Chicago Drifts Lower As Long Weekend Looms
31/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.64 1/2, down 5 3/4 cents; Nov 12 Soybeans closed at USD17.56 1/2, down 7 cents; Sep 12 Soybean Meal closed at USD547.10, down USD1.00; Sep 12 Soybean Oil closed at 56.42, down 17 points. For the week that left Sep 12 beans 27 cents higher, with new crop Nov 12 up 25 cents. Sep 12 Meal gained USD13.70 and Sep 12 oil added 18 points. Funds were estimated as net sellers of around 4,000 soybean contracts on the day, which would still place them adding around 6,000 lots to their net length on the week. It was a pretty predictable profit-taking session ahead of the long 3-day holiday weekend. Heavy rains from the remnants of Hurricane Isaac, now downgraded to a tropical storm, are working their way northwards into the Midwest. That may benefit a few late-planted second cropped soybeans, but aren't thought likely to be of much benefit to the vast majority of the rest of the crop at this stage. One month earlier they would potentially have been a whole lot more useful. World demand for soybeans remains strong. China sold all the 400 TMT of soybeans it offered up for auction onto the domestic market for the second time in a fortnight yesterday. AgRural estimated Brazil's 2012/13 soybean crop at a record 82 MMT, 23.5% higher than this year. Planting in the top producing state of Mato Grosso begins in just over a fortnight.
Corn: Sep 12 Corn closed at USD8.02 3/4, down 8 3/4 cents; Dec 12 Corn closed at USD7.99 3/4, down 8 3/4 cents. Profit-taking ahead of the long weekend saw Sep 12 corn finish up just 1/2 cent on the week, with Dec 12 down 8 3/4 cents. There may also have been an element of caution ahead of Federal Reserve Chairman Ben Bernanke's speech in Jackson Hole. Fund selling was estimated at 8,000 contracts on the day, making them net sellers for seven of the last eight session, during which time they've liquidated around 44,000 contracts. In addition to soybeans, China now say that they will sell corn from state-owned reserves, although they did not say when or how much they will auction. International demand for US corn remains sluggish, with those that can switching to feed wheat and others looking for cheaper origin corn. Spillover weakness from wheat, following the news that there was to be no Russian grain export ban, at least not for now, added to corn's demise on the day. The EU Commission estimated the EU-27 2012/13 corn crop at 60.2 MMT versus their previous estimate of 61.7 MMT and 65.4 MMT last year. Rains from Tropical Storm Isaac will hinder corn harvesting this weekend.
Wheat: Sep 12 CBOT Wheat closed at USD8.70, down 13 1/2 cents; Sep 12 KCBT Wheat closed at USD8.80 3/4, down 9 cents; Sep 12 MGEX Wheat closed at USD9.31 3/4, down 8 1/4 cents. Chicago wheat was 2 1/2 cents higher for the week, with Kansas up 4 1/2 cents and Minneapolis adding 13 1/4 cents. Wheat fell on disappointment that there was no announcement of export restrictions from Russia, with funds selling an estimated 3,000 CBOT wheat contracts on the day. As with corn, we have seen steady wheat selling over the past eight sessions, with funds only featuring as net buyers once in that period (as opposed to four times for soybeans). The results of the Saudi tender for 550 TMT of hard wheat are not yet released onto the market. It is possible that the US will pick up a share of the business. Egypt's GASC announced its fourth wheat tender in three weeks after the market closed, asking for an unspecified amount of soft wheat for Oct. 11-20 shipment. Russian and Romanian wheat won last weekend's tender. Russia's wheat crop is now seen in the region of 38-40 MMT versus 56.2 MMT in 2011.
EU Wheat Falls As Russia Sits On Hands
For the week London wheat was GBP1.15/tonne higher, whilst Paris wheat gained EUR3.50/tonne. At the close Nov 12 London feed wheat was only around EUR5.50/tonne cheaper than Nov 12 Paris milling wheat, whilst May 13 in London is actually EUR1.00/tonne higher.
Another week of widespread showers to heavy rain keeps large question marks remaining over the final size and yields of UK crops. Open interest in the most active Nov 12 London wheat has declined from around 10,000 contracts to around 7,500 in the past fortnight as shorts ponder how much 72.5kg/hl bushel weight wheat is actually out there.
The much-awaited Russian Ministerial meeting to discuss he grain markets turned out to be a non event, with no sign of an export ban or even any form of tariffs to restrict grain shipments.
The Ministry did officially narrow their grain production estimate from 70-75 MMT to 70 MMT, although this had been alluded to already. Exports for 2012/13 were pegged at 10-14 MMT yet they've shipped 4.6 MMT already in Jul/Aug, with at least a further 2.5 MMT, and possibly as much as 3.0 MMT, per month likely in both September and October.
Clearly they will have to do something at some point, but if they've decided what it is yet, they aren't telling.
IKAR Today cut their estimate for Russian grain production to 69-70 MMT, of which they forecast wheat output at 39-40 MMT. That compares pretty closely with SovEcon's 70 MMT and 38 MMT estimates released yesterday.
The EU Commission estimated EU 2012/13 soft wheat crop at 127.3 MMT, up 800 TMT from their previous forecast of 126.5 MMT. The EU-27 corn crop was placed at 60.2 MMT, which is 1.5 MMT down on their previous estimate of 61.7 MMT.
The German Farm Ministry estimated Germany’s 2012 grain crop at 44.7 MMT up 6.7% from a year ago. Wheat output is seen at 22.5 MMT, fractionally down on last year.
In the Southern Hemisphere, a drier week ahead for Argentina will be welcome after abundant August rains. The Buenos Aires Grains Exchange estimated the 2012 Argentine wheat area at 3.6 million hectares versus the government estimate of 3.7 million.
In Australia, showers favoured southern Victoria and southeastern Queensland yesterday and should return to western portions of Western Australia on Monday, then favour southeastern South Australia on Tuesday, according to MDA CropCast.
On noted agricultural consultant estimated Australia’s 2012/13 wheat crop at 25.0 MMT, 15% down from last year's record 29.5 MMT output. Large carryover stocks however mean that 2012/13 exports will match the 2011/12 record of 23.0 MMT.
The Morning Papers
31/08/12 -- The overnight electronic market is lower with beans 6-10 cents easier, corn down 5-7 cents and wheat falling 7-10 cents.
Month end, a 3-day Labor Day holiday weekend and first notice day for Chicago's September contracts may all encourage a bit of profit-taking.
On the agenda today we have the Russians meeting to decide what, if anything, they are going to do about their shrinking harvest and rapid early season export pace.
Ahead of that meeting we have the Russian Ministry re-iterating their 2012/13 grain export forecast of 10-14 MMT, of which around 4.6 MMT has been shipped in the first two months of the marketing year. The official grain production estimate is now 70 MMT from 70-75 MMT previously.
Later today we also have Ben Bernanke speaking at the impressive sounding Jackson Hole (didn't he win a couple of medals at the Olympics?), where the market will be hoping for some hints at the imminent launch of the good ship QE3.
The results of the Saudi wheat tender are out later today too. I'd expect to see them share the business around, like the usually do and as per their last tender which was split between the EU, US, Australia and Canada.
Kazakhstan says it's harvested just over 5 MMT of grain off 44% of the planted area, with yields averaging only 0.75 MT/ha, 46% down on this time last year.
Brussels issued 369 TMT of soft wheat export licences this week, the best weekly total of the marketing year so far methinks. That brings the 2012/12 YTD total to 1.8 MMT, 17% down on where we were this time last year.
Cumulative barley export licences of 1.4 MMT are almost double this time a year ago.
The Ukraine Ag Ministry now estimate Ukraine’s 2012/13 grain exports at 20.0 MMT versus their previous estimate of 22.0 MMT and 22.8 MMT in 2011/12.
AgRural estimate Brazil's 2012/13 soybean crop at a record 82 MMT, with planted area up 11.6% to a record 27.9 million hectares. That would place soybean output 23.5% higher than this year. Planting in the top producing state of Mato Grosso begins in just over a fortnight.
The German Ministry estimate the grain crop there at 44.7 MMT, up 6.7% on last year, and almost a million tonnes more than the German Farmers' Association (DBV) estimate of 43.8 MMT. Wheat output is seen at 22.5 MMT, a bit below Toepfer's recent 22.8 MMT forecast, but above the pessimistic view of the DBV's 21.9 MMT.
The Ministry place German rapeseed production at 4.8 MMT, a 25% increase on last year and 0.4 MMT higher than the DBV.
Septic Peg Speaks
All they will do is make some wishy-washy announcement that they are on the case, monitoring the situation and ready to act accordingly, if and when necessary, and within the rules of their newly acquired WTO membership, says Razz.
What they may then do behind the scenes is introduce some form of revised documentation requirements to accompany grain exports, which will be so difficult, complicated and slow to obtain that they will allow grain only to leave the country when, and to whom (eg Egypt), they see fit the Razzmeister reckons.
If further proof of his all knowing powers are required Peg tells me that Razz insists that Zhukov, named after Georgy Zhukov, a fellow son of peasants who went on to become the most successful Russian general in World War Two, is a nailed on certainty for the 3.00 at Bangor-on Dee this afternoon.
There we have it, a hot tip, a history lesson and the inside word on how Russia will tackle their grain export problems all in one go.*
* Please note, markets can go down as well as up, always read the label, no responsibility can be accepted for vehicles and/or their contents left in this car par, horses sometimes fall.
Chicago Closing Comments - Thursday
30/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.70 1/4, up 7 cents; Nov 12 Soybeans closed at USD17.63 1/2, up 10 1/2 cents; Sep 12 Soybean Meal closed at USD548.10, up USD4.80; Sep 12 Soybean Oil closed at 56.59, down 5 points. Sep 12 beans set a new all-time high for a front month, whilst Nov 12 beans posted a fresh contract high. Combined export sales of a net 721,300 MT including 352,000 MT to unknown destinations and 230,000 MT to China, were in line with expectations of 600-800 TMT. Accumulated new crop sales already account for more than half of the USDA's projected 2012/13 total with a week still left to go in the old crop 2011/12 marketing year. Funds were estimated as net buyers of around 4,000 soybean contracts on the day. Vietnam bought 140 TMT of Argentine origin soymeal for September shipment. China sold all the 400 TMT of soybeans it put up for auction in an effort to cap rising prices. Opinion is divided on how much good, or indeed harm, will "prodigious rains" expected for parts of US Midwest from the remnants of Hurricane Isaac do for soybeans. Beans are around 32-33 cents higher on the week so far, with month end and a three-day weekend looming then we can probably expect some profit-taking in the morning.
Corn: Sep 12 Corn closed at USD8.11 1/2, up 1 1/4 cents; Dec 12 Corn closed at USD8.08 1/2, down 5 cents. Funds were estimated to have been net sellers of around 4,000 corn contracts on the day. Weekly export sales were unimpressive at a net 134,700 MT, and below trade expectations of 250-450 TMT. Prices do seem to be rationing demand somewhat. It seems that unlike soybeans, corn users do have the ability to switch to alternatives. There were reports that Thailand will import 1.5 MMT of feed wheat this season, probably from India, which is five times their normal volume due to rising corn prices. Indonesia's corn imports are seen halving this year, with Black Sea, Indian and/or Australian feed wheat filling the void. Indonesia’s 2012 corn output is estimated at 9-10 MMT this year versus 8-9 MMT in 2011. Unlike beans, Dec 12 corn is flat on the week so far and looking tired, with fund money estimated as having liquidated around 36,000 contracts across the past seven sessions during which time they have only been a net buyer once. The Ukraine Ministry said that the country will export 12.4 MMT of corn in 2012/13, broadly in line with the USDA's 12.5 MMT, and around 2 MMT down on sales in 2011/12. Corn production there is seen at 21.1 MMT, around 7.5% down on last year.
Wheat: Sep 12 CBOT Wheat closed at USD8.83 1/2, down 2 cents; Sep 12 KCBT Wheat closed at USD8.89 3/4, down 6 1/2 cents; Sep 12 MGEX Wheat closed at USD9.40, down 1/2 cent. Funds were estimated to be around even on the day. For the week so far CBOT wheat is 16 cents higher. Weekly export sales of 508,400 MT, plus a tiny little 900 MT for 2013/14 delivery, were in line with trade estimates of 450-600 TMT. SovEcon cut their Russian wheat production estimate to 38 MMT, from 39 MMT last week and now 5 MMT below the USDA's 43 MMT. All eyes will be on them tomorrow when Ministers meet to discuss the grain markets, although their Deputy Ag Minister today was reported as saying export restrictions were not currently needed, and would not possibly start before early December. There seems to be a growing feeling that a repetition of the sudden export ban of 2010 is unlikely and that the Russian market should be left to regulate itself. Saudi Arabia aren't taking any chances though, tendering for 550 TMT of wheat, the results of which should be known tomorrow. World demand for wheat seems to be getting a boost from high corn prices. The market will soon start to focus on crop development in the Southern Hemisphere. MDA CropCast cut their Australian wheat production estimate by 700 TMT to 25.3 MMT this week citing dryness affecting 2/3rds of the wheat belt, stressing the crop as it pushes through jointing.
EU Wheat Higher As Russian Crop Downgraded Again
30/08/12 -- EU wheat closed mostly higher as Russia's production hopes took a further knock with Nov 12 London wheat up GBP1.25/tonne to GBP206.00/tonne and Nov 12 Paris wheat EUR1.75/tonne higher at EUR266.75/tonne.
SovEcon cut their Russian grain production estimate to 70.5 MMT, and warned that it may yet fall below 70 MMT, from 71.0-72.5 MMT last week and 94 MMT in 2011. Wheat output is now only forecast at 38 MMT - their smallest crop since 2003.
They went on to say that as the harvest progresses into Siberia and the Urals, the former could have it's worst wheat harvest, of maybe no more than 4 MMT, in 32 years.
Even so the Russian Deputy Ag Minister said, on the eve of a high level meeting to discuss the issue, that a grain export ban was not currently necessary - and that one was unlikely to happen before the beginning of December at the earliest.
Another widespread overnight soaking continues to frustrate UK farmers' attempts to get the wheat harvest in. The HGCA estimated that 40% of the crop has been cut nationally, with up to 80% of the crop said to be in the barn in the South East.
They stood by last week's estimate of an average national yield of somewhere between 7.1-7.5 MT/ha, which would be around 4-9% lower than the 5-year average of 7.8 MT/ha.
There are probably plenty who would peg yields at the lower end of that scale rather than the higher end. A final yield of 7.1 MMT would be the worst since 1992.
The HGCA said that the winter barley harvest is 98% complete, with yields better than average at 6.4-6.7 MT/ha. Spring barley harvesting is 25% complete, with yields in line with average at 5.3-5.4 MT/ha. Winter OSR yields are slightly better than average at 3.4-3.6 MT/ha, although seeds are "on the small side, and oil contents are lower than normal ranging from 40-45%."
MDA CropCast released their latest production estimates, placing the EU-27 wheat crop at only 128.6 MMT, which would be 6.4% down on last year and 4.3 MMT less than the USDA's current forecast.
MDA CropCast placed EU-27 wheat yields at an average 5.23 MT/ha, which is broadly in line with the EU Commission's MARS estimate of 5.29 MT/ha released earlier in the week. The former are a bit more bullish on corn prospects, estimating EU-27 average yields at 6.86 MT/ha, versus 6.28 MT/ha from MARS. That puts the EU-27 corn crop at 61.4 MMT versus 60.2 MMT last year.
The USDA attaché estimated Morocco’s all wheat production at 3.4 MMT, from 2.8 MMT previously. Barley production was raised from 0.9 MMT to 1.1 MMT. Morocco's wheat import requirements were cut from 5.0 MMT to 4.5 MMT.
France is traditionally their biggest soft wheat supplier, although Argentina and Uruguay have also come to the fore in 2011/12. Canada provide more than half of their durum requirements, with France accounting for a further 29% and Argentina 15%.
Morocco’s barley imports in 2011/12 have been dominated by French supplies (39%), followed by exports from Argentina (26%), Russia (10%) and Ukraine (8%).
The Lunchtime Bite
30/08/12 -- The overnight electronic market is slowly trying to claw its way into positive territory with beans currently unchanged to a cent higher, corn up 1-3 cents and wheat narrowly mixed.
The USDA's weekly export sales report continues to show signs of corn demand waning at prices around USD8/bushel. Old crop sales were negative 33,700 MT, with China cancelling one cargo. New crop corn sales were hardly inspiring either at only 168,400 MT. Trade estimates had been for combined sales of 250-450 TMT.
For wheat we had sales of 508,400 MT, plus a little 900 MT for 2013/14 delivery, in line with trade estimates of 450-600 TMT. Soybean sales were negative 10,100 MT, which also featured a Chinese cancellation, but new crop sales were strong at 731,400 MT including 352,000 MT to unknown destinations and 230,000 MT to China, against expectations of 600-800 TMT
Russia's Deputy Ag Minister said that there is no need to introduce a grain export ban at the present time, and that they "will not possibly start (any possible export limitations) before early December" ahead of tomorrow's high level meeting to discuss the grain markets.
SovEcon have cut their Russian wheat production estimate to 38 MMT, from 39 MMT last week and 5 MMT below the USDA's 43 MMT. Total grain output is now seen at 70.5 MMT versus 94 MMT in 2011, a 25% reduction.
Dryness in Australia is affecting 2/3rds of the wheat belt, stressing the crop as it pushes through jointing. "Rains early next week in western portions of Western Australia should improve moisture a bit, but dryness will continue across much of
the rest of the belt," say MDA CropCast. They've cut their Australian wheat production estimate by 700 TMT to 25.3 MMT this week.
The Ukraine Ministry say that the wheat harvest there will amount to 15.3 MMT, with the barley crop at 6.5 MMT and the corn crop producing 21.1 MMT. Exports in 2012/13 will be 4 MMT of wheat, 3 MMT of barley and 12.4 MMT of corn, they say. The USDA currently has wheat exports at 6 MMT, barley foreign sales at 2 MMT and corn shipments at 12.5 MMT.
Winter OSR planting is already 60% complete, the Ukraine Ministry add.
MDA CropCast have cut their US soybean production estimate by 1.15 MMT this week to 71.05 MMT which is around 2.2 MMT, or 3%, lower than the USDA. For US corn production they are even more bearish at 257.7 MMT which is nearly 6% lower than the USDA's 273.8 MMT and almost 50 MMT down on last year.
"Prodigious rains expected for parts of US Midwest from Hurricane Isaac's remnants could double the summer's dismal rainfall totals in some places," according to World Ag Weather. That may help later maturing second cropped soybeans.
Morning Markets
30/08/12 -- The overnight Globex grains are mostly a little lower in light consolidation following last night's decent gains. Beans are currently 4-6 cents easier, with wheat down 2-3 cents and corn a cent or so either side.
There's optimism around that the US will at least win a share of Saudi Arabia's 550 TMT wheat tender which closes tomorrow. The Saudis do have a habit of sharing their business around, so they probably will get a slice of the cake along with Australia and Canada, and maybe Europe too.
Is the timing of the Saudi tender co-incidentally timed to match Friday's Russian head honcho meeting to discuss what to do about the rapid early pace of Russian grain exports as a pretty poor harvest winds up? Probably not. I wonder though what the market will do though if Russia doesn't actually do anything on Friday except make some kind of announcement that they will continue to monitor the situation?
Thailand may import up to 1.5 MMT of feed wheat in 2012/13, five times it's normal purchases, due to high world corn prices, according to one report I read this morning. The not too fussy Thais will be looking around for the cheap option, and likely find it's India methinks.
The word on the streets of New Orleans is that Hurricane Isaac hasn't been as bad or caused as much damage as was feared. Hopefully that will be true of the corn crop too. It will help boost low water levels on the Mississippi though, and may bring some spin off rains to HRW wheat areas ahead of planting. Every cloud eh?
There seems to be good interest around for soymeal, despite Chicago closing within USD10/ton of the all time highs last night. Vietnam has bought 140 TMT of Argy soymeal at around USD685/tonne for LH Sep shipment, according to the morning wires.
It pissed it down big time in the early hours of this morning up here in North Yorkshire, which will further frustrate any thoughts of getting a combine into the wheat. It's not raining on MARS though, so their estimate for a UK wheat yield of 7.82 MT/ha still looks good, at least to them. Mind you, if it's harvested at 20% moisture then maybe they're right.
South East Asia have imported 21% less US DDGS in the first half of 2012 due to high prices and changes in quality is another headline that grabs my attention this morning. There's been a fair bit of talk of DDGS quality declining after the ethanol blenders' tax credit was removed at the end of 2011.
In an effort to claw some margin back some US ethanol plants have been removing more corn oil in the distilling process, with corn oil worth about four times more than the price of DDGS then why wouldn't they? That leaves less oil of course in the by-product, making DDGS not as an attractive feed as it was.
Favourable weather during February and March has seen the USDA's attache in Morocco raise their forecast for wheat production in the North African nation from 2.8 MMT to 3.4 MMT, and for barley from 0.9 MMT to 1.1 MMT. They've thus cut their estimate on Morocco's wheat imports in 2012/13 from 5 MMT to 4.5 MMT.
Chicago Soybeans Race To New Contract Highs
29/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.63 1/4, up 30 3/4 cents; Nov 12 Soybeans closed at USD17.53, up 30 3/4 cents; Sep 12 Soybean Meal closed at USD543.30, up USD9.10; Sep 12 Soybean Oil closed at 56.64, up 91 points. Fund buying was estimated at around 6,000 soybean contracts on the day as Nov 12 beans raced to fresh contract highs. Meal finished close to all-time highs, with plenty of interest around even at current levels. Thai feed mills are rumoured to have bought up to 1 MMT of meal recently - possibly of South American origin. Indonesia and Vietnam are also in the market for meal, seeking 100 TMT and 200 TMT each for shipment towards the end of the year. The Chairman of US soybean export council said that the US could virtually run out of beans by the end of the 2012/13 crop year. The Chinese government will auction off another 400 TMT of soybeans tomorrow in an effort to contain rising prices. Weekly export sales tomorrow will be scrutinised for signs of a let up in demand. There may not be any, the trade is expecting soybean sales of 600-800 TMT.
Corn: Sep 12 Corn closed at USD8.10 1/4, up 20 3/4 cents; Dec 12 Corn closed at USD8.13 1/2, up 18 cents. Fund activity saw them end as estimated net buyers of around 12,000 corn contracts on the day. Concerns that the heavy rains and high winds associated with Hurricane Isaac could cause further damage to an already embattled US corn crop added support. Today’s weekly EIA report showed US ethanol production falling slightly in the past week. The report also showed US ethanol stocks at 18.5 Million barrels, higher than last year's 17.9 million. Unlike soybeans there has been some evidence of demand destruction for corn, which is reflected in reduced demand from the ethanol sector and declining exports. Estimates for tomorrow's weekly export sales report for corn are 250-450 TMT. Tomorrow is Position day for September futures. Friday is month end and the last day of trading before the long Labor Day holiday weekend.
Wheat: Sep 12 CBOT Wheat closed at USD8.85 1/2, up 30 3/4 cents; Sep 12 KCBT Wheat closed at USD8.96 1/2, up 29 cents; Sep 12 MGEX Wheat closed at USD9.40 1/2, up 30 1/2 cents. Fund buying was estimated at around 5,000 Chicago wheat contracts on the day. The trade is pondering the outcome of a meeting on Friday between the Russian PM and his Ag Ministry, and the implications for wheat exports. An outright ban, such as the one infamously and spontaneously introduced in 2010 is not anticipated, but some form of export restrictions surely cannot be far away. Prior to that there's a fair bit of interest around in wheat. Saudi Arabia are looking for 550 TMT of optional origin hard wheat for Dec/Feb shipment, having already bought 290 TMT for Oct/Nov recently. Syria seek100 TMT of optional origin milling wheat for Sep/Oct shipment. Tunisia today bought 150 TMT of optional origin wheat for Oct/Dec shipment. Estimates for tomorrow's weekly export sales report are 450-600 TMT.
EU Wheat Steady As UK Harvest Stalls
29/08/12 -- EU grains ended mixed, but mostly higher, with Nov 12 London wheat up GBP1.50/tonne to close at GBP204.75/tonne and with Nov 12 Paris wheat EUR4.25/tonne firmer at EUR265.00/tonne.
Fresh news was pretty thin on the ground. Parts of the US Deep South are expected to pick up heavy rains as Hurricane Isaac makes landfall. They will come too late to help corn (indeed they will at best hinder the harvest, and at worst the associated high winds may even cause some damage), but could assist late planted second crop soybeans.
Further west there may be a chance of some beneficial rain on the Plains ahead of winter wheat planting.
Tunisia, Jordan and Saudi Arabia are all tendering for wheat. The latter is in the market for 550 TMT for Dec/Feb shipment, a decent volume and one that follows closely on the heels of a recent 290 TMT purchase for Oct/Nov delivery.
This would seem to indicate that they think that downside is limited, particularly ahead of Friday's top level meeting of the Russian PM and his Ministry of Agriculture advisers to discuss the grain markets.
Russia say that their grain harvest is 62% complete, producing a crop of 53.4 MMT so far, with yields down 27% on this time last year. Ukraine's harvest is 66% done producing a crop of 25.5 MMT and yields 15% lower than a year ago.
China says that it has stockpiled 23.2 MMT of home-grown wheat to date, in an effort to support prices, protect farmers and encourage domestic production.
Widespread rain has stalled the UK harvest once more. The crop is maybe 40-50% cut in the south east, 25% done in the south west and no more than 10% completed further north.
Low bushel weights seem to be an unfortunate and recurring theme, as rain hasn't been a problem they are blamed largely on the general lack of sunlight over the past 3 months or so. Few crops are making 72kg/hl, the usual minimum required standard, with 68kg/hl or less commonplace.
Protein levels amongst the milling varieties are said to be pretty good however, so it remains to be seen if the domestic millers are prepared, or able, to lower their minimum bushel weight standards.
Ensus will be producing bioethanol by the end of the week I understand, with Vivergo still set to set to begin operations in the last quarter of 2012, further tightening the UK supply and demand balance sheet.
That has some now pegging the UK's exportable wheat surplus at less than one million tonnes in 2012/13.
Lunchtime News
29/08/12 -- The overnight electronic market is firmer, with wheat up 10/13 cents, beans up 10-12 cents and corn 8-10 cents higher.
Saudi Arabia are tendering for 550 TMT of hard wheat for Dec/Feb shipment. Tunisia is looking for 150 TMT of optional origin milling wheat for Oct/Dec shipment.
The market seems to suddenly be getting excited about Friday's upcoming meeting between the Russian PM and Ag Minister, and what action (if any) they may take to restrict grain exports.
The Russian Ministry say that 62% of the harvest is in, producing a grain crop of 53.4 MMT so far, with yields averaging 1.92 MT/ha, a drop of 27% on last year at this time. Harvesting in the Urals is 47% complete, with the Volga district at 72% finished.
Meanwhile, Ukraine's harvest is two thirds done, producing a grain crop of 25.5 MT with yields averaging 2.57 MT/ha, down 15% on last year.
Yields down "only" 27% in Russia and 15% in Ukraine are probably not as bad as the market has been thinking. That said, in the case of the former we are now moving onto what is traditionally less productive land, and for the latter they are just getting going with corn which is said to have not done very well this year.
China's CNGOIC says that the country's annual soybean crushing capacity has reached 125 MMT, up 30 MMT in the past two years, yet the 2012/13 crush will only total 63 MMT (of which 57 MMT will be imported soybeans). The 2011/12 crush is estimated at 60 MMT versus 55 MMT in 2010/11.
Ten years ago the Chinese soybean crush was only 20 MMT, and 20 years ago it was less than 4 MMT.
The US weather is turning a little wetter, which may help some late developing soybeans but also slow the harvest for others, and corn too of course. There's moisture in the forecast for the HRW areas on the Plains too over the next 14 days, which will be welcome although unlikely to be enough to fully replenish depleted soil moisture deficits.
Northern China has picked up some heavy rains on the back of the the remnants of Typhoon Bolaven.
The outlook for Argentina is mainly dry through to Sunday, with the 6-10 day outlook wetter in central areas. They've had an unusually wet August, which augurs well for recently planted winter wheat and upcoming sowing of corn and soybeans a few months from now.
In Brazil, some spotty dryness remains in Rio Grande do Sul and dryness continues to increase in Parana, according to MDA CropCast.
Chicago Closing Comments - Tuesday
28/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.32 1/2, up 2 3/4 cents; Nov 12 Soybeans closed at USD17.22 1/4, up 3 1/2 cents; Sep 12 Soybean Meal closed at USD534.20, up USD2.40; Sep 12 Soybean Oil closed at 55.73, down 18 points. There wasn't a lot of fresh news today, with funds finishing up net buyers of an estimated 4,000 soybean contracts on the day. The USDA announced the sale of 110 TMT of US beans to omnipresent China for 2012/13 delivery. Taiwan also bought 58 TMT of US beans for Nov shipment and 120 TMT of Brazilian beans for March/July shipment. Taiwan is not a regular buyer of US beans, and this would seem to confirm that Brazil are pretty much sold out until new crop. Celeres report that 98% of the Brazilian 2011/12 bean crop has been sold versus 84% a year ago. They also say that 43% of the Brazilian 2012/13 crop has already been sold compared to 15% a year ago. Oil World estimated Brazil’s Sept 1st soybean stocks at 15.59 MMT versus 26.15 MMT a year ago, with Argentina’s at 18.5 MMT compared to 26.1 MMT a year ago. They estimated Brazilian 2012/13 soybean production at 82.0 MMT, up 23.5% on 66.4 MMT in 2011/12. Argentina's 2012/13 output is forecast at 56.0 MMT, up 38% on the 2011/12 crop of 40.5 MMT. Both of those are a long way off though, planting in Brazil is at least three weeks away yet, with Argentina even later than that. Michael Cordonnier estimated the 2012 US soybean yield at 35.5 bpa versus his previous estimate of 36.0 bpa and the USDA's 36.1 bpa.
Corn: Sep 12 Corn closed at USD7.89 1/2, down 5 cents; Dec 12 Corn closed at USD7.95 1/2, down 5 1/4 cents. Funds were estimated as being net sellers of around 3-5,000 corn contracts on the day, adding to their recent liquidation phase. Heavy rains in the Delta area from Hurricane Isaac may do more harm than good at this stage for US corn in the area. The associated high winds also hold some damage potential. MARS estimated the EU corn yield at 6.28 MT/ha, down 18% from a year ago. Michael Cordonnier estimated the 2012 US corn yield at 121.0 bpa versus his previous estimate of 123.0 bpa and the USDA's 123.4 bpa. UkrAgroConsult estimated the Ukraine grain crop at 42.38 MMT versus previous estimate of 43.87 MMT. Exports are seen at 21.5 MMT, down from their previous estimate of 23.3 MMT. More than half that total is likely to be corn. They've exported just over 1 MMT of corn so far in 2012/13 versus just 48,400 MT at this time a year ago. The trade is still digesting Friday night's results from the Pro Farmer Crop Tour. Benson Quinn Commodities Inc report that out of the last ten years the tour has over-estimated corn yields five times, and under-estimated them five times compared with the final USDA assessment.
Wheat: Sep 12 CBOT Wheat closed at USD8.54 3/4, down 7 1/4 cents; Sep 12 KCBT Wheat closed at USD8.67 1/2, down 5 1/2 cents; Sep 12 MGEX Wheat closed at USD9.10, down 2 3/4 cents. Funds were said to have been net sellers of around 2,000 Chicago contracts on the day. IKAR estimated Russia’s 2012 wheat crop at 40.0 MMT versus 56.2 MMT in 2011. The Russian PM and his Ag Minister are set to meet Friday to discuss the grain markets. At this stage it seems that export duties are more likely than an outright export ban. Egypt bought Russian wheat for October shipment over the weekend, it is not thought that Russian traders have offered anything any further forward than that as yet. Jordan are tendering for 100 TMT of optional origin wheat for Nov/Jan shipment along with 150 TMT of optional origin barley for a similar delivery period. MARS estimated EU soft wheat yields at 5.57 MT/ha, exactly in line with the 5-year average, although marginally lower than last year's 5.59 MT/ha. Improved yields in Europe's two largest wheat producing nations of France and Germany are seen compensating for losses elsewhere, most notably Romania, Estonia and Slovakia. Durum yields are forecast at 3.00 MT/ha versus 3.20 MT/ha in 2011/12.
EU Wheat Closing Comments - Tuesday
European jitters are to the forefront again on reports that Spain's Catalonia region said that it needs a major financial rescue from Madrid, amidst suggestions that the Spanish government itself will also soon require a sovereign bailout.
The G20's Agricultural Market Information System body, or AMIS, that has been set up to monitor rising world grain and oilseed prices says that the current situation is "worrying" but not yet a threat to global food security. The French, who chair the body, said that the G20 will wait until after the September USDA crop report before making a decision on any possible food price action.
The South Korean President last week asked G20 leaders to modify their biofuel policies "to cushion supply shocks."
Ukraine's Ag Ministry says that the country has exported 1.54 MMT of grains so far this month, bringing the marketing year-to-date total to 2.7 MMT, up 82.6% on this time last year when early season exports were particularly sluggish. Wheat accounts for 1.17 MMT and corn for 1 MMT of total exports so far.
Kazakhstan says that the harvest there is 40.6% done producing 4.7 MMT of grain to date. Yields of just 0.74 MT/ha are down 46% on last year's 1.37 MT/ha at this time. The Ministry say that the final harvest volume will total 13 MMT, less than half of last year's total.
Russian analysts IKAR have cut their domestic wheat production forecast to 40 MMT versus 56.2 MMT in 2011, although slightly better than SovEcon's 39 MMT estimate of last week.
The EU Commission's MARS unit peg EU-27 soft wheat yields "average" at 5.57 MT/ha this year, versus 5.59 MT/ha last year and the 5-year avg of 5.57 MT/ha. Barley yields are forecast likewise, at 4.32 MT/ha versus 4.31 MT/ha last year and the 5-year avg of 4.36 MT/ha.
Corn yields however will slump to 6.28 MT/ha versus 7.62 MT/ha last year and the 5-year avg of 6.94 MT/ha, led by a sharp drop from Romania, Bulgaria and Hungary, they add.
In the UK, wheat yields are forecast to average at an ambitious looking 7.82 MT/ha, with barley yields coming in at 5.66 MT/ha (winter barley 6.33 MT/ha and spring barley 5.28 MT/ha).
Oilseed rape yields in Europe are seen very close to the 5-year average at 3.01 MT/ha, led by a sharp rebound of 21.8% higher in Germany. UK yields are forecast 15.7% lower than last season's record at a tad below average 3.32 MT/ha.
Life On Mars
28/08/12 -- The EU Commission’s Monitoring Agricultural Resources unit (also known as MARS) say that EU-27 wheat yields will come in marginally below the 5-year average of 5.31 MT/ha this year at 5.29 MT/ha, a little over 1% down on last season.
That all sounds fairly plausible doesn't it? Well, it does until you discover that yields in the UK are seen coming in BETTER than the 5-year average AND last year at 7.82 MT/ha.
Clearly it would seem that these boys take their name from the place where they have been living and issuing their crop forecasts from this summer, as that's probably about how far you'd have to travel to find someone else who thinks that UK yields will average 7.82 MT/ha this year.
Moving
Certainly I will be doing the usual closing reports for London/Paris wheat and Chicago grains later on. I may even find time for one or two other bits, you never know.
There'll be new phone and fax numbers, which I will email out today/tomorrow once I have them, to those of you who's email addresses I have.
Chicago Closing Comments - Monday
27/08/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.29 3/4, down 7 3/4 cents; Nov 12 Soybeans closed at USD17.18 3/4, down 12 3/4 cents; Sep 12 Soybean Meal closed at USD531.80, down USD1.60; Sep 12 Soybean Oil closed at 55.91, down 33 points. Funds were estimated to have finished up as net sellers of around 6,000 soybean contracts on the day, banking profits after prices surged to fresh highs in early electronic trade. Those early gains were likely tied to the news released after the close Friday that the Pro Farmer Crop Tour was pegging US soybean yields and production lower than the USDA's August estimate at 34.8 bu/acre and 2.6 billion bushels. Speculation that both China and the US will soon take further measures to stimulate their respective economies was also deemed supportive. Midway through the daytime session Informa came out with a new estimate on soybean yields of 37.2 bu/acre, which is 1.1 bu/acre more than the USDA said earlier this month. Weekly export inspections of 17.407 million bushels were also below trade estimates of 20-25 million. Big prices will encourage record plantings in South America for next year's harvest. Safras e Mercado estimate Brazil’s 2012/13 soybean planted area at 27.218 million hectares versus 25.0 million in 2011/12, an increase of nearly 9%. That puts Brazil’s 2012/13 soybean crop at a record 82.295 MMT, an increase of 24% on 2011/12 and more than a million tonnes above the USDA's current estimate. Argentina’s 2012/13 soybean area is estimated rising 14% to 19.9 million ha, with production seen up more than 40% to 57.7 MMT - both also a record.
Corn: Sep 12 Corn closed at USD7.94 1/2, down 7 3/4 cents; Dec 12 Corn closed at USD8.00 3/4, down 7 3/4 cents. As with soybeans, early strength was linked to the late release of the Pro Farmer Crop Tour yield and output estimates on Friday. These placed US corn yields and production at 120.2 bpa and 10.478 billion bushels, versus the USDA's 123.4 bpa and 10.779 billion bushels. Yet funds were said to have been net sellers of around 8,000 corn contracts on the day, meaning that they are thought to have liquidated around 40,000 corn contracts across the last four sessions. Corn continues to find the USD8/bu mark a difficult one to hold above. Weekly export inspections were below expectations of 20-25 million bushels at only 14.458 million, maybe a sign of further demand destruction at these levels? That was less than half the volume of corn inspected for export this time last year. Tropical Storm Isaac is closing grain elevators, which combined with low water levels on the Mississippi, is restricting movement of newly harvested corn. After the close the USDA cut corn crop conditions by one point to just 22% good/excellent, with poor/very poor raised by a corresponding amount to 52%. Harvesting is seen at 6% complete versus 2% normally. Fully 26% of the crop is mature against 8% on average at this time, they add.
Wheat: Sep 12 CBOT Wheat closed at USD8.62, down 5 1/2 cents; Sep 12 KCBT Wheat closed at USD8.73 1/4, down 3 cents; Sep 12 MGEX Wheat closed at USD9.12 3/4, down 5 3/4 cents. Funds were said to have sold 2,000 CBOT wheat contracts on the day. Weekly export inspections were at the bottom end of expectations of 18-24 million bushels at 18.884 million. Russia and Romania picked up an Egyptian tender over the weekend. French wheat was said to be priced at around USD18-20/tonne above the traded prices, with US wheat a further USD40/tonne out. Decent and needed rains are expected for winter wheat areas ahead of planting which should begin in around a months time. The USDA placed the spring wheat harvest at 89% done versus only 57% normally. Russia's wheat harvest is said to be around 60% complete, producing a crop of around 30 MMT so far. The Russian Prime Minister and the Ag Minister are said to be due to hold a meeting on Friday to discuss Russia’s grain crop/exports. Some are speculating that an export ban may be on the agenda, Russian officials currently say that this is not the case. Kazakhstan has harvested almost 4.6 MMT of grains off nearly 40% of the planted area with average yields coming in at just 0.74 MT/ha.
Paris Wheat Ends Little Changed Monday
27/08/12 -- EU grains ended mixed, London wheat was closed for the bank holiday weekend, Nov 12 Paris wheat ended unchanged at EUR260.25/tonne, with other months EUR0.25/tonne lower to EUR0.50/tonne higher.
It was a pretty lacklustre session, early strength in the overnight Globex market saw soybeans set fresh contract highs, tied to lower production forecasts from the Pro Farmer Crop Tour of the US released after the close of Chicago on Friday night.
The US Midwest saw heavier rains than expected in west central and north central areas over the weekend. Central Kansas and parts of Oklahoma also received much needed rain.
In addition the fallout from Tropical Storm Isaac is likely bring decent rains for the central and southern Midwest over the next few days. Only minimal benefit may be gleaned by soybeans and corn at this late stage in their development, but potentially heavy rain for the southern Plains could be a boon ahead of winter wheat planting in states like Kansas and Oklahoma.
Argentina saw drier weather over the weekend, also a boost after a very wet August, whilst Brazil's wheat areas picked up some welcome rainfall.
Egypt bought 120 TMT of Russian wheat and 60 TMT of Romanian wheat for October shipment over the weekend, proof that the former aren't out of the market just yet.
The Russian Prime Minister and the Ag Minister are said to be due to hold a meeting on Friday to discuss Russia’s grain crop/exports.
Ukraine will export 23.3 MMT of grains in 2012/13, including 15.5 MMT of corn, according to the APK-Inform Agency. Despite anticipated lower cereal production this year that's a drop of less than 1% on exports in 2011/12 due to the high level of carryover stocks left from the 2011 harvest.
India said that they will release a total of 170 TMT of wheat from it's reserves onto the domestic market in September and October in addition to the 1.3 MMT of wheat that they have already sold off, much of which is finding it's way into the Asian market.
Morning Markets
27/08/12 -- London may be closed, but it's business as usual for the rest of the world's grain markets, and business is higher to start the week with the electronic Globex market seeing soybeans around 20 cents higher, with corn up 4-5 cents and wheat around 2-3 cents firmer.
The market is reacting to the Pro Farmer Crop Tour numbers which were released after the CBOT close on Friday night. They pegged US soybean production this year at 2.6 billion bushels and corn output at 10.478 billion bushels. The former being around 3.5% lower than the USDA's current 2.692 billion bushels estimate, and the latter down 2.8% on the USDA's 10.779 billion bushels.
Reports that China may be considering plans to support economic growth, and the release of a letter from Ben Bernanke saying that the Fed has the room to deliver further QE measures should they be needed are giving the markets a feel good factor. So too were conciliatory comments from Merkel and Hollande concerning the Greek plight over the weekend, even if they were only words and not action (again).
Nov 12 Globex soybeans have hit a contract high in overnight trade, so too have soymeal values on China's Dalian Commodity Exchange.
Egypt has bought 180,000 MT of wheat in a weekend tender, two cargoes from Russia and one from Romania for Oct 1-10 delivery.
Keen to cash in on current wheat prices, India says it has released 1.3 MMT of wheat onto the international market so far and says that it plans to sell a further 100,000 TMT in September and 70,000 MT in October.
Agrimoney report that the late harvest and poor quality of what has been cut for far has seen a spate of feed wheat imports into the UK in recent weeks from origins such as Poland, Denmark, Latvia and Estonia.
Russia's wheat harvest is said to be around 60% complete, producing a crop of around 30 MMT so far. The hot and dry weather there means that the corn harvest is now underway around 10 days earlier than normal.
