Chicago Closing Comments - Friday
03/08/12 -- Soycomplex: Aug 12 Soybeans closed at USD16.56 1/4, up 3 1/4 cents; Nov 12 Soybeans closed at USD16.28 3/4, up 12 1/4 cents; Aug 12 Soybean Meal closed at USD531.60, up USD7.90; Aug 12 Soybean Oil closed at 52.04, up 50 points. For the week that puts Aug 12 beans 28 cents lower, with Nov 12 beans 27 cents higher. Meal is up USD3.90 and soybean oil unchanged. Farm Futures Magazine estimated the 2012 US soybean crop at 2.696 billion bushels using a yield figure of 35.8 bushels/acre, 11.6% lower than the USDA's current 40.5 bpa forecast. Informa says that it sees USDA estimating the US soybean yield at 37.2 bpa next Friday, with production pegged at 2.791 million bushels. Lanworth Inc estimated US soybean yields at 34.5 bpa from 35.7 bpa only a week ago. Funds were said to have been net buyers of around 6,000 soybean contracts on the day.
Corn: Sep 12 Corn closed at USD8.10, up 16 cents; Dec 12 Corn closed at USD8.07 1/2, up 11 3/4 cents. For the week that puts Sep 12 corn 11 1/2 cents higher, with Dec 12 gaining 14 1/4 cents. Funds were estimated at being net buyers of around 10-12,000 contracts on the day. As with soybeans, private production estimates are lining up well below last month's USDA numbers ahead of next Friday's revised forecasts coming out. The normally conservative Informa estimated US corn production at just 10.338 billion bushels using a yield figure of only 120.7 bushels/acre, fully 17% below last month's USDA yield estimate of 146 bpa. Farm Futures estimate came in even lower, they are now estimating the 2012 US corn crop at only 9.57 billion bushels, using a yield of 114.0 bpa, that's almost 22% down on the USDA's July forecast. Mexico made its biggest one day purchase of US corn in over 20 years yesterday in what some are describing as the first "panic buy" of the season concerning the rapid decline in outlook for the US crop.
Wheat: Sep 12 CBOT Wheat closed at USD8.91 1/4, up 26 1/4 cents; Sep 12 KCBT Wheat closed at USD8.93, up 24 cents; Sep 12 MGEX Wheat closed at USD9.47, up 20 1/2 cents. Fund buying was estimated at 5,000 contracts in Chicago wheat. On the week overall CBOT wheat fell 6 3/4 cents, Kansas fell 13 cents and Minneapolis dropped 25 cents. Wheat gained on spillover support from corn and a weaker US dollar. South Korea imported a record 5.2 MMT of wheat in 2011/12, according to the USDA attaché there, of that total 2.0 MMT came from the US. Rains in the past week have slowed Argentine farmers' wheat plantings in Buenos Aires province, the country's top wheat region, according to the Buenos Aires Grains Exchange. Plantings are expected to be down this year as other crops offer potentially more lucrtive returns, and due to growers continued displeasure with potential government intervention in the grain markets. Reduced wheat production prospects in the Black Sea should offer improved export hopes to US wheat, at least in the second half of 2012/13.
EU Wheat End Of Week Report
On the week overall Nov 12 London wheat added GBP4.30/tonne and Nov 12 Paris wheat gained EUR3.25/tonne. As you can see that means that most, if not all, the week's gains came today on spillover support from firmer US grains.
Drought or no drought, customs data shows that Russia made a bright start to the 2012/13 export campaign shipping out 2 MMT of grain during the first month of the new season - it's second highest ever total for the month. August exports are likely to be even higher at 2.5 MMT, according to SovEcon.
At this rate they will hit their anticipated export ceiling of 13-14 MMT before the end of the year, around half of the volume exported in 2011/12. It seems likely therefore that Russia will effectively be out of the market in the New Year.
The Russian government meet next week to discuss the situation.
Down Under, customs data shows that Australia exported 2.34 MMT of wheat in June - up 63% from June 2011.
EU exports meanwhile are off to a sluggish start, with Brussels only issuing export licences for 135 000 MT of wheat this week, bringing the cumulative total for the season so far to only 748,000 MT, 32% down compared to 1.1 MMT at the same stage last year.
Morocco did at least buy 300,000 MT of EU wheat in a tender today.
Across the pond the US drought continues. Iowa had its third hottest and third driest July on record. Illinois had the second hottest and fourth driest July on record. The USDA are out next Friday with revised crop production estimates.
August Paris malting barley went off the board today. August corn follows suit on Monday and August milling wheat next Friday.
Chicago Closing Comments - Thursday
02/08/12 -- Soycomplex: Aug 12 Soybeans closed at USD16.53, down 29 1/4 cents; Nov 12 Soybeans closed at USD16.16 1/2, down 12 1/2 cents; Aug 12 Soybean Meal closed at USD523.70, down USD13.50; Aug 12 Soybean Oil closed at 51.54, down 19 points. Funds sold an estimated 7,000 soybean contracts on the day as outside influences weighed. Disappointment that neither the Fed nor the ECB were prepared to fire up the presses and print more money just yet generated a bit of "risk off" mode. The Chinese government announced that they had sold 400,907 MT of soybeans from their state reserves, the largest weekly sale in two years. Weekly export sales were below trade expectations of 250-600 TMT at 194 TMT of old crop and 52,400 MT of new crop. "Near normal temperatures are predicted in the 5-day forecast. This would be the first time since since late May that temperatures were NOT above average. The 5-day rainfall forecast is not too impressive, calling for .10 to .50 inch of rain in the Midwest corn and soybean belt. The average weekly rainfall in August is near .90 inch," say Martell Crop Projections. Brazil has exported 22.92 MMT of soybeans in the Jan–Jun time frame - 87% of their expected total exports.
Corn: Sep 12 Corn closed at USD7.94, down 6 1/2 cents; Dec 12 Corn closed at USD7.95 3/4, down 4 3/4 cents. Funds were said to have been sellers of around 5,000 corn contracts on the day, bringing their net sales to around 20,000 in the last three sessions. Weekly export sales were 178,400 MT for 2011/12 and 23,000 MT for 2012/13 delivery versus trade estimates of 0-250 TMT. China was noted to have cancelled a cargo of corn. Mexico bought almost 1 MMT of new crop US corn and over half a million of the 2013/14 crop. "July rainfall averaged only 1.72 inches and 46% of normal, based on unofficial data. Temperatures were the hottest in more than 60 years, 79.9 F and 6.4 degrees F above average. Very stressful pollinating conditions means corn damage is irreversible. Yields will be historically low from shrunken ears, reduced kernels from unsuccessful pollination and light test weights," say Martell Crop Projections. The USDA attaché in China estimates China’s 2012/13 corn crop at 195 MMT, up 1% from 2011/12.
Wheat: Sep 12 CBOT Wheat closed at USD8.65, down 14 1/2 cents; Sep 12 KCBT Wheat closed at USD8.69, down 15 cents; Sep 12 MGEX Wheat closed at USD9.26 1/2, down 11 1/2 cents. Weekly export sales of 516,200 MT of old crop and 4,500 MT of new crop were in line with expectations for sales of 400-600 TMT. Funds were estimated to have been net sellers of around 3,000 Chicago wheat contracts on the day. The winter wheat harvest in Canada has started early and yields are so far coming in 15 to 30 bushels above normal. The USDA attaché in Canada estimates the 2012/13 grain crop at 50.6 MMT, up 8% from a year ago. The size of the Russian wheat harvest is till open to much debate with estimates anywhere from 43-50 MMT. The InterFax agency estimated Ukraine’s 2012/13 grain crop at 45.0 MMT versus 56.7 MMT a year ago. Both are active sellers of wheat, although perhaps tellingly neither appear to be offering wheat for shipment beyond October. The USDA attaché in China estimates China’s 2012/13 wheat crop at 108.0 MMT versus 117.4 MMT in 2011/12. Japan bought 141 TMT of milling wheat in their regular weekly tender, including 108 TMT tonnes from the US and 33 TMT tonnes from Australia.
EU Grains Mixed As Harvest Results Filter Through
02/08/12 -- EU grains finished mixed with Nov 12 London wheat down GBP0.50/tonne to GBP188.50/tonne and Nov 12 Paris wheat up EUR0.75/tonne to EUR256.00/tonne.
Fresh news was fairly thin on the ground today. The InterFax news agency, quoting the Russian Ag Minister, said that they may lower their 2012 grain production estimate to 70-75 MMT versus 94 MMT in 2011 and a previous estimate of 75-80 MMT.
InterFax also said that Russia’s total 2012/13 grain exports are now estimated at 12 MMT versus the previous estimate of 16 MMT.
It seems that the government estimates are now lining up at the low end of what other market observers think.
The USDA attaché in Russia estimates Russia’s 2012 grain crop significantly higher at 81.0 MMT, including 47 MMT of wheat, 15 MMT of barley and 7.5 MMT of corn. Grain exports are pegged at 15.0 MMT, including 11 MMT of wheat, 2 MMT of barley, and 1.5 MMT of corn.
SovEcon, the respected analytical firm, weighed in with a wheat estimate of 46.5 MMT this week.
The grain harvest last year was around 94 MMT, of which 56 MMT was wheat. Total grain exports in 2011/12 were around 28 MMT, including 21.3 MMT of wheat.
At home, harvesting of winter barley and oilseed rape started about 7-10 days later than normal with about 40% of the winter barley and almost 20% of the winter oilseed rape area harvested by 31 July, mostly in southern England, say the HGCA. Wheat harvested is expected to start in the next 7-10 days, they add.
"Early indications are that UK winter barley yields are close to average at around 6.3 MT/ha with improved yields from normal on light land. Quality is variable," they say.
"Early indications are that UK rapeseed yields are close to the five year average at around 3.5 MT/ha, lower than the record yield of 3.9 MT/ha in 2011," they conclude.
Meanwhile the German Farmers Union (DBV) say that the winter barley harvest there is nearly complete, with yields averaging 6.3 MT/ha. The rapeseed harvest is around 70% done with yields averaging 3.3 MT.ha, they add.
Chicago Market Modestly Lower Wednesday
Corn: Sep 12 Corn closed at USD8.00 1/2, down 6 cents; Dec 12 Corn closed at USD8.00 1/2, down 4 3/4 cents. Fund selling was estimated at 5,000 contracts on the day. The consensus of opinion is that rains now would do little, if any good for corn. The only question now is how small is this US crop going to be? A Reuters survey yesterday said 11.166 billion bushels from within a range of estimates of 10.5-11.823 billion and versus the USDA estimate of 12.970 billion and 2011 production of 12.358 billion. That would represent a drop of almost 9% despite an increase in plantings. Momentum seems to be gathering for some political intervention to reduce the ethanol mandate. Congressmen are holding a press conference on Thursday to urge EPA to reduce the RFS. Export interest is drying up at these levels, and with old crop stocks hard to find. Trade estimates for tomorrow's weekly export sales are between zero and 250 TMT. Last week's sales were negative for both old and new crop you may recall, the first time that has happened in more than 20 years.
Wheat: Sep 12 CBOT Wheat closed at USD8.79 1/2, down 8 3/4 cents; Sep 12 KCBT Wheat closed at USD8.84, down 8 1/2 cents; Sep 12 MGEX Wheat closed at USD9.38, down 15 3/4 cents. Fund selling was estimated at 2,000 Chicago contracts on the day. Russia’s Prime Minister said that Russia will NOT curb wheat exports, although the government still plans to meet on August 8th to discuss the issue. Some reports suggest that they have said that they will not be introducing export tariffs either. Algeria bought 400-500 TMT of unconfirmed origin wheat, thought to be French, at levels that calculate out as being well below US offers. Early Canadian winter wheat yields are said to be coming in at 80-100 bushels per acre versus typical yields of 65-70 bushels per acre. Estimates for tomorrow's weekly export sales report are 400-600 TMT.
EU Grains Lower On Improved French And German Crops
Wheat prices faltered on better production prospects in France and Germany based on early harvest results and reports on Reuters of a Russian government source saying that the wheat crop there could still come in at 50 MMT versus the 45 MMT that the trade currently seems to have factored in.
That would still give Russia a wheat exportable surplus in the region of 11-15 MMT. A wheat crop of 50 MMT would only be not much more than a 10% decline from last year's crop, and a much better result than the trade is expecting. Unnamed Russian officials though are hardly the most reliable source of information.
A Russian government meeting to discuss the grain market is still scheduled for next week. Despite what is expected to be sharply lower output in 2012 they have still begun the new season as fairly aggressive sellers. The government may be pondering a way of curbing that enthusiasm without going the whole hog and introducing an outright export ban.
From a more reliable source, the French Farm Ministry upped it's forecast for soft wheat production there by a hefty 1.6 MMT to 36.7 MMT, some 8% up on last year. Wet weather since April has been favourable for yields, they said. They did however note that question marks remain over quality due to these conditions.
With a durum wheat crop of 2.4 MMT that should produce a French all wheat crop in excess of 39 MMT this year compared to 36 MMT in 2011.
Wheat isn't the only crop that has done well in France this year, the Ministry also increased their estimate for 2012/13 domestic barley production to 11.3 MMT, including an 80% increase in spring barley output, for a 28% rise on last season's barley crop.
Elsewhere FC Stone Europe said Germany is also seeing better than expected yields.
Ukraine state weather forecaster estimated Ukraine’s 2012 corn crop at 20.0 MMT versus it's previous estimate of 21.0 MMT and the USDA's forecast of 24.0 MMT.
Chicago Closing Comments - Tuesday
31/07/12 -- Soycomplex: Aug 12 Soybeans closed at USD17.21, down 4 3/4 cents; Nov 12 Soybeans closed at USD16.41, down 2 1/2 cents; Aug 12 Soybean Meal closed at USD544.70, down USD1.60; Aug 12 Soybean Oil closed at 52.55, down 2 points. It was a choppy two-sided session with beans and the products settling mixed in what looked like month-end trade. Funds were said to have sold 2,000 soybean contracts on the day. Meal made a new historic high overnight of USD554.20 versus the old high of USD552.00 but failed to hold onto those gains in the day session. FC Stone’s vice president of commodities forecast the 2012 US bean yield at 37-38 bpa but said the soybean yield could go as low as 34-35 bpa if there is no rain in Midwest the next 2 weeks.
Corn: Sep 12 Corn closed at USD8.06 1/2, down 13 1/2 cents; Dec 12 Corn closed at USD8.05 1/4, down 8 3/4 cents. Funds were said to have been net sellers of around 9,000 corn contracts on the day in what also looked like month-end profit-taking and book squaring. FCStone forecast the 2012 US corn yield at 132-138 bpa. Taiwan bought 60,800 tons of Brazilian corn for Oct/Nov shipment. Based on a Reuters poll of 13 analysts the 2012 US corn yield is estimated at 129.0 bpa (a 14 year low). Based on the same survey 2012 US corn production is estimated at 11.2 billion bushels (a 6 year low). The latest weather forecasts offer the possibility of more frequent rains over the course of the next couple of weeks, although how much good that will do for corn now is debatable.
Wheat: Sep 12 CBOT Wheat closed at USD8.88 1/4, down 26 1/4 cents; Sep 12 KCBT Wheat closed at USD8.92 1/2, down 24 1/2 cents; Sep 12 MGEX Wheat closed at USD9.53 3/4, down 23 cents. Wheat also gave in to month-end activity with funds cashing in an estimated 5,000 Chicago longs on the day. Russia’s Ag Minister estimated Russia’s 2012 grain crop at 80 MMT versus a previous estimate of 80-85 MMT and 94.0 MMT in 2011. Weather concerns remain for the Black Sea region and Southeast Australia. Yet Russia picked up a South African wheat order and Ukraine filled an order for 100,000 MT of wheat to Jordan today. Customs data shows that Russia exported 975 TMT of wheat in July versus 1.30 MMT of wheat a year ago. Talk continues that Russia may limit grain exports, the government there will hold a meeting on August 8th to discuss Russia’s grain situation.
EU Wheat Closing Comments - Tuesday
31/07/12 -- EU grains finished mixed with Nov 12 London wheat down GBP0.05/tonne to GBP191.95/tonne and Nov 12 Paris wheat down EUR4.75/tonne to EUR257.50/tonne.
Most pundits are now forecasting a Russian wheat crop of only around 45 MMT this year, versus the existing USDA estimate of 49 MMT and output of 56 MMT last year.
Things look a bit better in Ukraine however, where the harvest is already 90% complete, where the wheat crop looks set to come in at around 14 MMT, which is 1 MMT more than the latest USDA estimate, although still well below the 22 MMT produced last year.
Kazakhstan's wheat harvest was forecast at 12 MMT, which 1 MMT below the official USDA forecast by the USDA's bureau in Astana, the Kazakh capital. However, the large volume of leftover stocks from the 2011 record harvest will see exports of 7.5 MMT, which is 0.5 MMT more than the USDA's latest forecast, they added.
Things also seem a little brighter for rapeseed, where Oil World yesterday raised their EU-27 production estimate by 0.8 MMT to 19 MMT. That's 1 MMT more than the USDA's latest forecast and only marginally down on last year.
Much better anticipated yields than last year in Germany are largely responsible now that the harvest is in full swing. French yields also look like increasing modestly, although those in the UK will dip, they forecast.
Winter wheat harvesting in the US has slowed up considerably in recent weeks, from a frenetic early pace. The USDA said last night that 15% of the winter wheat crop was still in the ground compared to 19% normally. Spring wheat harvesting meanwhile is 28% done compared to just 3% normally.
Chicago Closing Comments - Monday
30/07/12 -- Soycomplex: Aug 12 Soybeans closed at USD17.25 3/4, up 41 1/2 cents; Nov 12 Soybeans closed at USD16.43 1/2, up 41 3/4 cents; Aug 12 Soybean Meal closed at USD546.30, up USD18.60; Aug 12 Soybean Oil closed at 52.57, up 53 points. Beans began the week sharply higher after weekend US rains disappointed and the forecast turned warmer and drier for the week ahead. Meanwhile old crop exports keep on going, tightening the 2011/12 balance sheet. The USDA weekly export inspections report came in at 15.498 million bu, more than double from the same week a year ago. Funds bought an estimated net 12,000 soybean contracts on the day. The USDA reported good/excellent soybeans at 29%, down two points on a week ago.
Corn: Sep 12 Corn closed at USD8.20, up 21 1/2 cents; Dec 12 Corn closed at USD8.14, up 20 3/4 cents; Funds were said to have been net buyers of around 16,000 corn contracts on the day following another disappointing weather weekend. The forecast for the week ahead currently offers little in the way of optimism. "Sizzling hot temperatures occurred again last week in the United States heartland. July temperatures may turn out to be the hottest since 1955, based on preliminary data. Extreme heat has been present for 5 consecutive weeks, coinciding with the critical pollination period in corn. Damage to the corn yield will be irreversible, since kernels not successfully fertilized would never develop into grain. The USDA cut good/excellent crop ratings by two percentage points to 24%.
Wheat: Sep 12 CBOT Wheat closed at USD9.14 1/2, up 16 1/2 cents; Sep 12 KCBT Wheat closed at USD9.14 1/2, up 8 1/2 cents; Sep 12 MGEX Wheat closed at USD9.75, up 3 cents. Funds were said to have been net buyers of around 3,000 Chicago wheat contracts on the day. Ideas that sharply lower Russian wheat production this year is unlikely to see them aggressive in the export marketplace for very long this season are supportive. Quality concerns over European output too may help US wheat regain some market share into the north African market it has been locked out of for 12 months or more. Egypt are expected to restart tendering for wheat next month. The USD reported spring wheat good/excellent crop conditions at 63%, up 3 points from last week. Winter wheat harvesting is grinding along slowly at 85% done after rapid early progress.
EU Wheat Up On Crop Concerns, Black Sea
30/07/12 -- EU grains finished sharply higher with Nov 12 London wheat up GBP4.50/tonne to GBP187.25/tonne and Nov 12 Paris wheat EUR4.50/tonne firmer at EUR262.50/tonne.
European crop concerns, at least over quality, are adding to the realisation that sharply lower Black Sea output for the second year in three means that they are not going to be the force to be reckoned with that they were in 2011/12.
Despite mopping up a flurry of recent tenders it is looking increasingly likely that Russia, Kazakhstan and Ukraine will be hanging up the sold out signs much earlier than normal this season, despite the Ukraine Ministry saying that they have carried over around 10 MMT of grain from last season into this new crop.
The non-cooperative European weather across the winter and spring/early summer is also raising doubts over production prospects here.
On Friday the HGCA reported: "Winter wheat quality could be very variable this season. There are increasing levels of fusarium in crops which could result in high levels of mycotoxins along with shrivelled grain and low specific weight. Low Hagberg Falling numbers, normally associated with delays in harvest, may also be prevalent due to the low temperatures during grain fill. Protein levels are very site and management dependent."
There are potential problem areas too for barley, with highly variable crops being reported. Already I have heard of everything from "the best crop I've ever harvested" to "one of my worst in recent years" amongst the early barley harvest.
In addition the HGCA report "Oilseed rape yields are unlikely to reach the record yields of 2011 due primarily to high levels of lodging." I think we can already say with confidence that yields will be well below last season.
The same yield and disease problems are likely to be replicated in Germany and possibly northern France too.
Algeria has announced a tender for wheat. It will be interesting to see if that gets filled by France, which is what you would normally expect, as a barometer to test if EU wheat prices are still competitive into north Africa.
