Chicago Close - Soybeans The Leader
24/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.37 1/2, up 10 1/4 cents; Nov 12 Soybeans closed at USD17.31 1/2, up 16 1/2 cents; Sep 12 Soybean Meal closed at USD533.40, up USD5.60; Sep 12 Soybean Oil closed at 56.24, up 12 points. Funds fancied adding to their length heading into the weekend and were said to have been net buyers of around 6,000 contracts on the day. For the week, Sep 12 beans were 66 1/2 cents higher, with Nov 12 beans up 85 3/4 cents. Sep 12 meal added USD10.70 ans Sep 12 oil 313 points. Taiwan bought three cargoes totalling 173,000 MT of US and Brazilian soybeans for November, March and July shipment. The IGC yesterday pegged world soybean production at 255 MMT in 2012/13, around 5.5 MMT lower than the USDA's current estimate. Brazil will produce 76 MMT, they said, which is 5 MMT less than the USDA said earlier this month, although more than 10 MMT up on this year's drought reduced crop. After the close the Pro Farmer Crop Tour placed 2012 US soybean yields at 34.8 bu/acre, with production at 2.6 billion bushels. Both numbers are around 3.5% down on the USDA's yield of 36.1 bpa and a production number of 2.692 billion bushels issued a fortnight ago, and according to them crop conditions have improved slightly since then. China will auction off another 400,000 MT of government-owned soybeans in the coming week in an attempt to cap domestic price rises. Market rumour suggests that China bought over 1.0 MMT of US beans this week.
Corn: Sep 12 Corn closed at USD8.02 1/4, down 6 1/2 cents; Dec 12 Corn closed at USD8.08 1/2, down 6 1/4 cents. For the week that places Sep 12 corn 4 cents higher, with Dec 12 up just 1 1/4 cents. Unlike soybeans, corn seems to be struggling to add to the upside, with funds net sellers of an estimated 7-8,000 corn contracts on the day. Based on tonight's close new crop Dec 12 corn is only 3 1/4 cents higher on the month of August than it began it, whilst new crop Nov 12 beans have shown a net gain of 90 1/2 cents. Weekly US corn exports remain sluggish at these levels, whilst soybean exports are robust, seemingly almost unaffected by price. US corn faces competition on the export arena from the likes of Brazil, and also soon from what will be a newly harvested Black Sea corn crop, whilst for soybeans the US has the market more or less to itself. The IGC pegged Ukraine's 2012 corn crop at 20 MMT, a little below the USDA's 21 MMT and 21.2 MMT from MDA CropCast. Ukraine, Brazil and Argentina are expected to export around 43 MMT of corn between them in 2012/13, almost 10 MMT more than the US who are projected to have their lowest export volume since 1985/86 in the coming season. The Pro Farmer Crop Tour wound up by giving us a final projected US corn yield of 120.25 bu/acre after the close, with production set at 10.478 billion bushels, some 2.8% lower than the current USDA estimate. In English money that's an output of just over 266 MMT, some 9 MMT less than the IGC's estimate of 275 MMT released yesterday.
Wheat: Sep 12 CBOT Wheat closed at USD8.67 1/2, down 7 cents; Sep 12 KCBT Wheat closed at USD8.76 1/4, down 6 3/4 cents; Sep 12 MGEX Wheat closed at USD9.18 1/2, down 2 cents. On the week Chicago wheat was 7 cents lower, with Kansas wheat down 9 1/4 cents and Minneapolis 9 cents easier. Funds were said to have been net sellers of around 3,000 CBOT wheat contracts on the day. HRW wheat farms in Kansas and Oklahoma are expecting good rains over the coming days that should improve field moisture for seeding. "Statistics Canada projected a record large 2012 Canadian wheat harvest this week, due largely to a 9.7% increase in plantings," said Martell Crop Projections. Similar to here in Europe, crop conditions look variable. "Excessive wetness in Saskatchewan, the top wheat province, is a threat to grain quality and yields. Since April 1, west central Saskatchewan has received 150-200% of normal rainfall. Alberta growers meanwhile anticipate an excellent harvest. Conditions Aug 7, the most recent provincial crop report, were 88-89% good-excellent in spring wheat and canola. This is Canada’s largest canola province and second biggest wheat grower. Manitoba crops were adversely affected by extreme July heat in the flowering and grain filling stages. Spring wheat and canola quality was very good, but a smaller seed size is expected to reduce the yield," they add.
EU Wheat Consolidates Ahead Of Weekend
24/08/12 -- EU grains ended mixed, but mostly lower, with Nov 12 London wheat down GBP2.70/tonne to close at GBP203.70/tonne and with Nov 12 Paris wheat EUR3.75/tonne easier at EUR260.25/tonne.
For the week Nov 12 London wheat still added GBP3.45/tonne, although its Paris counterpart shed EUR2.50/tonne. That reflects UK wheat production estimates declining, whist those across the Channel are rising.
European jitters are starting to resurface, keeping traders nervous. The Greek Prime Minister met with German Chancellor Angela Merkel in Berlin today, apparently asking for more time than previously agreed to comply with economic reforms. He's due to fly into Paris tomorrow to plead his case further to French President Hollande.
Meanwhile there's continued talk that the Spanish government may be the next to formally ask the Eurozone for aid. Its ailing banking sector got a handout earlier in the summer, but the government themselves have thus far managed to dodge the bullets.
After the meteoric rise in wheat prices (and those of corn, soybeans and rapeseed too) over the past eight months there seem to be a few around, amongst the speculative fraternity at least, willing to bank a few profits at these lofty heights.
The HGCA said that this year's delayed UK wheat harvest is "on par with that of 2008." Adding that final yields and quality remain uncertain, tentatively placing the former in the 7.1-7.5 MT/ha range, significantly below the 5-year average of 7.8 MT/ha.
In contrast, winter barley yields are good and should beat the 5-year average of 6.3 MT/ha, they add.
On the continent, German trading house Toepfer said that the wheat crop there would come in at 22.8 MMT, very similar to last year's 22.7 MMT in 2011 and a little above the USDA's estimate of 22.5 MMT. Their figure is almost a million tonnes higher than that of the German Farmers' Associations 21.9 MMT released earlier in the week.
Toepfer were also bullish on rapeseed production potential, pegging the German crop almost 33% higher than last year at 5.16 MMT, with full EU-27 output forecast at 19.64 MMT, a 3% increase on last year. They estimate the UK rapeseed crop at 2.49 MMT, a 10% reduction on last year. The HGCA say that thanks to an increase in the planted area the UK rapeseed crop could still be sizeable, although oil contents appear to be lower this year.
Russia's wheat crop keeps shrinking as harvesting progresses into the Urals and Siberia. The IGC cut their Russian wheat production estimate 4 MMT to 41 MMT yesterday, a drop of around 27% on last year. Even so, that's still around 2 MMT higher than the likes of SovEcon (39 MMT) and MDA CropCast (39.3 MMT), suggesting that further reductions could still be on the cards next month.
The Morning Paper
24/08/12 -- The overnight electronic market is doing it's best to recover some of last night's losses I see, with beans 12-17 cents firmer, corn up 3-5 cents and wheat up a similar amount.
Toepfer have released some crop production estimates, pegging the EU-27 rapeseed crop at 19.64 MMT, which they make as being a 3% increase on last year (and more than 1 MMT higher than the USDA currently say). This is almost entirely due to a sharp rebound in German output to 5.16 MMT, up by almost a third on last year's 3.89 MMT, Last season's crop was a total bummer you will recall.
Interestingly their estimate is miles above the German Farmers' Association figure of only 4.4 MMT released earlier this week. Now far be it from me to suggest that the German equivalent of the NFU would be lie through their back teeth in the interest of their members, so I won't. Let's just say that their estimate is well below everybody else's.
Toepfer peg the UK rapeseed crop at 2.49 MMT, which would be over 10% down on last year's bumper harvest, and probably about right.
Elsewhere the French oilseed institute Cetiom say that the rapeseed crop there will exceed 5.45 MMT, a modest increase on last year's 5.37 MMT, and slightly above the USDA's 5.36 MMT and FranceAgriMer's 5.3 MMT.
Toepfer see Europe's fourth largest rapeseed producer, Poland, as seen having a crop of 1.85 MMT, about the same as last year and 200,000 MT above the USDA's estimate.
Toepfer also estimated Germany’s 2012 wheat crop at 22.8 MMT vs. 22.7 MMT in 2011 and the USDA's 22.5 MMT.
The results of the Pro Farmer Crop Tour are out this afternoon and may provide some market direction at the end of a week that hasn't had a great deal of fresh news. As ever whether the funds fancy trimming some of their longs, or adding to them, going into the weekend is likely to be the determining factor.
The European debt storm clouds seem to be gathering again, with France and Germany in particular showing signs of reaching the end of their tether with Greece. Citigroup yesterday said that there was a 90% of a Grexit within the next 12-18 months. Jesus, do we still have to wait that long for a resolution to this whole sorry mess?
This is still the number one factor that could cause a major market reversal in my humble opinion, if it ignites a major flight to safety, as I think it would.
Yes, I know about the Russian drought, the US drought, and all the other underlying and undeniably bullish market fundamentals. With those in place, and Greece, Spain, Italy and the rest all managing to keep their heads above water and fund money continuing to support the market then we could most certainly go higher than this. Even a lot higher.
However, a messy and disorderly Greek exit from the eurozone, and the risk of a very swift contagion effect would surely see a large scale fund withdrawal from anything deemed even the slightest bit risky. World stock markets would collapse, and the dollar would surge.
None of those things would be beneficial for the grain markets. Consider how many days do you read "Chicago soybeans closed 25 cents higher. Funds were net sellers of 10,000 contracts on the day." The answer is hardly ever. If funds are net sellers then the market goes down, regardless of the fundamentals. And likewise if they are net buyers.
Chicago Consolidates From Recent Gains
23/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.27 1/4, down 20 3/4 cents; Nov 12 Soybeans closed at USD17.15, down 12 3/4 cents; Sep 12 Soybean Meal closed at USD527.80, down USD7.90; Sep 12 Soybean Oil closed at 56.12, down 5 points. Fund selling was said to have been around 7,000 contracts in soybeans on the day, enough to send the market tumbling following recent gains despite some decent fresh export sales business. The USDA reported the sale of 202 TMT of US beans to unknown along with 165 TMT to China, both for 2012/13 delivery. South Korea bought 110 TMT of US beans for Dec/Jan shipment and the USDA also reported the sale of 55 TMT of new crop US bean oil to China. All of those were on top of the usual weekly export sales report. That gave us sales of 132,900 MT for old crop and 585,800 MT for new crop beans, beating expectations for combined sales of 500-650 TMT. The 4th day of the Pro Farmer crop tour in Southern Minnesota found average bean pod counts of 1,003.7 pods in a 3 foot square area versus 1,124.3 pods a year ago and 1,115.9 pods for the 3-year average. That's a 10.7% reduction on last year versus the USDA's current projection that yields in the state will only decline by 1.3% this year.
Corn: Sep 12 Corn closed at USD8.08 3/4, down 21 1/2 cents; Dec 12 Corn closed at USD8.14 3/4, down 20 cents. Fund selling was estimated at 16,000 corn contracts on the day. Weekly export sales of 108,400 MT of old crop and 217,000 MT fell within the range of trade estimates for sales of a combined 200-350 TMT. The IGC estimated the 2012/13 global corn crop at 838 MMT versus their previous estimate of 864 MMT and 875 MMT last year. The US crop was estimated at 10.83 billion bushels versus their previous estimate of 11.81 billion although marginally above the USDA's current 10.78 billion. They did however also cut global corn consumption by 25 MMT, and raise world ending stocks for 2012/13 by 5 MMT from last month to 120 MMT, of which stocks amongst the major exporting nations were increased 8 MMT. This coming year will be the first time that we see a year-on-year fall in global corn consumption since 1993/94, they noted. "Exportable supplies in the US and Ukraine have tightened and, while the next crops in Brazil, Argentina and South Africa may be large, harvests are still several months away," they observed. The Pro Farmer crop tour in Southern Minnesota found average corn yield of 137.6 bpa versus 175.9 bpa a year ago and 182.2 bpa for the 3-year average. Final estimates from the tour are expected to be published tomorrow prior to the opening of the daytime open outcry CBOT session.
Wheat: Sep 12 CBOT Wheat closed at USD8.74 1/2, down 22 cents; Sep 12 KCBT Wheat closed at USD8.82 1/4, down 23 cents; Sep 12 MGEX Wheat closed at USD9.20 1/2, down 21 1/4 cents. Funds were said to have been net sellers of around 4,000 Chicago wheat contracts on the day. Weekly 2012/13 export sales of 468,800 MT (plus a further 6,000 MT for delivery in the 2013/14) were in line with trade estimates of 400-550 TMT. The IGC cut their world wheat production estimate by 3 MMT from last month to 662 MMT, some 34 MMT below last season’s record. World trade was also forecast to fall, by 13.3 MMT from last season’s record to 132.7 MMT. "Black Sea exporters have captured a high proportion of recent demand, but availabilities were soon expected to become short," they noted. Russia’s Ag Ministry said that the country has harvested 50.0 MMT of grains so far, of which 29.9 MMT is wheat with an average yield of 2.07 MT/ha, down 31.5% from a year ago. They cut their total grain harvest forecast to around 75 MMT. SovEcon suggest that even that is optimistic and estimate 70 MMT. A big rain event is in the forecast for the southern US Plains, ahead of wheat planting which is set to begin around a month from now. "The top US winter wheat states Kansas and Oklahoma are expecting heavy, soaking, rains with the updated forecast predicting 2-4 inches," say Martell Crop Projections.
EU Wheat Ends Mixed, Russian Output Marked Down Again
Russia’s Ag Ministry estimated their 2012 grain crop at 75 MMT versus a previous estimate of 75–80 MMT and 20% down on last year's 94.2 MMT in 2011.
That however is at the top end of private trade estimates. SovEcon predict a grain crop of 70 MMT, of which wheat will account for only 39 MMT, a more than 30% decrease on last year and less than the amount that sparked the 2010 export ban.
A Bloomberg survey predicts that Russia will run out of it's 2012/13 exportable surplus of 10-14 MMT by the end of November.
At home the HGCA said that the winter wheat harvest is 25% done with yields "currently ranging from 5.0-10.7 MT/ha, with no reports of exceptionally high yields." The quality of wheat samples harvested to date is poor, they added.
They peg the average UK yield at 7.1-7.5 MT/ha, which would suggest a final crop of around 14.2-15.0 MMT. Most in the trade are calling things closer to 14.0-14.5 MMT at best, some are suggesting output lower than 14.0 MMT.
For other crops the HGCA said that winter barley harvesting is 95% complete, with yields averaging 6.3-6.6 MT/ha, versus the 5-year average of 6.3 MT/ha. Spring barley is only 15% done, with very variable yields so far of 4.5–7.5 MT/ha.
The winter OSR harvest is 90% complete, with yields said to be holding up surprisingly well against the 5-year average of 3.4 MT/ha at 3.4-3.6 MT/ha.
Elsewhere the IGC came out with a revised world wheat production estimate of 662 MMT versus a previous estimate of 665 MMT. Consumption was seen unchanged at 679 MMT, trimming 2012/13 ending stocks 3 MMT to 180 MMT, the lowest since 2008/09.
World corn production was slashed for the second month in a row, this time by 26 MMT to 838 MMT. Consumption however was reduced by almost as much, 25 MMT, to 853 MMT. That marks the first year on year decline in world usage since 1993/94. With world trade seen declining, that actually raises ending stocks for 2012/13 by 5 MMT to 12 MMT.
The Lunchtime Byte
23/08/12 -- The overnight electronic market isn't doing a lot with beans 2 cents lower to 2 cents firmer. Corn is down 2-4 cents and wheat mostly a cent or so steadier.
SovEcon have cut their Russian grain crop estimate to 70 MMT, down 25.5% from last year. Wheat output is now estimated at just 39 MMT, some 30.6% lower than in 2011 and now less than the amount that sparked the 2010 export ban.
The Russian Ministry have capitulated somewhat and now say that the grain crop will be nearer to 75 MMT than the previously estimated 75-80 MMT.
Reuters report that the South Korean President has asked G20 leaders to "modify (their) biofuel policies to cushion supply shocks."
The Pro Farmer Crop Tour is now on day four, and in Illinois has found soybean counts of 944 pods per 3x3 foot area, down 21% from last year. That's in line with the USDA's forecast of yields down 21.3% in the state.
For corn they've found a yield potential of 121.6bpa, vs 156bpa last year although higher than the USDA's current 116bpa estimate for Illinois.
French wheat exports finished 2011/12 at 15.9 MMT, 19% down on 2010/11. Exports to non-EU destinations fell 35% to 8.4 MMT, according to customs data.
Data from DEFRA says that UK millers (including starch and ethanol producers) used 5.982 MMT of wheat in 2011/12, which is down 7.8% from the 6.491 MMT used in 2010/11.
The summer drought in Eastern Europe is causing low water in the Danube, disrupting grain movements out of Romania, Serbia and Hungary, according to the USDA attaché in Bucharest.
"Very heavy rainfall of 2-3 inches is predicted in hard red winter wheat in a new forecast from the National Weather Service Medium Range forecast team. A dose of heavy rainfall, 2-3 inches, would not cure drought in the Central Great Plains, but it would be a big help improving topsoil moisture for fall planting. Seeding in Kansas normally begins in late September, continuing to October 25. Oklahoma wheat is seeded 2-3 weeks later," say Martell Crop Projections.
Citigroup say that there's a 90% chance of a Greek eurozone exit in the next 12-18 months and it could be sooner: "conceivably even as early as September/October depending on the outcome of the September Troika report on Greece."
Chicago Posts Modest Correction
22/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.48, down 5 1/4 cents; Nov 12 Soybeans closed at USD17.27 3/4, down 4 3/4 cents; Sep 12 Soybean Meal closed at USD535.70, down USD7.90; Sep 12 Soybean Oil closed at 56.17, up 60 points. Fund selling on beans was estimated at around 3-4,000 contracts on the day, most likely on profit-taking after recent rises. Fundamentally nothing much has changed. StatsCanada pegged rapeseed production there at 15.4 MMT, which was 1 MMT lower than the trade was expecting. Day three of the Pro Farmer Crop Tour found some better yield potential than the first two days. In Southwest Iowa they came up with a soybean pod count of 1,120.2 pods versus 1,128.1 pods a year ago and the 3-year average of 1,279.2 pods. That particular survey only took in a small number of fields though. In West central Iowa they found pod counts of only 555.2 versus 1,251.09 pods a year ago. A Reuters poll of 11 analysts estimated US soybean yields at an 8-year low of 36.6 bu/acre, half a bushel more than the USDA said earlier this month. Production was forecast at a 4-year low of 2.713 billion bushels, which is 21 million more than the USDA. Estimates for tomorrow's weekly export sales report for soybeans are 500-650 TMT.
Corn: Sep 12 Corn closed at USD8.30 1/4, down 1 cent; Dec 12 Corn closed at USD8.34 3/4, down 4 cents. Funds were estimated as net sellers of around 3-5,000 contracts on the day breaking a five day winning streak. The same Reuters poll as mentioned above estimated corn yields at 121.5 bpa, a 16-year low and 4.7 bpa beneath the USDA's latest forecast. Final US production this year was pegged at 10.5 billion bushels, an 8-year low and 279 million below the USDA. The Pro Farmer Crop Tour found an average corn yield of 145.5 bpa in Southwest Iowa versus 143.2 bpa a year ago and the 3-year average of 167.2 bpa. In West central Iowa though they came up with a shockingly low corn yield of just 89.39 bpa versus 172.64 bpa a year ago. The weekly ethanol grind showed an increase to 823,000 barrels per day from 819,000 bpd last week. StatsCanada pegged corn production there at 11.7 MMT, which is 1 MMT up on last year. Trade estimates for tomorrow's weekly export sales report are 200-350 TMT.
Wheat: Sep 12 CBOT Wheat closed at USD8.96 1/2, down 4 cents; Sep 12 KCBT Wheat closed at USD9.05 1/4, down 3 cents; Sep 12 MGEX Wheat closed at $9.41 3/4, down 3 cents. Funds were estimated to have been light sellers of 1-2,000 Chicago wheat contracts on the day. StatsCanada estimated wheat production there at 27.0 MMT, exactly what the trade was expecting and up almost 7% on last year. Tender activity has been fairly light so far this week. South Korea bought 18,700 MT of Canadian milling wheat for Nov/Dec shipment. Japan isn't issuing it's normal weekly tender. There are dryness concerns now developing in Western Australia. ANZ Banking Group said that if this dry weather persists into September then Western Australia’s 2012/13 wheat output could fall to 6.0 MMT compared to 11.6 MMT in 2011/12. Argentina's newly planted wheat crop has had plenty of moisture to get it going, with Buenos Aires already having had 8.7 inches of rain so far this month. Weekly export sales for tomorrow are estimated at 400-550 TMT.
EU Grains Closing Comments - Wednesday
22/08/12 -- EU grains ended mixed, Nov 12 London wheat was up GBP0.35/tonne to close at GBP206.85/tonne and Nov 12 Paris wheat EUR1.00/tonne lower at EUR266.75/tonne.
Nov 12 London wheat was higher for the seventh successive day on continued reports of serious yield and quality issues with this season's crop as the harvest progresses. There's talk of feed manufacturers having to lower their standards, albeit at a price, as far as minimum bushel weights are concerned this year.
There's also some debate as to where enough wheat of sufficient quality is going to come from to make delivery against futures sales, should that be what shorts were intending to do. There's also the inevitable discussion about grower defaults amongst those with a large percentage of their anticipated 2012 crop already sold should their yields fall well short of expectations.
May 12 London feed wheat is now more expensive than May 12 Paris milling wheat.
The German Farmers' Association (DBV) pegged the grain crop there at 43.8 MMT this year, up almost 5% on last year's harvest, largely thanks to increased barley production. Winter wheat production is seen at 21.0 MMT, with spring wheat output responsible for a further 0.9 MMT to give an all wheat crop of 21.9 MMT. That's 4% down on last year, 600 TMT lower than the USDA currently say and 1.5 MMT below last week's Strategie Grains estimate.
They said that "massive winterkill" reduced the winter wheat acreage by almost 9 percent, leading to a sharp increase in spring barley plantings, up 40 percent this year to 590,000 hectares. That helps bring the German 2012 barley crop in at an estimated 9.8 MMT, some 12% up on last year and 580 TMT more than the USDA currently suggest.
German rapeseed production this year will come in at 4.4 MMT, according to DBV. That marks an increase of 15% on an "extremely difficult" 2011 output, but is fully half a million tonnes less than the USDA forecast. Wet conditions in the autumn of 2011 hindered plantings, keeping the area sown down to around 1.3 million hectares. The quality of this year's crop is "good, sometimes very good" with oil contents of 40 to 46 percent, they add.
StatsCanada estimated the all wheat crop there at 27.0 MMT, exactly in line with the average trade idea, and the USDA, and up almost 7% on last year. Barley production is forecast higher than trade estimates at 9.5 MMT, which is up also 1 MMT more than the USDA predict and almost 22% higher than in 2011. This year's rapeseed crop was estimated 1 MMT below trade forecasts at 15.4 MMT, although still nearly 9% up on year ago levels.
Rain - At Last!
Here's what my old chum Gail Martell of Martell Crop Projections has to say:
"The weather pattern over North America is undergoing change promoting heavy rain potential in the United States heartland. Not only are Midwest farm states expecting heavy rain – Iowa, Nebraska and Minnesota – but also parched winter wheat farms in Kansas, Oklahoma and West Texas.
It is not too late for soybeans to benefit from heavy rain. Pod filling is a 30-35 day process that continues well into September, even after plant leaves begin turning yellow.
Corn is beyond repair where more than 50% of the crop is “denting”, the kernel drying stage. As of August 19, 60% of United States corn was denting. Just a small amount 4% of corn was mature. Corn in the midst of filling kernels would still benefit from a soaking rain.
Kansas topsoil moisture was rated 72% very short, 24% short, 4% adequate and 0% surplus on August 19. This is driest I can ever remember. One good rainfall would not be enough to replenish parched fields, but a solid inch of rain would be a good start.
Kansas wheat seeding is set to begin in late September, finishing up around the middle of October.
Meanwhile, tropical storm Isaac is encroaching on the Caribbean Sea, expected to reach hurricane strength as is moves westward across the warm waters of the Caribbean. This is a ferocious looking storm on the satellite view.
Isaac is on a track that bends northward, making landfall in Florida Monday evening or Tuesday. The storm would then move slowly northward up the Atlantic seaboard.
If Isaac follows a track up the East coast, it would have little bearing on Midwest crops west of the Mississippi River. However, strong desiccating winds would develop over a large swath of the eastern Midwest and the Mid South. These winds would develop from the hurricane's counterclockwise winds, on the "back side" of the storm centre as it trudges up the Atlantic coast."
Reuters meanwhile are today reporting that Argentina is set to have "its wettest August on record" with Buenos Aires already having had 8.7 inches of rain so far this month. That should be good news for newly planted wheat and could also see corn and soybeans get planted earlier than normal, maximising yield potential.
Argy corn planting usually starts mid-September, with soybean planting kicking off around a month later.
News Snippets
22/08/12 -- The electronic market is consolidating a little from the early week gains, with soybeans down 12-14 cents, corn 5-6 cents lower and wheat down around 8-9 cents.
Day two of the Pro Farmer Crop Tour pegged Nebraska corn yields at 131.8 bu/acre, well below the USDA's projected 147 bpa. Corn yields in Indiana of 113.3 bpa though were above the USDA's estimate of 100 bpa earlier this month. Both of course are well down on last season's 153.7 bpa and 143.1 bpa respectively.
Soybean pod counts were 894.4 in Nebraska and 1,033.2 in Indiana versus 1,286.5 and 1,137.6 respectively last year.
For soybeans at least the cavalry are coming, eventually, although they haven't actually started planting yet. Michael Cordonnier estimates total South American output for 2012/13 could reach 151.0 MMT versus 114.4 MMT in 2011/12, an increase of almost a third.
Corn output could increase a bit more modestly to 100.5 MMT from 95.5 MMT, he estimates.
A good chum of mine down in Norfolk emailed me this morning to say that he'd cut 100 acres of 1st wheat yesterday that only yielded 2.26 MT/acre. "A normal yield for that sort of land is 4 MT/acre+, it looks more like rice that wheat," he adds. Yikes.
As of August 21, the Ukraine grain harvest was 65% complete producing 25.39 MMT with an average yield of 2.58 MT/ha, say the Ministry. Almost a third of the 2013 winter rapeseed crop has already been planted, they add.
Kazakhstan has harvested 3.135 MMT of grains with an average yield of just 0.73 MT/ha of 28% of the planted area, according to their Ministry of Agriculture.
Russia has formally become a fully paid up member of the WTO today.
South Korea have bought 18,700 MT of Canadian milling wheat.
Chicago Market Marches Higher
21/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.53 1/2, up 49 3/4 cents; Nov 12 Soybeans ended at USD17.32 1/2, up 49 cents; Sep 12 Soybean Meal closed at USD543.60, up USD11.00; Sep 12 Soybean Oil finished at 55.57, up 168 points. Funds were estimated to have been net buyers of around 15,000 soybean contracts on the day. Nov beans and Dec meal both made fresh contract highs. The USDA raised good/excellent crop conditions by one point last night to 31%, the minimum improvement that the trade was expecting. Day one of the Pro Farmer Crop Tour came up with an Ohio soybean pod count in a 3 foot area of 1,033.72 pods versus the 3-year average of 1,240.85 pods. The South Dakota soybean pod count was 584.9 pods versus the 3-year average of 1,116.9 pods. Customs data shows that China imported 5.87 MMT of soybeans in July, although only 650 TMT of that total came from the US. Brazil was their biggest supplier, providing 3.8 MMT of their total imports. That places Jan-Jul 2012 Chinese soybean imports at 34.92 MMT, up 20.14% from a year ago, of which the US supplied 15 MMT, Brazil 17 MMT and Argentina just 2.4 MMT. Michael Cordonnier estimated 2012 US bean yields at 36.0 bpa, unchanged from his previous estimate and fractionally lower than the USDA's 36.1 bpa forecast.
Corn: Sep 12 Corn closed at USD8.31 1/4, up 16 cents; Dec 12 Corn finished at USD8.38 3/4, up 15 cents. Funds were estimated to have bought 10,000 corn contracts on the day. Day one of the Pro Farmer Crop Tour found yield potential in Ohio 29% down on last year versus the USDA's current estimate of a 20% reduction. South Dakota corn yields were found 47% lower this year versus the USDA's 26% cut estimate. Crop conditions were left unchanged by the USDA last night, with 51% of the crop rated poor/very poor. This season continues to draw comparisons with 1988, when US corn production shrank 38% from similar hot and dry weather. "A very significant amount of corn was never harvested for grain that year, and was instead cut for silage due to poor quality. The 1988 US corn yield was around 25% below average. The USDA pegged corn production at 10.8 billion bushels in the August report, only 15% below average. Growers boosted plantings by 7% this season, buffering corn losses to a degree, yet we must wonder about further losses from a shrinking crop area. Corn not fit as a feed grain would be cut for silage. Thus, corn losses this year may be worse than currently anticipated," said Martell Crop Projections.
Wheat: Sep 12 CBOT Wheat closed at USD9.00 1/2, up 21 cents; Sep 12 KCBT Wheat finished at USD9.08 1/4, up 17 1/4 cents; Sep 12 MGEX Wheat ended at USD9.44 3/4, up 13 3/4 cents. Fund buying was estimated at 4,000 Chicago wheat contracts on the day. Iran bought 400 TMT of milling wheat for September shipment, thought to be mostly of EU and Black Sea origin. Stats Canada's crop production and yield estimates are out tomorrow with the trade forecasting all wheat output at 27.0 MMT from within a range of estimates of 25.9-28.2 MMT, their July estimate of 26.8 MMT and 2011 production of 25.261 MMT. All wheat yields are estimated at 42.3 bpa from within a range of estimates of 40.5-44.0 bpa, their July estimate of 42.8 bpa and 2011 yields of 44.0 bpa. Customs data shows that China imported 251,474 MT of wheat in July, more than double that of a year ago. That takes their 2012 calendar year to date imports to 2.44 MMT, which is also up sharply from a year ago. The USDA last night reported winter wheat harvesting just about complete at 97% done, with the spring wheat harvest well advanced at 79% complete versus just 40% normally. Spring wheat condition reports have now finished for the season. Trade talk/market chatter continues that Russia may have to limit grain exports before too long. They've shipped 3.4 MMT in the first six weeks of the 2012/13 marketing year, against trade estimates for the full season of only 10-12 MMT.
London Wheat Higher For Sixth Straight Session
This was the sixth higher close in a row for London wheat as UK farmers understandably remain reluctant sellers until the crop is in the barn and they know what they are dealing with.
Big question marks remain over both quality and quantity this year. There is also a large open interest in excess of 1 MMT in front month November, some are already wondering how much of this season's crop will even reach futures quality criteria, let alone make milling standard.
FC Stone revised their estimate for UK 2012 wheat production to 14.0 MMT, down 1.0 M from their previous estimate and 8.5% lower than last year despite a small increase in planted area.
Russian grain stocks as at Aug 1st were 27.7 MMT say the Ministry there, some 14% lower than year ago levels. Aug 1-15 grain exports were 1.3 MMT, putting them in line to ship 2.5-3.0 MMT this month to add to the 2.1 MMT exported in July.
Russia’s grain harvest is now 54% complete with average yields at 1.98 MT/ha, down 27.5% from a year ago.
The USDA last night estimated the US spring wheat crop at 79% harvested vs. 65% a week ago and vs. 40% for the 5-year average. Winter wheat harvesting is wrapping up at 97% complete.
Day one of a high profile crop tour in America estimated corn yields in Ohio this year at 110.5 bushels/acre versus 156.3 bpa last year, the current USDA estimate of 126.0 bpa and the 3-year average of 160.5 bpa.
South Dakota corn yields were forecast at 74.3 bpa, the lowest in 19 years, compared to 141.1 bpa last year, the existing USDA estimate of 98 bpa and the 3-year average of 143.9 bpa.
Globex Grains Latest
20/08/12 -- Soycomplex: Sep 12 Soybeans trade at USD16.84 1/2, up 13 1/2 cents; Nov 12 Soybeans are at USD16.59, up 13 1/4 cents; Sep 12 Soybean Meal is at USD524.40, up USD1.70; Sep 12 Soybean Oil closed at 53.47, up 36 points. The market will be looking to tonight's USDA crop progress report released after the close to see if there are any signs that recent rains have improved US yield potential, or merely halted their decline. There seems to have been little rain around for the western corn belt over the weekend, with shower activity mainly confined to the south and east. China's CNGOIC see second half 2012 soybean imports falling to 25.5 MMT from just over 29.0 MMT in the first half of the year. After peaking at a more than two year high last month, August imports will decline to 4.5 MMT, some 23% down on July, and Sep/Oct soybean imports may fall further to a combined 7 MMT, they say. Domestic stocks are plentiful and crusher demand slow due to a squeeze on margins, they add.
Corn: Sep 12 Corn trades at USD8.06 3/4, up 8 1/4 cents; Dec 12 Corn is at USD8.15, up 7 3/4 cents. There's virtually no rain at all in the forecast for the Corn Belt for the next 2-3 days. That will enable further harvest progress, but do little for later maturing corn. Tonight's crop progress report will be of interest. Last week the USDA left good/excellent crop conditions unchanged at 23% with poor/very poor raised one point to 51%. Bunge have said that they may soon start exporting larger volumes of corn from Brazil into the US. They have only been exporting small amounts of corn so far. Brazil harvested a record corn crop of 72.78 MMT this year thanks to bumper "sarafina" or second crop. The Buenos Aires Cereals Exchange say that Argentina has sold 79% of their 2011/12 corn crop and 6% of their yet to be planted 2012/13 corn crop. They estimate Argentina’s 2012/13 corn area at 3.1 million hectares, down 20% from 2011/12.
Wheat: Sep 12 CBOT Wheat trades at USD8.75, up 1/2 cent; Dec 12 CBOT Wheat stands at USD8.95 1/4, up 3/4 of a cent. Russia’s Ag Ministry say that the grain crop this year will total 75-80 MMT, but other private estimates are now much lower with SovEcon coming in at 71.0-72.5 MMT and IKAR at 73 MMT. SovEcon now estimate the wheat crop there at only 39.0-41.0 MMT, a level that sparked the 2010 export embargo. Argentina Ag Ministry estimate the 2012/13 wheat area at 3.7 million hectares versus a previous estimate of 3.82 million and 4.63 million in 2011/12. Planting should be just about done, and recent good rains will help get the reduced crop off to a good start at least. The Buenos Aires Cereals Exchange say growers there had sold 100% of their 2011/12 wheat crop and 18% of their 2012/13 wheat crop. Tonight's USDA report should be of more importance for corn and soybean than for wheat. Last week the USDA reported the US winter wheat harvest at 88% complete, with spring wheat harvesting at 47% done. Good/excellent spring wheat conditions were 63%.
EU Grains Higher - Led By London Wheat
This is another new life of contract high for Nov 12 London wheat after weekend harvest activity continues to throw up highly variable, but generally disappointing results. Wheat yields half of normal, down to 2 MT/acre, were reported in Norfolk over the weekend, with quality similarly poor.
London wheat continues to lead the way higher on ideas that output this season may ultimately finish well below last year's 15.3 MMT, despite an increase in plantings, whist domestic demand will be boosted by the re-opening of Ensus and Vivergo also coming on stream before the end of the year.
Since the end of July front month Nov 12 London wheat is up 5%, with it's Paris counterpart only 2% higher and Sep 12 Chicago wheat around 1% lower.
It will be interesting to keep an eye on UK exports now that we are into the new 2012/13 marketing year. Shipments in June, the last month of 2011/12, were a six year low of just 55 TMT. With serious doubts over the quality of this year's crop reflected in large milling wheat premiums, UK wheat is simply not competitive to traditional export homes like Spain.
Feed wheat ex store Saxony for September collection was reportedly offered at EUR235.00/tonne on Friday - the equivalent of around GBP185.00/tonne. The premium for A quality 13% protein, 275 hagberg milling wheat over there is currently around EUR15.00/tonne as opposed to in excess of GBP30.00/tonne here in the UK.
SovEcon have cut their estimate for Russian wheat production again, to 39-41 MMT, from 40.5-42.5 MMT last week, as the harvest progresses into the Urals and Siberia with yields similarly disappointing to those further south and west.
That represents a 27-30% decrease on last season's output of 56.2 MMT, with an inevitable impact on exports also likely. Even so Russia's Ag Ministry have ruled out an export ban saying that other methods will be employed to contain rising domestic food prices.
The Ministry are still forecasting a total grain crop of 75-80 MMT. SovEcon now say that will be more like 71.0-72.5 MMT (from an earlier estimate of 70-74 MMT), whilst other local analytical group IKAR are predicting 73 MMT (down from 74.5 MMT previously). Production in 2011 was 94 MMT.
The Kazakhstan Ministry are reporting grain yields there down 37% from last season, although less than one million of the estimated 15 million hectares planted has been harvested so far. Carryover stocks from 2011/12 should still enable them to export 12 MMT of grains in 2012/13 despite production this year more than halving to around 13 MMT, they add.
The European debt crisis rumbles quietly on in the background, with signs of Germany getting to the end of their tether. German finance minister, Wolfgang Schäuble, said over the weekend that "we can help the Greeks, but we cannot responsibly throw money into a bottomless pit," according to a report in the FT.
Schäuble apparently went on to rule out a new aid plan for Greece, saying that "there are limits".
Early Morning News
20/08/12 -- Fresh news from over the weekend is fairly limited so far this morning.
China's CNGOIC think-tank says that they see LH 2012 soybean imports falling to 25.5 MMT from 29.05 MMT in FH 2012. August imports will likely total 4.5 MMT, some 23% down on July, and Sep/Oct soybean imports may fall further to a combined 7 MMT on declining profit margins, they say.
If they are correct then that has them importing some 54.55 MMT in the 2012 calendar year versus the USDA's 2011/12 estimate of 57.5 MMT and 2012/13's predicted 59.5 MMT. Last week's government auction of just over 400 TMT of soybeans was fully subscribed you may recall. The government are supposed to be repeating this offering on a fortnightly basis.
Chinese port stocks of soybeans are currently reputed to be around 6.5 MMT.
Despite now only expecting a grain harvest of around 13 MMT, Kazakhstan may still export 12 MMT in 2012/13 thanks to the very large carryover stocks of 9 MMT left from the record 2011 harvest, according to the Ag Ministry.
Landlocked Kazakhstan struggled to find access to export homes to the west, particularly during the first half of 2011/12, with Russia and Ukraine busy shipping their own grain out of the Black Sea. That's left plenty of wheat left over to carry into 2012/13 it would seem.
The Ukraine Ministry say that the wheat harvest there is just about finished at 16.3 MMT in bunker weight, which implies a clean weight figure of somewhere around 14-15 MMT. Good crop husbandry isn't the strong suit of your average Ukraine cereal grower.
Latest estimates have Ukraine exporting 20.3 MMT of grains in 2012/13, including 4.5-5.0 MMT of wheat, 3 MMT of barley and around 12 MMT of corn.
Russia join the WTO later this week (either Weds or Thurs depending on which report you read). Trade talk currently suggests that the introduction of punitive export tariffs may be the most likely avenue for them to follow to curb grain shipments, rather than an outright ban.
A report on Reuters quotes the Russian Minister of Agriculture as saying that "pinpoint interventions" may be used to contain domestic food price increases. These actions may include the release of government-held intervention stocks onto the market, he appears to be hinting, but these are only thought to stand at around 5 MMT.
That won't be enough to stem the outflowing tide currently running at a rate of 2.5-3.0 MMT/month.
