincide with the planting intentions numbers.
It was the stocks numbers as opposed to the acreage numbers that caused a limit up move this time last year, as they came in lower than even the lowest trade estimate.
This time round the trade is expecting a corn stocks number of 6.15 billion bushels for corn, from within a range of 5.925-6.288 billion and 6.523 billion a year ago. Soybean stocks are estimated at 1.387 billion (1.270-1.585) and wheat stocks at 1.223 billion (1.181-1.251).
For acres we are looking at an average of 94.72 million for corn (from a range of 93.6-95.6 million); for soybeans 75.4 million (74.0-76.7) and for wheat 57.4 million (55.5-58.2).
It is worth remembering that the acreage numbers are based on a Mar 1st survey. Since then corn prices have declined 34 cents, whilst soybean prices have risen 50 cents. Production estimates in South America for the latter have also declined, so it may be that some US growers will think that soybeans may have a bit more upside potential than corn or wheat going forward. I certainly do. That could mean a bit more land going into soybeans than tomorrow's report might suggest.
With front month May soybeans currently standing at USD13.74/bu in the overnight market we are within 6 cents of the highest close for soybeans in more than six months. Conversely corn has slipped below USD6.20/bu overnight, a close there tonight would be a two month low and place it only 41 cents above the mid-December low of 2011. Soybeans are currently USD2.74/bu above their mid-December low.
It looks like we are shaping up for a quiet one today, but there's plenty of potential for fireworks tomorrow!
Dutch Firm To Acquire BOCM Pauls
29/03/12 -- Early scoop of the day is the news that BOCM Pauls has been acquired by the Dutch ForFarmers Group, who are also a shareholder in Cefetra. Press release here.
No that image isn't wonky, it's your eyesight you old duffer. Things start to go when you get to your age, now put your teeth back in and get some work done.
Chicago Dips Ahead Of USDA Numbers
28/03/12 -- Soybeans: May 12 Soybeans closed at USD13.67 1/2, down 2 1/4 cents; Nov 12 Soybeans closed at USD13.20 1/2, down 7 1/4 cents; May 12 Soybean Meal closed at USD377.70, up USD1.70; May 12 Soybean Oil closed at 54.60, down 50 points. Beans were dragged lower by corn and wheat, although they still look the strongest leg of the sector. Funds were said to be net sellers of 3,000 contracts on the day in light profit-taking ahead of Friday's USDA reports. South American crop estimates keep shrinking, with one private analyst pegging Argentine soybean production at 42.6 MMT, almost 4 MMT lower than the USDA's current figure. Estimates for tomorrow's weekly export sales report are 450,000 to 750,000 MT.
Corn: May 12 Corn closed at USD6.20 1/4, down 10 1/2 cents; Dec 12 Corn closed at USD5.36 1/4, down 14 cents. Funds were said to have sold a hefty 20,000 contracts on the day, which would place them exiting around 35-40,000 on the week so far. Do they know something we don't? Friday's acreage report is widely expected to show a sharp jump in corn plantings which typically produce four times the yield of soybeans, although there are obviously other considerations such as crop rotation and higher inputs for corn. To clarify on a point made yesterday, there have been 6 limit up or limit down moves out of the last seven days when the quarterly stocks reports have been released. Before that we get the weekly export sales numbers tomorrow, the trade is expecting sales of 600 and 900 thousand MT.
Wheat: May 12 CBOT Wheat closed at USD6.30 3/4, down 9 cents; May 12 KCBT Wheat closed at USD6.70, down 9 cents; May 12 MGEX Wheat closed at USD7.97 3/4, down 8 1/2 cents. Funds were said to have added 3,000 Chicago contracts to their short position today. India said that it would harvest a record wheat crop in excess of 90 MMT this year, with consumption estimated at 83 MMT that will increase their reserves and/or allow them to export. Egypt bought one cargo of US wheat, plus another of Argentine origin. European and Black Sea origins proved to be too expensive. Estimates for tomorrow's weekly export sales are 450,000 to 750,000 MT.
EU Wheat Declines On More Consolidation
28/03/12 -- EU grains finished lower with May 12 London wheat down GBP1.40/tonne at GBP172.65/tonne. New crop Nov 12 was GBP1.70/tonne lower at GBP159.75/tonne. May 12 Paris wheat closed down EUR2.00/tonne to EUR211.25/tonne.
It feels like today was more consolidation and profit-taking ahead of Friday's important USDA data. Nobody appears confident of what that might bring, with anything from outrageously bullish to stunningly bearish and everything in the middle possible.
One report I read said that Chicago corn has touched a limit move, one way or the other, in six of the last seven years that this report has been issued. That doesn't seem to mean that it has closed limit up or limit down, but it has traded at the daily limit at some point during the session.
We can only wait and see what Friday will bring, but history would appear to suggest that something dramatic, one way or the other, may be statistically likely.
Meanwhile Egypt bought one cargo each of US and Argentine wheat in it's latest tender today. The former was reportedly at USD262.84/tonne and the latter at USD259.35/tonne. For the record, the cheapest French wheat offered was at USD300.00/tonne. Russian and Ukraine origins were also passed on.
The HGCA made some tweaks to the UK 2011/12 supply and demand balnce sheet today, cutting domestic Human and industrial (H&I) wheat consumption by 46TMT due to lower demand from the ethanol sector than previously anticipated.
They indicated that they don't expect Ensus to operate this side of June, but suggested that "there are strong expectations that the plant being commissioned at Hull could process wheat this season."
"Wheat usage as animal feed is forecast at 6.45MMT, up 5% on 2010/11 but down 35TMT on January’s estimate," they added.
Roll Up, Roll Up
28/03/12 -- On this day in 2011 front month London wheat closed at GBP200.50/tonne. Exactly one year previously it was GBP98.50/tonne. So I guess you could say that for anyone with wheat still left to sell in the UK your glass is around three-quarters full currently.
I read this morning that corn has hit a limit (but maybe not necessarily closed there) move in six of the last seven years on the day of the March planting intentions/stocks report. Last year it was limit up.
I also read that the spec funds sitting on a record long position in soybeans have a "bullet proof" mentality about being long.
Red or black, what do you fancy?
EU Rapemeal Prices
28/03/12 -- Rapemeal prices on the continent little changed today, nearby availability remains tight - a situation that looks like staying with us until new crop.
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 | 231.00 | -2.00 |
| May/Jul12 | 223.00 | unch |
| Aug/Oct12 | 191.00 | -1.00 |
| Nov12/Jan13 | 194.00 | unch |
| Feb/Apr13 | 195.00 | -1.00 |
| May/Jul13 | 187.00 | -5.00 |
| Aug/Oct13 | 165.00 | -2.00 |
| Nov13/Jan14 | 175.00 | -1.00 |
News Snippets
28/03/12 -- The overnight market sees soybeans 6-7 cents firmer, wheat up 2-3 cents and corn mixed a cent or so either side.
Egypt are back in the market tendering for wheat.
The Indian Farm Secretary says that the country will have a record wheat crop in excess of 90 MMT this year.
Russia has exported 22 MMT of grains so far this marketing year, according to their Ag Minister.
Rabobank estimate next season's Australian wheat crop at 24 MMT.
The UK drought has officially spread to East and South Yorkshire.
Chicago Slumps Ahead Of USDA Friday
27/03/12 -- Soybeans: May 12 Soybeans closed at USD13.69 3/4, down 9 3/4 cents; Nov 12 Soybeans closed at USD13.27 3/4, down 1 3/4 cents; May 12 Soybean Meal closed at USD376.00, down USD1.90; May 12 Soybean Oil closed at 55.10, down 33 points. It was a Turnaround Tuesday of profit taking ahead of Friday's USDA reports, despite a sale of 120,000 MT of new crop beans to China. Spec funds, who held a record long in bean futures and options as of last Tuesday and have added to that position since, were said to have sold 6,000 soybean contracts on the day. Estimates for Friday's plantings report centre around 75.3-75.5 million acres.
Corn: May 12 Corn closed at USD6.30 3/4, down 7 cents; Dec 12 Corn closed at USD5.50 1/4, down 3 cents. Prices closed close to session lows as funds reputedly sold 5,000 lots on the day, adding to the 10,000 supposedly sold Monday. Trade estimates for the US corn acreage average 94.7 million acres, up 2.8 million or 3% from 2011. Estimates range from 93.6 to 95.6 million acres. March 1 stocks are expected around 6.2 billion bushels. South Korea bought 65,000 MT of optional origin corn overnight, but there's no sign of China to keep the bulls fed.
Wheat: May 12 CBOT Wheat closed at USD6.39 3/4, down 19 3/4 cents; May 12 KCBT Wheat closed at USD6.79, down 20 cents; May 12 MGEX Wheat closed at USD8.06 1/4, down 15 3/4 cents. Funds were said to have sold 4,000 Chicago wheat contracts on the day, although some think that selling could have been greater than that. Crop conditions in Kansas and Oklahoma, the two largest HRW wheat states, are showing significant improvement. Opinion is divided on how much damage has been done in Europe, but it is common knowledge that the carry-in to the world 2012/13 crop will be large, possibly record large. Friday's reports are considered less likely to throw up a wheat surprise than they are for corn or soybeans.
EU Wheat Consolidates Ahead Of USDA Report
27/03/12 -- EU grains finished mostly lower with May 12 London wheat ending down GBP3.10/tonne at GBP174.05/tonne, and May 12 Paris wheat falling EUR4.00/tonne to EUR213.25/tonne.
It was a day of consolidation after yesterday's sharp gains, with traders wary of what the USDA might throw at them on Friday.
For Mar 1st US wheat stocks the trade is expecting a figure of 1.255 million bushels.
For US plantings an all wheat area of 57.6 million acres is the average trade guess, with the range of guesses at 56.6-58.3 million, that's a bit lower than the 58 million the USDA suggested last month but still up almost 6% on last year's 54.4 million.
US crop conditions are also hugely better than they were this time last year with 75% of Oklahoma and 59% of Kansas wheat rated good/excellent. Mid-March last year only 22% of Oklahoma's and 25% of Kansas wheat was placed in the top two categories.
We should never underestimate the USDA's capacity for surprise. On the day of these reports last year March 1st stocks US corn stocks were below even the lowest trade estimate and corn closed limit up, with wheat 36 cents higher and soybeans up 38 1/4 cents.
In other news, the EU Commission's research unit MARS projected EU-27 2012 wheat yields at 5.41 MT/ha, a small increase on last year. Of note were ideas that the UK yield would average 4% more than in 2011 at 8.07 MT/ha, with those in France 7% higher at 7.11 MT/ha and Germany's up 7.5% to 7.57 MT/ha.
The largest decline in yields this year is seen coming from Romania, down 21%, with Ireland down 15% and Spain falling 14%.
EU-27 barley yields are forecast 2.6% higher this year at 4.41 MT/ha, with those in the UK at 5.82 MT/ha, up 2.7%. Rapeseed yields EU-wide are seen averaging 3.02 MT/ha, up 5.5% on last year, with the UK yield falling from a record 3.94 MT/ha to a more normal 3.5 MT/ha this time round.
Early Call On Chicago
27/03/12 -- The overnight markets are a little higher with beans and corn up around 4-6 cents and wheat around 2-4 cents steadier. Crude is a little lower but Brent remains above USD125/barrel whilst NYMEX WTI hovers around USD107/barrel.
It's warmer and drier than normal both sides of the Atlantic. Winter wheat crop conditions in the US are way ahead of last year and crop development is at least a couple of weeks ahead of normal.
Kansas wheat is has jumped to 59% good/excellent, up from 54% last week. Oklahoma's crop is in even better shape, with 75% of it rated in the top two categories compared to 70% a week ago. Last week's rains clearly did plenty of good.
It's wheat conditions and production potential this side of the pond that is getting all the attention though, with Spain the primary concern, although the UK and northern France are also major worries.
Even so the EU Commission's MARS unit say that EU-27 wheat yields will come in slightly higher than last year at 5.41 MT/ha. Spanish yields are seen down 14.2% for all wheat, with durum yields falling by almost a third. Romania is also flagged up as suffering with wheat and barley yields both down around 21%.
Whilst US conditions look largely very favourable now things could still turn nasty in April. Then there's a whole summer of potential weather scares waiting. If the funds fancy it, and it looks like they do, who knows where prices might go if things turn shitty - particularly for soybeans which appear to have the most upside potential to me.
Meanwhile, the trade is positioning ahead of Friday's USDA reports. Trade estimates for the US corn acreage average 94.7 million acres, up 2.8 million or 3% from 2011. Estimates range from 93.6 to 95.6 million acres.
For soybeans the trade is forecasting 75.5 million acres, only half a million up on last year, despite prices close to USD14/bushel.
Regardless of what the USDA say on Friday, longer term price direction is all about fund money. Yesterday they were said to have sold around 10,000 corn contracts and been net buyers of 9,000 lots of soybeans and 4,000 lots of wheat. Corn went down and beans and wheat ended higher. Simple!
The USDA have just reported the sale of 120,000 MT of new crop soybeans to their favourite buyer, China.
Early calls for this afternoon's CBOT session: wheat up 2-4 cents, corn and beans 4-6 cents higher.
EU Rapemeal Prices Continue To Rise
27/03/12 -- Rapemeal prices on the continent continue to rise in line with steep gains in Chicago soybeans and meal this past couple of days. With attention now starting to focus on potential crop losses due to drought, new crop posts gains on old crop today.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Mar12 | unq | n/a |
| Apr12 | 233.00 | +3.00 |
| May/Jul12 | 223.00 | unch |
| Aug/Oct12 | 192.00 | +3.00 |
| Nov12/Jan13 | 194.00 | +4.00 |
| Feb/Apr13 | 196.00 | +4.00 |
| May/Jul13 | 192.00 | +5.00 |
| Aug/Oct13 | 167.00 | unch |
| Nov13/Jan14 | 176.00 | unch |
The Morning Vibe
27/03/12 -- The Monitoring Agricultural ResourceS unit, otherwise known by the slightly contrived acronym MARS have apparently said that they forecast EU soft wheat yields rising 1.7% to 5.67 MT/ha in 2012, with barley yields up 2.6% to 4.41 MT/ha.
I say apparently as I haven't actually seen the numbers myself, although their first stab at EU yields was due out on Friday there is no sign of it yet on their website.
The wheat number is slightly than Strategie Grains said earlier this month (5.8 MT/ha), whilst the barley estimate is very similar (4.4 MT/ha).
Meanwhile, isn't it hot? Yesterday's rumble across the A59 and back was rather pleasant apart from the usual hold-ups. BOCM lorries getting in my way, adhering strictly to the speed limit. NWF lorries not getting in my way, adhering strictly to the layby's.
My friend Gail Martell has sent me this interesting image plotting Europe's percent of normal rainfall for the past 60 days Water wanted. I am reliably informed that rain is on the way, but it might be the second half of April before we see it.
The boys at Bloomberg keep emailing me to ask if it's time to panic yet. It's early days yet I told them (here), a view apparently concurred with by the HGCA.
"Iberian wheat crops are suffering," Dow Jones report today, although seeing as Portugal only produced 68,000 MT of wheat last year I don't think we need to be too concerned about them.
Spain however are getting it with both barrels it would seem, and they had an all wheat crop of around 7 MMT last year.
The rain cavalry could push in from the east for Poland and Eastern Germany by the end of the week, but Northern France and the UK are set to stay dry, if a bit cooler. In fact, even Spain and Portugal will get more rain than the UK in the coming seven day period.
There does however seem to be a chance for a change to more unsettled conditions for the UK once we get into the middle of April, according to weatherweb.net.
Chicago Soybeans Race To Six Month Highs
26/03/12 -- Soybeans: May 12 Soybeans closed at USD13.79 1/2, up 13 3/4 cents; Nov 12 Soybeans closed at USD13.29 1/2, up 7 cents; May 12 Soybean Meal closed at USD377.90, up USD4.90; May 12 Soybean Oil closed at 55.43, up 55 points. This was a six month closing high for beans, spurred on by Oil World saying that 2011/12 world production was 2 MMT lower than the USDA currently state and around 21 MMT down on last year. Meanwhile, AgRural cut their Brazilian crop estimate to 66.7 MMT, saying that harvesting is 61% complete as of Friday. Funds were said to have been net buyers of 9,000 soybean contracts on the day.
Corn: May 12 Corn closed at USD6.37 3/4, down 8 3/4 cents; Dec 12 Corn closed at USD5.53 1/4 down 4 1/4 cents. The prospect for large US spring plantings weighed on corn. Weekly export inspections were also uninspiring at 22.2 million bushels, half of last week's total. Year to date inspections are now 920 million bushels, 45 million below this time last year. The much warmer than normal temperatures and largely favourable Midwest conditions see fieldwork progressing at a record pace. Everybody seems to agree that we will have the largest US corn plantings since 1944, the only question is how high? A Reuters survey estimates them at 94.72 million acres, versus 91.9 million in 2011.
Wheat: May 12 CBOT Wheat closed at USD6.59 1/2, up 5 1/4 cents; May 12 KCBT Wheat closed at USD6.99, up 4 1/2 cents; May 12 MGEX Wheat closed at USD8.22 up 4 1/2 cents. Wheat benefited from a weaker dollar and dryness in Europe following earlier winterkill ideas pushing prices this side of the pond sharply higher. Corn is seen stealing some wheat acres in the US this spring, with all wheat plantings forecast at 57.4 according to Reuters compared with the USDA's suggestion of 58 million at last month's Outlook Forum. Weekly export inspections were 15.4 million bushels, 5.5 million down on last week and little more than half of a year ago. Year to date inspections of 811 million lag 2010/11 by 157 million.
London Wheat Closes At Highest Since June 2011
26/03/12 -- EU grains finished sharply higher with May 12 London wheat climbing GBP4.65/tonne to GBP177.15/tonne and May 12 Paris wheat up EUR3.25/tonne to EUR217.25/tonne.
This was the highest close for a front month for London wheat in nine months following another extremely warm and dry weekend that will only have heightened drought loss fears at home and on mainland Europe.
Shorts will be getting squeezed out by this sharp and unexpected rally from wheat.
Soybeans are closing in on USD14/bushel following continued crop write-downs in South America. Oil World now predict that world soybean production in 2011/12 will fall more than 20 MMT from last year.
The trade is now focusing on the USDA's March planting intentions report which comes out on Friday. The vibe for that is big corn acres, with spring conditions largely favourable for early planting, only a modest increase in soybean sowings and although wheat area will be up that it may fall short of the 58 million that the USDA said last month.
Before that DEFRA give us the revised S&D numbers for UK crop production for 2011/12 on Wednesday.
The Early Vibe
26/03/12 -- The overnight market sees wheat & corn trading flat to a little easier, but with beans posting double digit gains, in nearby old crop months at least.
Once again beans are the strongest, following through on strong gains Friday, this time buoyed by news that Oil World founder Thomas Mielke (cue Milky Bar Kid joke) says that world soybean production will fall to around 243 MMT in 2011/12, some 21 MMT or so below last season's levels.
The size of the US crop this year looks extremely important, given the losses in South America (16 MMT according to the Mielke Bar Kid). The so-called battle for acres is underway (an expression I dislike intensely, and one that conjures up images of corn, soybeans and wheat clad in skin tight white Lycra playing electric guitar head-to-head) and corn seems to be winning.
Some are saying that the US needs to plant 80 million acres of soybeans to make up for South American losses and rebalance world supply with world demand in 2012/13. However, the USDA only gave us 75 million acres last month, and the largest private analysts estimate that I can recall seeing so far is 76.7 million.
Throw in the obligatory weather scare or three across the summer and the fund's appetite for the grains sector (their insatiability is of more concern than China's to me) and the stage looks set for a pretty rocky mountain way up ahead (nice pun - bringing in the battle of the bands theme) and one that could be dominated by beans.
My day today is going to be dominated by the A59 so there won't be any more blogging until later this afternoon. Looks like we will see London/Paris wheat open higher after another glorious weekend and prospects for more of the same this week brings little chance of rain. I haven't written off this crop just yet though, some decent rain in April/May would soon turn it around IMHO.
