Nogger's Blog

What Happened To Soybeans On Friday?

12/05/12 -- It looks like Friday was a sharp reminder that no matter what the fundamentals say, when the elephants all stampede for the exit door en masse there's only one thing gonna happen.

What appears to have startled Dumbo this week is the news that a leading US bank were said to have lost USD2 billion, maybe more, on credit default swaps in just six weeks.

The suggestion is that they were selling "paper" soybeans at whatever price they could get on Friday to recoup some of those losses. As ever, when the price drops sharply computer generated stop-losses kick in and the little guys also get sucked into the vortex.

Separately, it is interesting to note that Fortress Investment Group announced Thursday that they were closing their commodities fund, which has lost 12.57% in first four months of year, later this month.

Meanwhile front month May 12 Chicago soybeans are 99 cents lower than where they finished April yet South American production estimates and US ending stocks have been lowered and China/unknown has bought US soybeans virtually every day  since then!

Chicago Soybeans Crash

11/05/12 -- Soybeans: May 12 Soybeans closed at USD14.04, down 48 1/4 cents; Nov 12 Soybeans closed at USD13.21 1/4, down 37 3/4 cents; May 12 Soybean Meal closed at USD411.00, down USD12.90; May 12 Soybean Oil closed at 51.90, down 125 points. Extreme volatility continues. On the week overall May 12 beans fell 71 cents and Nov 12 was down 45 1/2 cents. Meal was down USD21.10 and oil shed 140 points. It's been a risk off week despite, for beans, a bullish USDA report yesterday. Crude oil fell to its lowest levels of the year on dollar strength and weak Chinese economic data. Funds were sellers across all of the grains today, shedding an estimated 12,000 soybean contracts on the day. The Commitment of Traders Report shows large funds liquidating around 23,000 of their length in the week through to Tuesday. The USDA announced the sale of 139,500 MT of already tight old crop soybeans to unknown, but even that couldn't stem the tide today.

Corn: May 12 Corn closed at USD6.08, down 17 1/2 cents; Dec 12 Corn closed at USD5.05 1/4, down 2 cents. On the week May 12 corn lost 54 1/4 cents and Dec 12 declined 19 cents. The last time Dec was this low was Feb 2011. Funds were said to have been net sellers of around 10,000 corn contracts on the day, ignoring news of the sale of 300,000 MT of corn to "unknown" - 60,000 MT for 2011/12 delivery and 240,000 MT for 2012/13 delivery. News that the largest bank in America had lost "at least" USD2 billion on derivatives trading that was supposed to be a hedge against economic risk unnerved the market to say the least. Favourable US weather and early plantings weigh on new crop.

Wheat: May 12 CBOT Wheat closed at USD5.92 3/4, down 2 cents; May 12 KCBT Wheat closed at USD6.01, down 8 1/2 cents; May 12 MGEX Wheat closed at USD7.41 1/4, up 11 1/4 cents. On the week overall Chicago wheat was down 11 cents, Kansas down 12 3/4 cents and Minneapolis was 1 1/4 cents higher. New crop Jul 12 Chicago wheat closed below USD6/bu for the first time in the contracts lifespan today. Funds were said to have been net sellers of around 3,000 Chicago contracts on the day. The US winter wheat harvest will soon be going full throttle, with the USDA yesterday estimating that crop at 1.7 billion bushels yesterday, an increase of 13% on last year.

EU Grains Close - Friday

11/05/12 -- EU grains finished mixed with May 12 London wheat finishing down GBP1.25/tonne to GBP172.50/tonne, and new crop Nov 12 falling GBP0.30/tonne to close at GBP148.20/tonne. Aug 12 Paris wheat ended EUR3.75/tonne lower at EUR197.50/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR196.25/tonne.

On the week as a whole May 12 London wheat gained GBP0.25/tonne and Nov 12 lost GBP1.30/tonne to close the week at its lowest since February. Nov Paris wheat was EUR0.50/tonne higher on the week.

EU wheat still looks expensive relative to its US counterpart. Benchmark new crop month Jul 12 Chicago wheat closed below USD6/bushel for the first time in the contracts life today, and trading in that began in August 2009.

EU wheat exports will slump to their lowest levels in five years in 2012/13 the USDA said yesterday. At 14.5 MMT they will be down 12% down on this season and 37% lower than last year, they forecast.

The weak euro is helping to support Paris wheat a little, with sterling briefly breaking through the 1.25 level for the first time since Nov 2008 today. Even so EU exports aren't exactly flying out of the door. Brussels issued 176 TMT of soft wheat export licences this week, bringing the marketing year to date total to 11.65 MMT, 32% down on year ago levels.

April rains have replenished soil moisture deficits in the UK, France and western Germany. FranceAgriMer rate 65% of the French wheat crop in good/excellent condition. The French body also raised their estimates for wheat and corn 2011/12 carryover yesterday due to lower exports than anticipated.

Commodities in general were under pressure today following the announcement that America's largest bank, JPMorgan Chase, has suffered losses of "at least" USD2 billion due to a risky hedging strategy. That may lead to calls for tighter regulation on speculative activity in the grains market.

Drought Cancelled

11/05/12 -- We can all breathe a sigh of relief and get out there with the hosepipe and water the garden here in North Yorkshire as the Environment Agency have announced that drought restrictions here no longer apply.

Phew. The kids have been desperate for me to get the paddling pool out as well, so they'll be made up when they get home from school later. I might even have a celebratory bath all on my own later. It's been a bugger sharing it with MrsN#3 lately I can tell you, she keeps pinching me loofah.

Still, at least we can both fit in the bath together if we so chose. Which for some inexplicable reason puts me in mind of MrsN#1 with a shudder. On a holiday in the Lake District with her one time she decided to go for a swim in Windermere only to discover that she could hardly fit, Bowness went under twelve foot of water and the RSPCA thought that they'd found the Loch Ness monster's much bigger brother.

Yes, brother. Three Japanese tourists kept trying to harpoon her.

EU Rapemeal Prices

11/05/12 -- Rapemeal prices on the continent are mostly a little higher today on the back of sharp rises in Chicago soymeal last night.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:

The Morning Vibe

11/05/12 -- Today has all the hallmarks of a thank God it's Friday let's all piss off early to the pub sort of a day. And it's lashing it down. Again.

The overnight grains are lower, with soybeans giving up around half of last night's gains. For corn we have the July contract sub-USD6/bu, having shed more than 20 cents this week to reside at its lowest levels in 14 months.

July CBOT wheat is now also under USD6/bu - a lifetime contract low. Things aren't looking too pretty for that with a large US new crop looming.

Nov 12 London wheat is GBP0.45/tonne easier to GBP148.05/tonne, it's lowest level since February, and to round off a week of market jitters we have news today of JPMorgan Chase revealing trading losses of "at least" USD2 billion and possibly USD3 billion. But what's the odd billion between friends eh? Billion shmillion, that's what I say.

Soybeans are finding it difficult to swim against the tide today, despite bullish fundamentals. China's Jan/Apr soybean imports are reported to be up 22.3% on the same period in 2011.

They will import 61 MMT of soybeans in 2012/13 the USDA said yesterday, 5 MMT more than they will buy this year and around a quarter of all the soybeans in the world.

Are they open yet?

Chicago Closing Comments

10/05/12 -- Soybeans: May 12 Soybeans closed at USD14.52 1/4, up 24 1/2 cents; Nov 12 Soybeans closed at USD13.59, up 25 1/2 cents; May 12 Soybean Meal closed at USD423.90, up USD9.00; May 12 Soybean Oil closed at 53.15, up 69 points. Beans led the way sharply higher on the back of a bullish USDA report that reduced old crop ending stocks by more than anticipated and pegged new crop inventories well below market expectations. The 2011/12 soybean carryout was cut from 250 to 210 million bushels and 2012/13 ending stocks were estimated at a very tight 145 million bushels. Insatiable China's 2011/12 soybean imports are seen rising 3.7 MMT to 56 MMT, and by a further 4 MMT to 61 MMT in 2012/13. Weekly export sales were also bullish at 466,500 MT for old crop and a hefty 1,360,500 MT for new crop giving a combined total of 1,827,000 MT versus expectations of 1.2-1.4 MMT. It should be noted that China accounted for more than 1 MMT of the combined total. Funds were said to have bought around 7,000 soybean contracts on the day.

Corn: May 12 Corn closed at USD6.25 1/2, down 15 3/4 cents, Dec 12 Corn closed at USD5.07 1/4, down 9 1/2 cents. Funds were said to have sold 23,000 corn contracts on the day after the USDA surprised the market by raising old crop ending stocks rather than reducing them by 50 million bushels to 851 million bushels, around 90 million more than the trade was expecting. They also gave us the largest US corn crop in history this year - over 375 MMT. They said that 2012/13 ending stocks will more than double to 1.881 billion bushels and pegged the world corn crop at almost 946 MMT, far higher than the IGC's recent 900 MMT. Brazil's crop was seen increasing 5 MMT from last month to 67 MMT. Weekly corn export sales were 224,200 MT old crop and 249,200 MT new crop, well under the combined 1.1-1.3 MMT that the trade was expecting.

Wheat: May 12 CBOT Wheat closed at USD5.94 3/4, up 3 1/2 cents; May 12 KCBT Wheat closed at USD6.09 1/2, up 1 1/2 cents; May 12 MGEX Wheat closed at USD7.30, down 1 1/4 cents. There were both bullish and bearish numbers for wheat in today's USDA report. Kansas was forecast to produce a 387 million bushel winter wheat crop this year, 40% up on last year. The US all wheat crop was estimated at 2.245 billion bushels, more than expected and 12.3% up on last year. They also pegged global wheat production at 677.6 MMT in the year ahead, some 17 MMT down on last year, a fall of 2.5 percent. Global wheat consumption is seen falling around 8 MMT next season, due to the outlook for a bumper world corn crop which absorbs some of this lower production. Even so, at 686.5 MMT the world will consume 11 MMT more wheat than it produces in 2012/13, meaning that world ending stocks for wheat are seen declining by 9 MMT to 188 MMT.

EU Grains Close

10/05/12 -- EU grains finished mixed but mostly lower with May 12 London wheat ending up GBP0.25/tonne to GBP173.75/tonne, new crop Nov 12 was down GBP0.40/tonne to GBP148.50/tone. Expiring May 12 Paris wheat crashed EUR12.75/tonne to EUR215.75/tonne, whilst new crop Nov 12 was down EUR1.75/tonne to EUR195.50/tonne.

The last remaining old crop Paris contract staged another dramatically thin performance, reversing all of yesterday's equally off the wall EUR11.50/tonne gains and then some.

Today was all about the USDA who gave us their first 2012/13 world crop production estimates, along with both old crop and new crop ending stocks projections both in the US and around the world.

Essentially the reports were bullish soybeans (and thus rapeseed), bearish corn and somewhere in the middle for wheat.

For soybeans they cut 2011/12 US ending stocks by more than expected to 5.7 MMT and projected 2012/13 carryout even tighter at 3.9 MMT. US ending stocks have only been lower than this four times in the last forty years, and when the latter number is taken on a stocks to usage basis this is the tightest availability since the mid-1960's. Meanwhile insatiable China's 2011/12 soybean imports are seen rising 3.7 MMT to 56 MMT, and by a further 4 MMT to 61 MMT in 2012/13.

The USDA pegged the EU-27 rapeseed crop down almost 6% to 18 MMT this year. World and EU-27 rapeseed ending stocks are forecast at nine year lows in 2012/13. World stocks will slump 32% to 2.86 MMT – less than half of where they were two years ago. Europe’s stocks meanwhile will more than halve from where they are expected to be at the end of this season to just 675,000 MT.

They estimated that the UK will produce a marginally lower 2.7 MMT rapeseed crop this year, with French production also seen down a tad to 5.25 MMT. German output will recover 15% from last season's drought damaged crop to 4.45 MMT.

The world corn numbers were undeniably bearish, with US 2011/12 ending stocks increased to 21.6 MMT and those for 2012/13 seen more than doubling to 47.8 MMT. US production this year was pegged at a record in excess of 375 MMT, with world output also pegged at a record of almost 946 MMT - well above the ICG's current estimate 900 MMT.

For wheat they gave us a world crop of 677.6 MMT, which was very much in the ballpark of other estimates from the IGC (676 MMT) and the FAO (675 MMT). World ending stocks are seen declining by 9 MMT to 188 MMT in the coming season.

The EU-27 wheat crop will come in at 132 MMT this year, they said. That's a 4% drop on last year. In amongst that there was little change on last year for the three main protagonists, with a UK crop of 15.6 MMT, a French crop of 36.5 MMT and a German crop of 22.5 MMT.

Separately FranceAgriMer raised their estimates for wheat and corn 2011/12 ending stocks there due to domestic prices being too high to meet earlier export forecasts.

USDA World Rapeseed Numbers

10/05/12 -- The USDA are forecasting a world rapeseed crop very similar to that of the past couple of seasons at 60.4 MMT in 2012/13.

A sharp drop in the crop here in Europe, down almost 6% to 18 MMT is seen being compensated for by a near 9% increase in production from Canada to 15.4 MMT.

World and EU-27 rapeseed ending stocks are forecast at nine year lows in 2012/13. World stocks will slump 32% to 2.86 MMT – less than half of where they were two years ago. Europe’s stocks meanwhile will more than halve from where they are expected to be at the end of this season to just 675,000 MT.

USDA World Barley Numbers

10/05/12 -- The USDA are forecasting an EU-27 barley crop of 53.6 MMT in 2012/13 - an increase of just over 2 MMT, or 4% on last year. That is largely responsible for world barley output rising 1.7 MMT to 135.4 MMT next season.
Russia and Ukraine will have smaller crops, the latter’s falling by 17% to 7.5 MMT. Decreases are also anticipated from Turkey (down 11%), Kazakhstan (down 23%) and Morocco (down more than 50% at 1.1 MMT).

Increases in output are expected from Argentina (up 35%), Canada (up 15%) and Iran (up 17%).

World consumption is forecast slightly higher at 136.2 MMT, with global ending stocks seen falling a tad to 21.4 MMT.

USDA World Soybean Numbers

10/05/12 -- The USDA paint a much tighter picture for soybean availability in first half of 2012/13 than they do for corn or wheat. In South America, the harvest that is just about over in Brazil and midway through in Argentine actually falls into the 2011/12 marketing year, we've got almost 12 months to wait yet before we get to 2012/13 there.

For the year we are in now the USDA peg Brazilian soybean production down 14% at 65 MMT and Argentine output down 13% to 42.5 MMT.

That puts the burden of supply on a soybean hungry world very much on America's shoulders for the remainder of 2012. The USDA cut 2011/12 US ending stocks by more than expected to 5.7 MMT and projected 2012/13 carryout even tighter at 3.9 MMT.

US ending stocks have only been lower than this four times in the last forty years, and when that number is taken on a stocks to usage basis this is the tightest availability since the mid-1960's.

Insatiable China's 2011/12 soybean imports are seen rising 3.7 MMT to 56 MMT, and by a further 4 MMT to 61 MMT in 2012/13.

USDA World Corn Numbers

10/05/12 -- The USDA's first foray into 2012/13 predictably gave us the largest US corn crop in history - over 375 MMT. That is seen changing the world supply and demand fundamentals quite dramatically next season.

Whilst the USDA's world wheat production estimate is very much in line with what we'd already had from the IGC, in the case of corn at 945.8 MMT it is considerably higher - 45.8 MMT higher in fact and represents an increase 8.7% in global output.

Firstly that means that US ending stocks will more than double from 21.6 MMT to 47.8 MMT in 2012/13 - the highest since 2005/06. It also means that world ending stocks will recover from 127.6 MMT in the current year to 152.3 MMT next season - the highest in twelve years.

Increases in production around the globe in 2012/13 are expected from Argentina (25 MMT, up 17%), Canada (12.6 MMT, up 18%), Mexico (21 MMT, up 11%), South Africa (13 MMT, up 13%) and Ukraine (24 MMT, up 5%).

Argentine (15 MMT0, Ukraine (14 MMT) and Brazil (10.5 MMT) will all compete with America (48 MMT) on the world export stage in 2012/13.

USDA World Wheat Numbers

10/05/12 -- In their first peek into 2012/13 the USDA today gave us a world wheat crop of 677.6 MMT in the year ahead, some 17 MMT down on last year, a fall of 2.5 percent.

That's a tad higher than the numbers that the IGC and FAO had already given us - 676 MMT and 675.1 MMT respectively - but they are all still very much in the same ballpark.

Here in Europe the USDA are now estimating wheat production this year at 132 MMT, a 4% drop on last year. Other notable cuts in global production in the year that lies ahead come from Ukraine (13 MMT, down 41%), Kazakhstan (15 MMT, down 34%), Australia (26 MMT, down 12%) and Argentina (12 MMT. down 17%).

Making up for some of those losses are production increases in America (61.1 MMT, up 12%), India (91 MMT, up 5%) and Canada (27 MMT, up 7%).

Global wheat consumption is seen falling around 8 MMT next season, due to the outlook for a bumper world corn crop, which absorbs some of these lower production numbers. Even so, at 686.5 MMT the world will consume 11 MMT more wheat than it produces in 2012/13, meaning that world ending stocks for wheat are seen declining by 9 MMT to 188 MMT.

EU-27 wheat exports will decline 2 MMT from the current marketing year to 14.5 MMT in 2012/13, the lowest in five years as we lose out to more competitively priced US wheat, who's exports are seen rising 4 MMT to 31.5 MMT. Even so, lower output in Europe means that 2012/13 ending stocks will decline to 12 MMT from 13.3 MMT at the end this season.

Early Call On Chicago

10/05/12 -- The overnight grains were mostly higher with beans leading the way up 14-18 cents. Corn was up almost 10 cents nearby but generally a cent or so easier further forward, wheat was 3-4 cents higher.

The big news of course was the raft of USDA numbers. Catching the eye immediately was a surprise 50 million increase in old crop US corn ending stocks, from 801 million bushels to 851 million. The most optimistic trade estimate was for these to be left unchanged from last month, nobody was forecasting an increase. US wheat and soybean stocks were cut by a bit more than anticipated, but nothing startling.

World corn ending stocks for the current marketing year also got a boost, being raised from 122.7 MMT to 127.6 MMT. The trade was expecting a decline. Also catching the eye was a much larger than expected cut to world wheat ending stocks in 2011/12, from 206.3 MMT to 197.0 MMT.

South American soybean production estimates fell into line with trade guesses, with Brazil's crop cut by 1 MMT to 65 MMT and Argentina's reduced by 2.5 MMT to 42.5 MMT. Further cuts to the latter are surely likely next month.

Brazil's corn production estimate was raised 5 MMT to 67 MMT, another bearish surprise for corn, although other analysts have also recently been upping their forecasts for corn output here.

Argentina's corn crop was left unchanged at 21.5 MMT, contrary to expectations for a 0.8 MMT reduction.

Kansas was forecast to produce a 387 million bushel winter wheat crop this year, 40% up on last year. The US all wheat crop was estimated at 2.245 billion bushels, more than expected and 12.3% up on last year.

As well as all that the USDA also gave us the usual weekly export sales numbers which, sticking with the above theme, were bearish corn and bullish soybeans. Corn sales were 224,200 MT old crop and 249,200 MT new crop, well under the combined 1.1-1.3 MMT that the trade was expecting.

In contrast soybean weekly sales were 466,500 MT for old crop and a hefty 1,360,500 MT for new crop giving a combined total of 1,827,000 MT versus expectations of 1.2-1.4 MMT. It should be noted that China accounted for more than 1 MMT of the combined total.

Wheat sales were in line with trade ideas of 450-750 TMT at a combined 550,500 MT.

The numbers are bullish for soybeans, negative for corn and neutral to slightly friendly for wheat, although the latter may get dragged down by corn. Early calls for this afternoon's CBOT session: old crop soybeans up 10-20 cents, new crop up 20-30 cents; corn flat old crop and 10-15 cents lower on new crop; wheat flat to 5 cents lower.

USDA Numbers

10/05/12 -- The USDA's eagerly awaited raft of important numbers are out, here's some of them:

USDA 2011/12 Ending Stocks Estimates (billion bushels):

USDA 2012/13 Ending Stocks Estimates (billion bushels):


USDA 2011/12 World Ending Stocks Estimates (MMT):


South American 2011/12 Crop Production:

EU Rapemeal Prices

10/05/12 -- Rapemeal prices on the continent are mostly a little lower today following last night's losses in Chicago soymeal.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:

The Morning Paper

10/05/12 -- It's seemingly all about the USDA today. What they will throw at is this time is anybodies guess. Lower Argie soybean production looks a given, but how low? The average trade guess is a drop of 3 MMT to 42 MMT, although there are now plenty of estimates lower than that.

My chum Gail Martell noted in an email to me recently that in the last really bad drought year in Argentina (2008/09) it was June before the USDA caught up with just how low production actually was that year. So whatever they come up with today there's the potential for it to be revised significantly lower again next month.

They will also delight and enthral us with their first estimates on 2012/13 crop production around the world, including thoughts on our own EU wheat crop this year. It's a bit like Christmas, except all the presents are numbers.

Talking of numbers, here's a few for you. About to expire May 12 Paris wheat staged a remarkable and clearly technical late rally yesterday to close at EUR228.50/tonne, a level not beaten by a front month since June 2011. In stark contrast May 12 Paris malting barley closed below EUR200.00/tonne for the first time for a front month since July 2010 last night!

Ukraine has exported 18.4 MMT of grains so far this marketing year, almost double the volume shipped in 2010/11, with corn accounting for more than 61% of that total.

India is reported to be actively looking to offload some of its surplus wheat stocks to its near neighbours.

Oh look, it's raining again. It's not just here though, France had its fifth-wettest April since 1959, according to Meteo France with rain totals in April 70% above normal. That redresses winter drought and means that the vast majority of the country has now had close to normal rainfall in the Sep/Apr period, they say.

Chicago Falls On Outside Influences, Book Squaring

09/05/12 -- Soybeans: May 12 Soybeans closed at USD14.27 3/4, down 10 cents; Nov 12 Soybeans closed at USD13.33 1/2, down 7 cents; May 12 Soybean Meal closed at USD414.90, down USD1.70; May 12 Soybean Oil closed at 52.46, down 44 points. Beans fell for the third session in a row, with funds shedding a further 4,000 contracts of their substantial length in nervousness ahead of tomorrow's USDA report and in general commodity jitters. Greece is principally responsible for the latter once more. Trade estimates for tomorrow's US 2011/12 stocks report for soybeans are 221 million vs the USDA's 250 million last month. For 2012/13 US soybean stocks are expected to fall to 170 million bushels. World 2011/12 soybean ending stocks are forecast at 52.96 MMT from 55.52 MMT last month. South American production numbers will be scrutinised, with Argentina's soybean crop expected to be cut from 45 MMT in April to 42 MMT. Weekly export sales are expected to be robust at 1.2-1.4 MMT, with China/unknown a featured buyer.

Corn: May 12 Corn closed at USD6.41 1/4, down 24 3/4 cents; Dec 12 Corn closed at USD5.16 3/4, down 11 1/4 cents. Strong rumours that China had bought anywhere from 4-8 cargoes of old and new crop US corn still couln't save the day. As with soybeans it was outside market influences and book squaring ahead of tomorrow's USDA report that seemed primarily responsible for May 12 losing almost 25 cents. Funds were said to have sold 14,000 corn contracts on the day. The trade is expecting 2011/12 US ending stocks for corn at 758 million bushels vs the April USDA estimate of 801 million. Potentially bumper yields this year though, combined with the largest acreage since the 1930's will see 2012/13 US ending stocks more than double to 1.704 million bushels the trade believes. In South America the trade is looking for an Argentine corn crop of 20.7 MMT (vs 21.5 MMT last month) and a Brazilian corn crop of 62.7 MMT (from 62.0 MMT). Celeres today raised its forecast for the Brazilian corn crop to 65MMT. Weekly export sales are expected to be 1.1-1.3 MMT.

Wheat: May 12 CBOT Wheat closed at USD5.91 1/4, down 17 3/4 cents; May 12 KCBT Wheat closed at USD6.08, down 17 cents; May 12 MGEX Wheat closed at USD7.31 1/4, down 1/2 cent. Wheat remains a follower of corn. Funds sold an estimated 3,000 Chicago contracts on the day with May 12 closing below USD6.00/bushel for the first time for a front month since January. Trade estimates for tomorrow's US 2011/12 stocks report for wheat are 781 million bushels vs the USDA's 793 million in April. For 2012/13 US wheat stocks are seen rising slightly to climbing to 805 million. With the 2012 US winter wheat harvest imminent the USDA are seen pegging US all wheat production this year at an average trade estimate of 2.196 billion bushels (59.8 MMT) versus 1.999 billion (54.4 MMT) last year. They will also release their first estimates on 2012/13 wheat production around the world. This season's world wheat ending stocks are forecast a million tonnes down on last month, although at a still very ample 205.27 MMT.

EU Wheat Mostly Lower On Greek Jitters

09/05/12 -- EU grains finished mostly lower with May 12 London wheat closing down GBP1.00/tonne at GBP173.50/tonne, and Nov 12 falling GBP1.05/tonne to GBP148.90/tonne. May 12 Paris wheat bucked the trend and jumped EUR11.50/tonne to EUR228.50/tonne and new crop Nov 12 fell EUR0.75/tonne to EUR197.25/tonne.

May 12 Paris wheat goes off the board tomorrow, and clearly got very technical at the eleventh hour, so we shouldn't read too much into that. Old crop milling wheat delivered Rouen is trading around EUR205-207.00/tonne - the equivalent of around GBP165-166.00/tonne. New crop wheat to the same destination for July delivery is around EUR197.00/tonne - or just over GBP158.00/tonne.

The pound rose to fresh 3 1/2 year highs against the euro today as Greece is starting to look increasingly likely to baulk at any more austerity and select the default option. Meanwhile Spain says that it is to part nationalise it's fourth largest bank BFA-Bankia after the markets close tonight.

The repercussions over a possible Greek default are seeing spec money exit the grains market, especially ahead of the USDA's reports tomorrow which will include their first ever forecasts for 2012/12 crop production.

EU-27 crop conditions meanwhile have improved significantly in the past 4-5 weeks, with abundant rainfall across the UK, France and Spain. The western half of Germany has also received beneficial moisture, although further east and into Poland things are looking less rosy.

In the midst of their 2012 wheat harvest India’s food ministry report that the country’s food grain stocks as of May 1 are 71.1 MMT, more than three times the required buffer amount, with stocks likely to rise to 80 MMT as the harvest wraps up. They have today signed a trade agreement with Iran which will probably act as a precursor for them to export as much as 4 MMT of wheat to the Arab nation weighed down by sanctions from the West.

The US winter wheat harvest has already begun in periphery southern states and will soon be underway in the nation's largest producing state of Kansas, some 3-4 weeks earlier than normal. Bumper output is expected with crop conditions far better than they were a year ago.

Early Call On Chicago

09/05/12 -- The overnight gains see beans more than 17 cents down nearby with new crop Nov 12 falling 12 1/2 cents. Corn is unchanged to 3 1/2 cents lower and wheat is down around 3-6 cents. Crude is extending it's losing run to day six, down more than a dollar to USD95.85/barrel, which is over ten dollars below where it closed on the first of the month.

Greece is the word, a Euro exit, a return to the drachma and a messy default has perhaps never looked more likely than it does now. That's why we are seeing fund money pulling out of soybeans despite underlying bullish fundamentals.

Beans are where the bulk of their grains length lies, so that is the one that is most under pressure with the overnight market seeing front month May 12 fall to USD14.20/bu, more than 80 cents below where it was at the end of April.

Yet South American production estimates are falling on a weekly basis, with Oil World yesterday cutting their Argentine soybean forecast by 1.5 MMT and warning that a downgrade for Brazil was also likely. In addition China/unknown are buying US soybeans on a daily basis.

There is now also the risk of an Argentine dock workers strike kicking off as early as tomorrow.

Going into new crop things look bearish for corn and wheat in particular.

Trade estimates for tomorrow's US 2011/12 stocks report are: Corn 758 million bushels vs the April USDA estimate of 801 million; Soybeans 221 million vs the USDA's 250 million last month; Wheat 781 million vs the USDA's 793 million in April.

For 2012/13 US corn stocks are seen rising to 1.704 million bushels, with soybeans falling to 170 million and wheat climbing to 805 million.

In South America the trade is looking for an Argentine corn crop of 20.7 MMT (vs 21.5 MMT last month) and a Brazilian corn crop of 62.7 MMT (from 62.0 MMT). Argentine soybean production is thought likely to fall to 42.0 MMT from 45 MMT and Brazilian soybean output seen at 65.5 MMt from 66.0 MMT

Further fund selling of soybeans ahead of tomorrow's USDA reports looks likely this afternoon, with early calls: beans 14-18 cents weaker, corn down 3-4 cents and wheat 4-6 cents easier.

Ukraine Latest

09/05/12 -- There are plenty of stories around of it being too hot and dry in Ukraine and of crop damage potential there, so I thought I'd check out what my old mucker and man on the ground over there Mike Lee has to say about it.

Handily enough he's just posted something on his excellent blog here:

"April finishes with rainfall and temperatures above average and above this time last year. May has started very warm with daytime temperatures reaching the mid to high twenties. Occasional showers are continuing to water thirsty crops but not so much as to disrupt spring plantings. In summary: marvelous weather, the question is how long will it last?"

Doesn't exactly sound like a crisis just yet then.

EU Rapemeal Prices

09/05/12 -- Rapemeal prices on the continent are mostly a little higher today, partially recovering from steep declines earlier in the week that mirror soybean losses in Chicago.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:

Chicago Closing Comments

08/05/12 -- Soybeans: May 12 Soybeans closed at USD14.37 3/4, down 25 3/4 cents; Nov 12 Soybeans closed at USD13.40 1/2, down 13 cents; May 12 Soybean Meal closed at USD416.60, down USD8.60; May 12 Soybean Oil closed at USD52.90, down 31 points. Funds sold 8,000 soybean contracts on the day, taking the market lower despite bullish fundamentals. Outside markets were a bearish influence in follow through selling in the wake of the weekend election results in Europe. The market is also a bit nervous ahead of Thursday's USDA reports. The USDA announced the sale of 225,000 MT of beans to China split 60,000 MT old crop and 165,000 MT new crop. They also reported the sale of 40,000 MT of new crop soyoil to "unknown". That's seven sessions in a row that they've announced the sale of soybeans to China or "unknown" destinations.

Corn: May 12 Corn closed at USD6.66, up 1 cent; Dec 12 Corn closed at USD5.28, up 3 1/4 cents. Corn closed firmer, but well off session highs, with front month May 12 touching 22 cents higer at one point. May goes off the board next Monday. Funds were said to have bought around 4,000 corn contracts on the day. Old crop remains tight with farmer selling minimal as they busy themselves sowing new crop. There's some suggestion that China may have bought old and new crop corn over the weekend, but there is no official confirmation of this yet. The USDA will give us fresh 2012 world production estimates on Thursday as well as report on US ending stocks which, for corn, it has hitherto been reluctant to drop below the 800 million bushel mark.

Wheat: May 12 CBOT Wheat closed at USD6.09, up 2 3/4 cents; May 12 KCBT Wheat closed at USD6.25, up 5 3/4 cents; May 12 MGEX Wheat closed at USD7.31 3/4, down 3 3/4 cents. Funds were said to have bought around 2,000 Chicago contracts on the day. Export activity is fairly light, Jordan bought 50,000 MT of optional origin wheat in a tender overnight. Tunisia bought 75,000 MT of wheat from an unspecified origin. South Korea bought 112,000 MT of optional origin feed wheat, 92,000 MT of US wheat and 36,100 MT of Australian milling wheat. The USDA are expected to report a sharp rebound in US wheat production on Thursday with an average trade estimate of 2.196 billion bushels (59.8 MMT) versus 1.999 billion (54.4 MMT) last year.

EU Wheat Ends Higher But Lacks Direction

08/05/12 -- EU grains finished higher with May 12 London wheat finishing up GBP2.50/tonne to GBP174.50/tonne, and new crop Nov 12 rising a more modest GBP0.45/tonne to close at GBP149.95/tonne. May 12 Paris wheat ended EUR0.25/tonne higher at EUR217.00/tonne, whilst Nov 12 was EUR3.25/tonne firmer at EUR198.00/tonne.

There seems to be little rhyme or reason to the markets at the moment, they are up for a day or two and then down for a day or two - it's been more than a month since May 12 London wheat closed outside the GBP170's.

These remaining old crop months are pretty illiquid though, new crop Nov 12 London wheat however does seem to be in a trend, and it's downwards, having closed at GBP163.50/tonne in late March. Nov 12 Paris wheat peaked at EUR208.25/tonne at the same time.

Fresh news is thin on the ground. Jordan bought 50,000 MT of optional origin wheat in a tender overnight. Tunisia bought 75,000 MT of wheat from an unspecified origin.

America's harvest is growing ever closer though and all the signs point to good, possibly even record, yields in some states. Spring wheat is also going into the ground in a very timely manner.

Meanwhile US corn planting is at its third fastest pace ever, maturity is massively above normal, 32% now as opposed to just 6% last year. This means that the crop is less likely to be at the crucial pollination stage at the height of the summer heat. It should also be less vulnerable to an early frost too.

The USDA will report on US and world production prospects for 2012 for the first time on Thursday. We've got used to being thrown a surprise or two in recent reports, few would bet against them doing the same again this time round.

Early Call On Chicago

08/05/12 -- The overnight grains are mostly higher with beans up 1-3 cents, corn up as much as 8 3/4 cents nearby and 2-3 cents higher on new crop and wheat up 5-7 cents. Crude oil is almost a dollar lower, extending it's recent losing streak.

Having reported soybean sales to unknown/China every day last week, and again yesterday, the USDA are back again today announcing the sale of 225,000 MT of beans to China split 60,000 MT old crop and 165,000 MT new crop. They are also reporting the sale of 40,000 MT of new crop soyoil to "unknown".

How much longer the market can absorb these daily sales remains to be seen. It will also be interesting to see what these orders do to the USDA's old crop balance sheet projections on Thursday.

Despite seeming to have the most upside potential, it doesn't feel like soybeans are going to put in any significant gains ahead of this report though, given the heavy fund length that exists already.

There's some suggestion that China may have also bought old and new crop corn over the weekend, but there is no official confirmation of this yet.

US corn, soybean and spring wheat plantings are well advanced. So too is winter wheat maturity. That will tempt many to harvest early and double crop with corn, or more particularly soybeans. Informa last week suggested that soybean double cropped acreage will climb by 26% on last year.

Whilst the EU rapeseed crop is forecast to drop sharply to around 17.5 MMT by Rabobank, Canadian and Australian production is seen rising by 14-15%, possibly more in the case of the latter.

With a large US winter wheat harvest almost upon us, upside potential for that looks limited. Old crop corn is undeniably tight, but a probable record crop lies ahead to put new crop under pressure somewhere down the line unless we get a weather scare. Soybeans offer most upside potential given the large reductions in South American production and constant Chinese interest.

Looking further ahead into 2013 Informa last week forecast Brazilian soybean production at a monster 80.5 MMT, with Argentina chipping in with a record 60 MMT of their own as South American producers attempt to cash in on these big prices. In Brazil some of that will be down to new land coming into production, in Argentina it may be partially due to a switch away from wheat.

Early calls for this afternoon's CBOT session: corn 6-8 cents higher old crop and 2-4 cents firmer new crop; soybeans up 1-3 cents and wheat up 4-6 cents.

Chicago Close - Monday

07/05/12 -- Soybeans: May 12 Soybeans closed at USD14.63 1/2, down 11 1/2 cents; Nov 12 Soybeans closed at USD13.53 1/2, down 13 1/4 cents; May 12 Soybean Meal closed at USD425.20, down USD6.90; May 12 Soybean Oil closed at 53.21, down 9 points. Having annouced sales of mostly new crop soybeans to China/unknown every day last week, the USDA began the week reporting 110,000 MT of old crop soybeans to unknown today. Even so, beans gave in to a broad-based sell-off in commodities following the weekend election results in Europe. The Buenos Aires Grains Exchange cut their Argentine soybean production estimate to 41 MMT, more than 8 MMT down on last year. The USDA, who currently have Argentine production pegged at 45 MMT, will issue revised supply & demand estimates on Thursday. Funds, who were said to have been net sellers of 6,000 soybean contracts on the day, may continue to liquidate their length ahead of that report. The USDA reported soybean planting at 24% complete after the close, compared to 11% normally.

Corn: May 12 Corn closed at USD6.65, up 2 3/4 cents; Dec 12 Corn closed at USD5.24 3/4, up 1/2 cent. Corn just about shrugged off outside market influences. The USDA announced 240,000 MT of optional origin new crop corn sold to Mexico and a further 116,000 MT to South Korea. Funds were said to have been net sellers of around 2,000 contracts on the day. After the close the USDA announced that US spring corn planting progress was 71% complete, versus trade expectations for 62-67% done, and well ahead of the five year average of 47%. This is surprising given that widespread Midwest rains last week were thought to have stalled sowings somewhat. Emergence for the early planted crop is running at 32% compared with 13% normally. Ideas are that La Nina has given way to what may prove to be an El Nino weather pattern, which would typically bring cool and wet conditions for the Midwest this summer, could bring record yields when coupled with these early plantings and thus a longer growing season.

Wheat: May 12 CBOT Wheat closed at USD6.06 1/4, up 2 1/2 cents; May 12 KCBT Wheat closed at USD6.19 1/4, up 5 1/2 cents; May 12 MGEX Wheat closed at USD7.35 1/2, down 4 1/2 cents. StatsCanada announced Mar 31 wheat stocks of 14.5 MMT, slightly below expectations and 1.3 MMT less than last year. The USDA will release their first 2012/13 production estimates on Thursday. US wheat output is expected to be around 10% higher with an average trade estimate of 2.196 billion bushels (59.8 MMT) versus 1.999 billion (54.4 MMT) last year. After the close the USDA pegged spring wheat planting well advanced at 84% done versus 49% normally, emergence is also well ahead of the five year average of 17% at 47%. Winter wheat rated good/excellent fell slightly from 64% to 63%, but that is well ahead of this time last year when only 33% of the crop was rated in the top two categories. In Washington 90% of the crop is now rated good/excellent. Hot and dry conditions in parts of Ukraine and Russia are being flagged up as potential problem areas for wheat.

EU Wheat Closing Comments

07/05/12 -- EU grains finished mostly lower although London wheat was closed for a belated May Day holiday. May 12 Paris wheat ended down EUR3.25/tonne at EUR216.75/tonne, new crop Nov 12 was down EUR1.00/tonne to EUR194.75/tonne.

For new crop Nov 12 Paris wheat this was the lowest close in two months as the coming season's harvest hopes rise on improving prospects in Western Europe and the US.

Much of the SE of England, and most of France and Spain have had between two and six times their normal rainfall totals in the past 14 days, according to Martell Crop Projections.

US production hopes have also improved significantly since winter wheat went into dormancy, with abundant rains in recent months boosting hopes that the top producing state of Kansas will have a record yield this year.

Weekend election results in France and Greece knocked the euro to its lowest levels against the pound since November 2008. New French PM Francois Hollande is likely to less willing to climb into bed with German Chancellor Angela Merkel than the ousted Nicolas Sarkozy.

That potentially threatens the uneasy accord that has been struck within the fiscally mired Eurozone of late. Meanwhile Greece faces political and financial turmoil after the pro-austerity parties took a thrashing at the polls.

The market is already suggesting that a new coalition Greek government is unlikely to have enough support from the pro-austerity sector to push through the necessary spending cuts needed to qualify for the next tranche of EU bailout funding.

With each week that passes the new 2012/13 marketing year gets closer. The USDA will issue their first production estimates for the coming season on Thursday this week. US analytical firm Informa Economics on Friday forecast word corn production in 2012/13 at a record 932 MMT, which is 67 MMT (or 7.6%) up on last year. That's well above the IGC's April estimate of 900 MMT.

Interesting Chart Of The Day

06/05/12 -- Whilst updating a plethora of charts over the weekend for various discerning clients I got myself thinking about fertiliser, Urea specifically, as I have some historical price data on that going back a few years.

I found myself wondering how much correlation there is between the price of wheat and the price of urea. I mean I can't be the only one who's wondered in an idle moment if basically it isn't really just priced at what the producers think that the market will stand.

Let me say right here that I what I know about the fertiliser market fundamentals is four fifths of bugger all. What I have noticed though is that the price seems to follow the price of wheat on a delayed reaction basis.

The price of oil, demand from China, the Indians haven't bought yet, you'd better get your order in now or it will all be gone we've only got a couple of lorry loads left are all great selling points aren't they?

So anyway, as I was updating my FOB Black Sea urea chart I noticed that prices are now matching last summer's highs - the highest that they've been since I started keeping tabs on them at the start of 2010. On that basis alone it would seem unlikely to me that this is indeed a great time to buy.

You can click the chart to enlarge it. What I've noted for you is that over the past eighteen months or so we've had three significant lows on London wheat:

A: Mar 2011-  in the aftermath of the Japanese earthquake, tsunami and nuclear scare.

B: Jun 2011 - financial melt-down on fears of a Greek debt default.

C: Dec 2011 - the bottom of the recent market when London wheat fell to GBP140/tonne.

All three of these events were matched by a subsequent dip in Urea prices between one and two months later. Coincidence? Maybe.

During this period the highs for London wheat were set:

1: Apr 2011 - the all time high close for London wheat, helped by erm, let's call it "technical market conditions" shall we?

2: Aug 2011 - just before we all realised that despite the drought we were actually going to end up with a decent crop after all.

3?: Apr 2012 - are the old crop highs now in? We don't know, but we can say that prices were higher in April than they had been at any time since last June so let's call it a high for now.

It seems that the Apr 2011 wheat high was met by a subsequent Urea high set in June of last year. The Aug wheat high was followed by a Urea price rally that peaked in late September. Once London wheat peaked last summer it was, like my marriage to MrsN#1, downhill all the way to the mid-December lows. Urea mirrored that decline, starting a month or so later and finishing the first week of February around six weeks after wheat had bottomed.

So the first two of these three of these events were matched by a subsequent peak in Urea prices between one and two months later. Double coincidence? Double maybe.

Supposing wheat has peaked, or that it will do so this month, the odds seem to be stacked in favour of a Urea high being just around the corner. But what do I know? Four fifths of bugger all. It's an interesting theory though, and one I will be monitoring over the next few months.