Nogger's Blog

Chicago Closing Comments - Friday

14/09/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.36 1/2, down 7 cents; Nov 12 Soybeans closed at USD17.39, down 8 1/4 cents; Sep 12 Soybean Meal closed at USD524.60, down USD8.90; Sep 12 Soybean Oil closed at 56.64, up 18 points. On the week Sep 12 beans gained just 4 3/4 cents, whilst Sep 12 meal shed USD7 and Sep 12 oil added 57 points. Funds were estimated as being net sellers of around 5,000 soybean contracts on the day. September contracts went off the board today. The recent trend of spring months gaining on the nearbys continued today for both beans and meal. That may be down to harvest pressure, or the notion that the forwards are too cheap. The US has 72% of the USDA's entire projected 2012/13 sales on the books already. The USDA had the soybean harvest at 4% complete last week, that should be nearer to 10% on Monday night. The Fed announcement of further economic stimulus measures has the dollar under pressure, falling to a 4 1/2 month low against the pound today. Lanworth Inc, the satellite technology analysts, estimated the 2012 US soybean crop at 2.6 billion bushels versus the USDA's estimate of 2.634 billion and 15% down on last year. The NOPA August Crush came in at 124.773 million bushels, lower than the 128.3 million the trade was expecting, although above the 118.8 million crushed in Aug 2011.

Corn: Sep 12 Corn closed at USD7.77 1/2, up 3/4 cent; Dec 12 Corn closed at USD7.82, up 8 1/4 cents. On the week Sep 12 was 17 1/2 cents lower, with Dec 12 down a similar amount. Funds were said to have been net buyers of around 8,000 corn contracts on the day. Argentina said that it has authorised a further 2.75 MMT of 2011/12 corn for export, bringing the total for the marketing year to date to 16.45 MMT. Planting for the 2012/13 crop is just getting underway, hampered by too much rain. The Ministry says that 2.2% of the crop is in the ground so far compared to 4.3% this time last year. Harvest pressure may be weighing a little on corn. The USDA said that 15% of the crop was harvested as of last week, that could be more like 25% in Monday night's report. Lanworth estimated the 2012 US corn crop at 10.14 billion bushels versus the USDA's estimate released Wednesday of 10.727 billion. That would represent a cut of 18% on last year, despite a sharp increase in planted area. "China is on track to produce a record corn harvest this season estimated at 198-200 MMT. Domestic consumption is pegged at 201 MMT, suggesting that only small imports will be needed in the 2012/13 marketing year. Growing conditions have been nearly ideal. Very heavy July rainfall insured favourable pollination while summertime warmth boosted development encouraging tall plants and large ears," say Martell Crop Projections.

Wheat: Sep 12 CBOT Wheat closed at USD8.97 1/2, up 18 1/2 cents; Sep 12 KCBT Wheat closed at USD9.29, up 25 1/4 cents; Sep 12 MGEX Wheat closed at USD9.71 3/4, up 32 1/4 cents. On the week overall Chicago wheat gained 12 3/4 cents, Kansas wheat added 29 3/4 cents and Minneapolis 31 cents. Funds were said to have been net buyers of around 4,000 Chicago wheat contracts on the day. Egypt bought Russian, Ukraine and French wheat for the second time this week. US and Canadian wheat worked out around USD25-27/tonne more expensive once freight is added on. The market seems pretty relaxed about that though, confident that the former two at least will soon be sold out. ANZ estimated Australia’s 2012 wheat crop at only 20 MMT, far below the USDA's 26 MMT figure, which if true would clearly place a large question mark over the USDA's forecast 2012/13 Australian exports of 21 MMT, even with a large carryin from 2011/12. In the US winter wheat planting is just getting underway on the Great Plains. "Rainfall increased last week in the US heartland, easing drought and improving field moisture for winter wheat planting. Texas, Oklahoma and Kansas received scattered heavy rainfall over 1 inch. There is a long way to go to fully replenish parched fields, but recent rains are a step in the right direction," say Martell Crop Projections.

London Wheat Ends At Near 17-Month Closing High

14/09/12 -- EU grains ended mostly higher with Nov 12 London wheat GBP2.50/tonne firmer to close at GBP207.00/tonne and with Nov 12 Paris wheat EUR2.25/tonne higher at EUR266.50/tonne.

This was the highest close for a front month on London wheat for almost 17 months. On the week overall though Nov 12 London wheat only managed to add GBP1.05/tonne and Nov 12 Paris wheat EUR1.50/tonne.

The announcement of further QE measures by the US Federal Reserve buoyed the markets in general Friday, with European stocks adding around 1.5-2.0% on the day.

Tunisia bought 50 TMT of optional origin durum wheat overnight, possibly French, for Oct/Nov shipment.

French wheat certainly did win a second share of this week's Egypt business Thursday night, and was shown to now be matching Russian and Ukraine origin wheat on price.

Brussels issued 409 TMT of soft wheat export licenses this week, the best showing since March, although cumulative 2012/13 sales are still lagging last season by 14%, Not so for barley, where this week's total of 206 TMT brings the marketing year-to-date total to 1.65 MMT, an 85% increase on a year ago.

At home, "a sustained period of improved weather" has allowed the domestic wheat harvest to progress to 90% complete, say the HGCA. They say that yields are below average at 7.1-7.4 MT/ha, which would imply a crop of around 14.5 MMT if we take the middle ground using a generally accepted planted area of 2 million hectares.

Specific weights are low, averaging only 65-70kg/ha, they note, meaning that "deductions for low specific weights are common."

Spring barley harvesting is around 70% complete, with spring OSR around 40% done. Spring barley yields are better than expected, although below the 5-year average at around 5.1-5.4 MT/ha. Spring OSR yields are also "on the low side" at an average 2.1 MT/ha, they add.

Now that the harvest in the northern hemisphere is drawing to a close, the market is focusing on how crops in the southern hemisphere are faring.

ANZ Bank estimated Australia’s 2012/13 wheat crop at only 20 MMT, well below the general consensus of 22-23 MMT and considerably less than the USDA's estimate of 26.0 MMT. If accurate, that would be a reduction of almost a third on last year and their smallest crop since 2007/08. That would certainly have a negative impact on Australia's export ambitions in 2012/13, which the USDA currently estimate at 21 MMT.

Australia, which has a domestic wheat consumption of around 7 MMT per annum, was said to have had carryover stocks of 7.7 MMT at the end of 2011/12.

Elsewhere things look a little brighter, Argentina Ag Ministry estimate the 2012/13 wheat crop there at 12.5 MMT versus the USDA's estimate of 11.5 MMT. The Buenos Aires Grains Exchange said that the widely publicised flooding in Argentina has only affected a small proportion of this year's wheat crop.

EU Rapemeal Prices

14/09/12 -- Rapemeal prices on the continent are higher today, in line with gains in Chicago soymeal overnight and a firm tone to seed prices.

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

The Morning Vibe

14/09/12 -- The overnight Globex market is generally a little firmer, with beans up 7-9 cents, corn up 4-5 cents and wheat around 10 cents firmer.

All the front month September contracts in Chicago go off the board this afternoon.

Egypt bought wheat again late yesterday (for last week Nov delivery), with French origin grain coming out at around parity with the other winning bids from Russia and Ukraine.

Russian wheat was offered, and accepted, though with a delivery period through to the end of November. It is probably now only a matter of days before Egypt are back to test the water again, this time for 1st week December shipment.

The winning bids were all around the USD361/tonne mark, including freight. US and Canadian wheat worked out around USD25-27/tonne more expensive once freight was added. The market doesn't seem overly bothered about this for now, the prices paid were around USD16/tonne higher than the Nov 1-10 Russian wheat bought only a week ago and USD6/tonne higher than they paid for Nov 11-20 delivery just two days ago.

Tunisia is tendering for 50 TMT of optional origin durum wheat for Oct/Nov shipment. Bangladesh is also in the market for wheat, an order likely to be filled by India.

Brussels issued 409 TMT of soft wheat export licenses this week, bringing the cumulative marketing YTD total to 2.5 MMT, down 14% on this time last year.

In stark contrast they also issued 206 TMT of barley export licenses this week, bringing the marketing YTD total to 1.65 MMT - that's up 83% on this time last year. The world wants barley it would seem, and whilst the Southern Hemisphere harvest in Australia and Argentina is months away yet Europe is proving to be one of the few shops open it appears.

Chicago Closing Comments - Thursday

13/09/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.43 1/2, up 2 3/4 cents; Nov 12 Soybeans closed at USD17.47 1/4, up 1 1/2 cents; Sep 12 Soybean Meal closed at USD533.50, down USD1.90; Sep 12 Soybean Oil closed at 56.46, up 55 points. September contracts go off the board tomorrow. Funds were said to have been buyers of around 3,000 soybean contracts on the day. The market was buoyed late in t he day by news of further QE stimulus measures from the Fed. Weekly export sales of 628,200 MT were in line with the expected 500-800 TMT. China was the biggest buyer at 340,800 MT. We are now into the new 2012/13 marketing year, US soybean exports in 2011/12 were down 8% on the previous year. An assortment of analysts are forecasting China's soybean imports to start to drop over the next few months. Chinatex estimate China’s Oct bean imports at 2.5 MMT, down by more than a third on the 3.8 MMT purchased a year previously, and their lowest monthly total since Feb 2011. The Chinese government sold almost all of the 400 TMT of state-owned soybeans offered at today's bi-weekly auction. Chinatex estimated China’s Oct12–Mar13 soybean imports at 25.0 MMT, a drop of more than 11% on the same period in 2011/12.

Corn: Sep 12 Corn closed at USD7.76 3/4, up 5 3/4 cents; Dec 12 Corn closed at USD7.73 3/4, up 4 1/4 cents. Funds were said to have been net buyers of around 5,000 corn contracts on the day. Weekly export sales of 214,800 MT for the 2012/013 marketing year were at the low end of trade expectations of 200-400 TMT. There were also sales of 212,500 MT for delivery in 2013/14. US corn exports in 2011/12 were down 16% on the previous year. The Fed announcement of QE3 is supportive and could lead to more fund money coming into the market for grains, and also underpin crude and other commodities. Strategie Grains cut their EU-27 corn production forecast by 4.3 MMT from last month to 53.7 MMT which is almost 3.5 MMT below the USDA's estimate released yesterday. CNGOIC estimated China’s 2012/13 corn output at 197.0 MMT up 2.2% from a year ago, corn imports in 2013 will only total 1 MMT, they said. Ag Canada estimated that Canada will export 1.2 MMT of corn this season, they're normally a net importer. Both Argentina and Brazil are forecast to export record volumes of corn in 2012/13, ensuring that the US doesn't have everything entirely it's own way.

Wheat: Sep 12 CBOT Wheat closed at USD8.79, up 12 cents; Sep 12 KCBT Wheat closed at USD9.03 3/4, up 11 cents; Sep 12 MGEX Wheat closed at USD9.39 1/2, unchanged. Fund activity had them attributed to being a net buyer of around 3,000 CBOT wheat on the day. Weekly export sales of 381,800 MT were at the low end of expectations for sales of 300-600 TMT. Still, the trade drew some solace from Egypt's seventh tender in a month, even if US wheat didn't feature once again. US and Canadian wheat was priced out to the tune of USD10-15/tonne, and that is before adding on more expensive freight costs. Strategie Grains pegged EU-27 wheat output at 131.6 MMT, 3.7% down on last year and 0.8 MMT lower than yesterday's USDA report. India's official weather office said that Sept 6-12 rainfall was 21% above normal. Wheat planting there will begin next month before the first big harvest of 2013 commences in March, for what is a short season crop. Wheat output next year is expected to be "at least 90 MMT" say the Ministry there. Meanwhile India continues to seek export business, with an estimated 2 MMT earmarked for foreign sales between now and the end of the year. Crop conditions in Australia (too dry) and Argentina (too wet) appear reluctant to go away.

EU Wheat Closing Comments

13/09/12 -- EU wheat closed mostly firmer on the day, with Nov 12 London wheat up GBP0.75/tonne to GBP204.50/tonne and Nov 12 Paris wheat climbing EUR3.5/tonne to EUR264.25/tonne.

Just as you thought that the USDA had finally fallen into line with most of their worldwide crop forecasts yesterday, French analysts Strategie Grains came out with an EU-27 corn production estimate of 53.5 MMT. That's 4.3 MMT down on last month's forecast, 19% down on last year, and fully 3.64 MT below the USDA's revised number from yesterday.

They blamed the reduction on "dry, hot conditions (that) persisted in central and southern Europe through August, disrupting grain filling."

They also reduced their forecast for EU-27 soft wheat production this year by 1.7 MMT from last month to 123.6 MMT, a 4% cut on last year. All wheat output was pegged at 131.6 MMT, 3.7% down on last year and 0.8 MMT lower than yesterday's USDA report.

Overall they cut their EU-27 total grain crop estimate to 270.5 MMT versus their previous estimate of 274.9 MMT.

Ukraine's Ministry said that it had harvested 26.8 MMT of grains, including 14.5 MMT of wheat and 1.2 MMT of corn so far in 2012. Wheat exports appear to have been voluntarily capped at 4 MMT this season, according to media reports.

Kazakhstan said that it has harvested 10.08 MMT of grains so far off 79% of the planted area, yields are very slowly creeping up at 0.83 MT/ha, although still 46% down on last year. That implies a final harvest result of around 12.75 MMT, in line with Ministry expectations.

In breaking news late in the day, Egypt said it had bought 235,000 MT of Russian, French and Ukrainian wheat for Nov. 21-30 shipment this afternoon. That was the world's largest wheat buyer's seventh purchase in a month. Russian wheat accounted for just over half of the volume purchased, although its competitive edge over other origins is disappearing rapidly.

This is their furthest forward purchase from Russia that we know of so far, an underscores their willingness to keep offering wheat, in line with the Ministry insistence that they will not be introducing an "unfair" export tax or ban.

USDA Weekly Export Sales Highlights

13/09/12 -- The USDA's weekly export sales report for the period August 31-September 6 came in as follows:

Wheat: Net sales of 381,800 MT were at the low end of expectations for sales of 300-600 TMT. Exports of 487,400 MT were down 19 percent from the previous week but interestingly included 113,700 MT bound for China.

Corn: There were sales of 214,800 MT for the 2012/013 marketing year, versus expectations of 200-400 TMT, along with sales of 212,500 MT for delivery in 2013/14. A total of 1,667,200 MT in sales were outstanding on August 31 (the end of the 2011/2012 marketing year) which were carried over to the 2012/13 marketing year. Accumulated exports for the 2011/12 marketing year were 37,914,800 MT, down 16 percent from from 2010/11's total of 45,256,400 MT.

Soybeans: Net sales of 628,200 MT were in line with the expected 500-800 TMT. China was the biggest buyer at 340,800 MT. A total of 2,016,800 MT in sales were outstanding on August 31 (the end of the 2011/12 marketing year) which were carried over to the 2012/013 marketing year. Accumulated exports for the 2011/12 marketing year were 36,739,200 MT, down 8 percent from 2010/11's total of 39,993,100 MT.

EU Rapemeal Prices

13/09/12 -- Rapemeal prices on the continent are sharply higher following strong gains in last night's losses in Chicago soymeal after a bullish slant for soybean production in yesterday's USDA crop report.

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

Chicago Mixed, Soy Higher, Corn Lower

12/09/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.40 3/4, up 44 1/4 cents; Nov 12 Soybeans closed at USD17.45 3/4, up 44 1/4 cents; Sep 12 Soybean Meal closed at USD535.40, up USD11.50; Sep 12 Soybean Oil closed at 55.91, up 60 points. Funds were heavy buyers of beans, snapping up an estimated 14,000 contracts on the day. The USDA report came in bullish for soybeans, pegging US yields this year at 35.3 bpa vs the average trade guess of 35.5 bpa and 36.1 bpa last month. That cut production slightly below the average trade guess to 2.634 billion bushels, from 2.692 billion last month. Old crop carryout was also cut a bit more than expected to 130 million bushels from 145 million last month. After five straight sessions of declines the market was overdue a rebound anyway, and the USDA numbers provided the catalyst. South American production estimates were left unchanged, as you might expect with planting not even yet underway. The market is abundantly clear though that the world 2012/13 balance sheet is totally reliant on US beans for another 5-6 months yet. China will auction off 400 TMT of state-owned soybeans tomorrow. Trade estimates for tomorrow’s weekly export sales range from 500 to 800 TMT.

Corn: Sep 12 Corn closed at USD7.71, down 11 1/4 cents; Dec 12 Corn closed at USD7.69 1/2, down 8 1/4 cents. The USDA report was bearish for corn, not cutting potential US yields this year by as much as expected. Yields were only trimmed marginally from last month's 123.4 bpa to 122.8 bpa, 2.2 bpa more than the average trade guess. That puts 2012 US corn production at 10.727 billion bushels, right at the top end of trade estimates and 324 million above the average trade guess. Both old and new ending stocks came in above expectations too, well above at 733 million bushels versus 618 million in the case of the latter. It should be noted though that the USDA left their harvested area estimate just about unchanged at 87.361 million acres, there are many that think that will need to be reduced next month. Nevertheless, funds were said to have sold 12,000 corn contracts on the day. The weekly ethanol grind was reported as 816,000 barrels/day against last week's 829,000 bpd and 879,000 bpd a year ago. Ukraine's Ministry estimated 2012/13 grain exports at 21.0 MMT versus 21.794 MMT a year ago. Most of that will be corn, with wheat exports capped at 4 MMT. Trade estimates for the weekly export sales range from 200 to 400 TMT.

Wheat: Sep 12 CBOT Wheat closed at USD8.67, up 7 cents; Sep 12 KCBT Wheat closed at USD8.92 3/4, up 8 3/4 cents; Sep 12 MGEX Wheat closed at USD9.39 1/2, up 13 cents. It was a choppy session for wheat, which traded both sides, although settled higher with funds buying an estimated 2,000 Chicago wheat contracts on the day. Today's report was always more likely to be about beans and corn than it was for wheat with it's different growing season. The USDA put US wheat ending stocks at 698 million, unchanged from last month. Russia's crop was cut 4 MMT to 39 MMT, although they left export potential there unchanged at 8 MMT (which is 63% down on last season), with Ukraine's exports cut from 6 MMT to 4 MMT (down 27%). Australian wheat output was left unchanged at 26 MMT, which looks increasingly unlikely in the wake of drought in Western Australia. Other trade estimates are centred around 22-23 MMT. Egypt issued it's seventh wheat tender in a month, as it continues to mop up cheap Black Sea origin grain. This one is for delivery Nov 21-30, the furthest forward yet, so it will be very interesting to see if Russian wheat is offered at all. Trade estimates for the weekly export sales range from 300 to 600 TMT.

EU Wheat Mostly Lower As USDA Report Pressures

12/09/12 -- EU wheat closed mixed but mostly lower on the day following the release of the USDA report,which was bearish for corn, but bullish for soybeans, sending both scuttling off in different price directions in the US. Nov 12 London wheat closed GBP0.75/tonne lower on the day at GBP203.75/tonne and Nov 12 Paris wheat fell EUR2.75/tonne to EUR260.75/tonne.

The USDA's September supply & demand report didn't cut US corn yields by as much as expected, which gave us a 2012 crop towards the upper end of expectations at 10.727 billion bushels (272.5 MMT) even if it still represents a cut of over 13% on last year.

For wheat the data could probably be called neutral and generally in line with expectations, although it fell immediately after the release of the numbers in sympathy with corn. Russia's wheat crop was cut from last month's 43 MMT to 39 MMT, bringing them into line with other analysts' estimates. Kazakhstan's crop was cut half a million tonnes, although that was balanced by a rise of the same in Ukraine's output.

Closer to home, they cut the EU-27 wheat crop by half a million tonnes to 132.4 MMT (down 3.7% versus 2011/12), principally due to a downwards revision for UK wheat output this year from 15.5 MMT last month to 14.8 MMT this time round, although the latter still looks a little ambitious using an average yield of 7.36 MT/ha.

Europe's barley crop was raised 1 MMT to 53.9 MMT, almost 5% up on last year, mainly due to an increase in production from Germany. The UK's barley crop estimate was placed at 5.5 MMT, which is 200,000 MT down on last month with yields seen averaging 5.61 MT/ha.

The EU-27 rapeseed crop was placed 300,000 MT higher than last month at 18.8 MMT, 1.4% down on last year, of which the UK is seen supplying 2.64 MMT, unchanged on a month ago, with yields averaging 3.59 MT/ha.

On a world trade front the USDA increased Europe's share of the world export market by 0.5 MMT from last month to 17.5 MMT, a 1.1 MMT increase on 2011/12. Russia's wheat exports were left unchanged at 8 MMT (63% down on last season), with Ukraine's cut from 6 MMT to 4 MMT (down 27%).

World wheat ending stocks for 2012/13 were cut 0.5 MMT to 176.7 MMT, not as low as the 171.5 MMT that the trade had been expecting.

Falling into line with the USDA estimate, the Ukraine Ministry outlined their intention to cap wheat exports at 4 MMT this season, of which around 1.7 MMT has already been shipped.

FranceAgriMer cut their estimate for soft wheat production there by nearly 600 TMT to 36.1 MMT, although that still represents an increase of 6.2% on last year. Barley output was forecast to surge by more than 30% this year to 11.5 MMT on increased plantings and a 20% rise in yields.

In other news, the euro rose to a four-month high against the dollar today following the news that the German constitutional court this morning rejected a petition to block the European Stability Mechanism (ESM).

USDA Report Reaction

12/09/12 -- The eagerly awaited USDA report is out and as per usual (and Septic Peg's prediction) there are a few surprises in there.

Peg was right in saying that the trade wasn't going to get the bullish corn report that they were expecting. US corn yields were only trimmed marginally from last month's 123.4 bpa to 122.8 bpa, 2.2 bpa more than the average trade guess.

That puts 2012 US corn production at 10.727 billion bushels, right at the top end of trade estimates and 324 million above the average trade guess. Old crop 2011/12 corn ending stocks were also raised, taking new crop 2012/13 US carryout to 733 million bushels, 83 million up on last month, and contrary to trade expectations for a 32 million bushel cut.

US corn demand from the ethanol sector was left unchanged at 4.5 billion bushels, or 42% of the crop.

For beans, the trade guesses were closer to the mark, with US yields this year cut from 36.1 bpa last month to 35.3 bpa this time round vs the average trade guess of 35.5 bpa. The 2012 US soybean crop came in almost exactly as expected at 2.634 billion bushels, with old crop carryout cut a bit more than expected to 130 million bushels from 145 million last month.

New crop 2012/13 US ending stocks were however left unchanged from last month at 115 million bushels. As too were wheat stocks at 698 million.

On a global level 2012/13 ending stocks came in higher than anticipated for corn, wheat and soybeans. Although the latter two were trimmed slightly from last month, they weren't cut as much as expected and world corn stocks were actually raised a tad.

They cut Russian wheat output this year to 39 MMT, which brings them into line with other trade forecasts. Kazakhstan's wheat crop was cut half a million to 10.5 MMT, but Ukraine's was raised a similar amount to 15.5 MMT. Australian wheat output was inexplicably left unchanged at 26 MMT, with the rest of the world lining up in the 22-23 MMT region.

Also of note creeping in off the radar screen a little was a 4.5 MMT cut to EU-27 corn output this year, to 57.14 MMT from 61.54 MMT previously.

The USDA Numbers

12/09/12 -- The USDA's September WASDE numbers are out, here's some of the main ones:

USDA 2012 US Yield Estimates (bushels/acre):

USDA 2012 US Production Estimates (billion bushels):


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


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


USDA 2012/13 World Ending Stocks Estimates (MMT):


World 2012/13 Crop Production (MMT):

Septic Peg's Been On The Line Again

12/09/12 -- Septic Peg, my spirit guide from beyond the grave, has been on the blower (they're allowed one phone call a fortnight in the after life) to say that that bloke out of The Green Mile is a really nice chap and that this afternoon's USDA report is NOT going to be as bullish on corn as the market expects.

It was a bad line (Virgin Media must have the contract up there) so I didn't get all the details. We will know the nitty gritty in just over an hour.

EU Rapemeal Prices

12/09/12 -- Rapemeal prices on the continent are mixed. Last night's losses in Chicago soymeal have largely been erased by gains in the overnight electronic market this morning.

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

Morning News

12/09/12 -- The overnight electronic market sees soybeans 10-14 cents higher, with corn up 2-3 cents and wheat 2-4 cents firmer.

Evrybody is waiting on the USDA report due out at 13.30 London time. Soybeans are up seemingly on a correction from recent losses. September closed below USD17 last night for the first time in almost a month. That was also the fifth straight session of declines during which time the front month contract has shed almost 75 cents.

Yet fundamentally nothing much has changed for soybeans. Global demand remains strong, the USDA is expected to unveil the smallest domestic soybean stockpile since 1976 this afternoon and dryness in Brazil is a concern with planting there due to start within days. The world badly needs a big crop out of South America in 2012/13.

There's a possibility that the USDA might surprise the market and raise potential US soybean yields slightly today. They need to do something if they want to avoid pegging 2012/13 ending stocks below the 100 million bushel mark (and they surely do).

For corn, it seems that another yield reduction is highly likely, with something around the 120 bpa mark the average trade guess. How are they going to balance the 2012/13 books? An increase in carry in from 2011/12 is a possibility, by virtue of increased imports and reduced exports. Feed demand could also be cut, although a further reduction in ethanol usage is probably unlikely at this stage.

For wheat, US ending stocks are expected to see a small increase to 709 million bushels from the August estimate of 698 million. It's changes to the global balance sheet that will be of more interest, particularly the Black Sea countries and Australia.

The Ukraine Ministry have outlined their intention to cap wheat exports at 4 MMT this season, of which around 1.7 MMT has already been shipped. At that rate they will be out of the wheat export market by the end of the year.

Egypt's recent buying spree can be attributed to them wanting to mop up as much cheap Black Sea wheat as possible before the barn doors are closed until next season. Russian offers do seem to be drying up with France getting it's first share of Egypt's 2012/13 business yesterday. US wheat is still priced out.

It's unlikely that Egypt will continue buying in such large and frequent quantities once the cheap sellers are out of the market though.

The German constitutional court has this morning rejected a petition to block the European Stability Mechanism (ESM), propelling the euro to a four-month high against the dollar. The pound is also up above 1.61 against the greenback for the first time since May.

Chicago Market Dips On Fund Selling Ahead Of USDA Report

11/09/12 -- Soycomplex: Sep 12 Soybeans closed at USD16.96 1/2, down 16 1/2 cents; Nov 12 Soybeans closed at USD17.01 1/2, down 17 1/4 cents; Sep 12 Soybean Meal closed at USD523.90, down USD3.30; Sep 12 Soybean Oil closed at 55.31, down 65 points. Today can probably be best described as another day of evening up ahead of tomorrow's USDA report. Funds sold an estimated 7,000 soybean contracts on the day in their third day of liquidation, further lightening their length. The trade estimates that the USDA will come out with a yield figure of 35.5 bpa from within a range of trade estimates of 32.0-36.7 bpa and the August USDA estimate of 36.1 bpa. Production is seen at an average of 2.638 billion bushels from within a range of estimates of 2.40-2.739 billion, the August estimate of 2.692 billion and the 2011 crop of 3.056 billion. Brazil is still awaiting the arrival of seasonal rains before it begins planting its 2012/13 soybean crop.

Corn: Sep 12 Corn closed at USD7.82 1/4, up 1 1/4 cents; Dec 12 Corn closed at USD7.77 3/4, down 5 1/2 cents. Fund selling was estimated at 7,000 on the day. Tomorrow's USDA report is expected to show an average 2012 US corn yield of 120.6 bpa from within a range of estimates of 117.6-123.4 bpa and the August estimate of 123.4 bpa. Production is seen at 10.403 billion bushels, from within a range of 9.86–10.779 billion, the USDA August estimate of 10.779 billion and the 2011 crop of 12.358 billion. That's a drop of almost 16% on last year despite the largest planted area in 75 years. The USDA yesterday pegged the corn crop at 15% harvested, towards the lower end of the expected 15-17%. Dented is 93% versus 86% a week ago and 77% for the 5-year average. They also rated the crop as being 58% mature versus 41% a week ago and 27% for the 5-year average.

Wheat: Sep 12 CBOT Wheat closed at USD8.60, down 8 1/4 cents; Sep 12 KCBT Wheat closed at USD8.84, down 1/2 cent; Sep 12 MGEX Wheat closed at USD9.26 1/2, down 3/4 cent. Funds were estimated as being net sellers of around 3,000 Chicago wheat contracts on the day. Egypt bought one cargo each of Russian, Ukraine and French wheat for Nov 11-20 shipment. US wheat was comfortably priced out again, although the prices paid were higher again than other recent purchases. ABARES estimated the Australian wheat crop at 22.5 MMT (in line with the expected 22.0-23.0 MMT), down 1.6 MMT from their previous estimate of 24.1 MMT and a cut of almost 24% on the record 2011/12 crop of 29.5 MMT. Even so wheat exports are only seen falling 6.5% due to the high level of carryover stocks from previous years. Bangladesh bought 50 TMT of Indian wheat for September shipment as the later continues to be an active seller on the international market.

EU Wheat Declines Pre-USDA

11/09/12 -- EU grains ended mostly lower with Nov 12 London wheat GBP2.00/tonne easier to close at GBP204.50/tonne and with Nov 12 Paris wheat EUR1.75/tonne weaker at EUR263.50/tonne.

The market was in consolidation mode ahead of tomorrow's USDA reports, nervous that there could be a surprise, particularly for soybeans.

The trade is split 75:25 in favour of a reduction in projected US soybean yields versus last month, but last night's upwards revision in soybean good/excellent ratings following Hurricane Isaac rains might suggest that a surprise increase is on the cards.

ABARES cut their Australian 2012/13 wheat crop estimate to 22.5 MMT from 24.1 MMT previously, which was bang in line with other trade estimates (except the USDA's 26.0 MMT). Despite that though, they increased wheat export potential by 0.5 MMT from last month to 21.5 MMT (and 0.5 MMT above the USDA's August estimate). That's a fall of only 6.5% from last season's record despite output falling by almost 24% thanks to very large carry in stocks from two years of bumper production.

Australia's barley production in 2012/13 was forecast to fall by 19% to around 7 MMT (the USDA currently say 8 MMT), whilst rapeseed output is expected to decline 2% to around 2.8 MMT (vs 3 MMT from the USDA).

Egypt bought 235,000 MT of Ukrainian, Russian and French wheat for Nov 11-20 shipment today. The prices involved, including freight, were 55,000 MT of Ukrainian wheat at USD352.20/tonne; 60,000 MT of Russian wheat from Glencore at USD355.38/tonne; 60,000 MT of French wheat from Granit at USD362.90/tonne.

French wheat is still clearly expensive, but at least Egypt knows it is going to get it.

This was their sixth purchase in a month, and suggests that they are looking to book up tonnage whilst Russian/Ukraine wheat is still available and holding down world market prices.

That might not be before long, as Egypt's enquiries nudge further forward Russian offers are drying up and prices are increasing rapidly. Today's Russian levels are up around USD15/tonne on the price paid for late October shipment only last Thursday.

Despite that, Russia's Deputy Prime Minister Arkady Dvorkovich reiterated once again that it has no plans to introduce grain export restrictions.

Oil World says that Germany's rapeseed plantings have increased by 13-15% this year, encouraged by high prices. French analysts Cetiom say that 2/3rds of French winter rapeseed is still to emerge due to the late cereal harvest and the hot/dry August.

UK harvest progress as of Sep 4 is placed at 55% of the wheat area, 40% of spring barley and 50% of the oat area, according to the HGCA.

Going forward, Reuters report that the EU is to impose limits on the use of crop-based biofuels over fears they are less climate-friendly than previously thought and that they compete with food production. Indications are that the industry will be left to stand on its own two feet after current mandates expire in 2020.

EU Rapemeal Prices

11/09/12 -- Rapemeal prices on the continent are mostly lower following last night's losses in Chicago soymeal, harvest pressure and slack seasonal demand.

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

The Morning Line

11/09/12 -- The overnight Globex market is narrowly mixed with beans around 2-3 cents lower, corn up 3 cents and wheat a cent or so either side.

ABARES are out with their latest Australian crop production estimates, pegging the wheat crop there at 22.5 MMT, down from their previous 24.1 MMT, although bang in line with most other trade estimates in the 22-23 MMT range (not, of course the USDA who currently go 26 MMT).

Dryness in Western Australia is the main culprit, with the wheat harvest there seen slumping almost 40% to 7.1 MMT.

Despite the production downgrades though, ABARES raised their ideas on wheat export potential for 2012/13 by 1 MMT to 21.5 MMT (and 0.5 MMT higher than the USDA) aided by the large carryover stocks left in the system from the record harvest of 2011/2.

ABARES are also forecasting barley production in 2012/13 to fall by 19% to around 7 MMT (the USDA currently say 8 MMT), while canola production is expected to decline 2% to around 2.8 MMT (vs 3 MMT from the USDA).

Hungry old Egypt are back in the market again tendering for wheat for Nov 11-20 delivery, in what looks like a further testing of the water with regards to Russian availability.

Last Thursday's tender saw Egypt by Russian, Romanian and Ukraine wheat for both late October and early November delivery, although there was only one cargo of Russian wheat offered firm for the Nov 1-10 delivery period. Including freight Ukraine wheat was the cheapest wheat on offer last week, although their reliability as a supplier is questionable.

The trade is looking to tomorrow's USDA report to unmuddy the waters with the usual mixture of anticipation and uncertainty.

For US corn a yield of 120.6 bpa is the average trade guess from within a range of estimates of 117.6-123.4 bpa and the August estimate of 123.4 bpa. Production is seen at 10.403 billion bushels, from within a range of 9.86–10.779 billion, the USDA August estimate of 10.779 billion and the 2011 crop of 12.358 billion.

For US soybeans the trade is looking for an yield of 35.5 bpa out of a range of trade estimates of 32.0-36.7 bpa and the August USDA estimate of 36.1 bpa. Production is seen at an average of 2.638 billion bushels from withing a range of estimates of 2.40-2.739 billion, the August estimate of 2.692 billion and the 2011 crop of 3.056 billion.

For US 2011/12 ending stocks we have corn estimated at 1.014 billion from within a range of estimates of 0.750-1.176 billion and the USDA's August estimate of 1.021 billion. For soybeans the market is expecting 137 million out of a range of estimates of 95-173 million and an August estimate of 145 million.

For US 2012/13 ending stocks we have corn estimated at 618 million from within a range of 506-750 million and the USDA August estimate of 650 million. For soybeans we have a tight looking 106 million average from a range of estimates of 87-117 million and the USDA August estimate of 115 million. For wheat the trade is expecting 709 million out of a range of 670-797 million and the August estimate of 698 million.

Not much change is expected to world 2011/12 ending stocks, but those for 2012/13 are all seen contracting: Corn from 123.33 MMT to 121.021 MMT; soybeans from 53.380 MMT to 51.924 MMT; wheat from 177.17 MMT to 174.489 MMT.

Chicago Sees Profit-Taking Ahead Of USDA Report

10/09/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.13, down 18 3/4 cents; Nov 12 Soybeans closed at USD17.18 3/4, down 17 3/4 cents; Sep 12 Soybean Meal closed at USD527.20, down USD4.40; Sep 12 Soybean Oil closed at 55.96, down 11 points. Funds were said to have been net sellers of around 6,000 soybean contracts on the day amidst harvest pressure. Talk that China may have cancelled US bean purchases coincided with the news that their August soybean imports fell to a 6-month low of 4.42 MMT. The Chinese government estimate September bean imports falling further to 4.2 MMT, with October imports at only 3.0 MMT. Profit-taking ahead of Wednesday's USDA report was probably also a feature. Reuters report that five out of twenty analysts in a recent survey of theirs are expecting the USDA to raise potential soybean yields this week. After the close they upped good/excellent crop conditions two points to 32%, which may add a bit more spillover pressure in the morning. Celeres say that 45% of the yet to be planted 2012/13 Brazilian bean crop has been sold versus 18% a year ago.

Corn: Sep 12 Corn closed at USD7.81, down 14 cents; Dec 12 Corn closed at USD7.83 1/4, down 16 1/4 cents. Funds were said to have sold 8,000 corn contracts on the day, also in profit-taking ahead of Wednesday's USDA report. For the first week of the 2012/13 marketing year weekly export inspections from the USDA continue to show signs of demand rationing at only 9.8 million bushels, even if that was a bit better than last week's paltry 6.37 million. The trade was expecting a number in the 15-10 million range. Weekly exports need to average around 25 million to match the USDA's 2012/13 forecast. The USDA said that the US corn his harvested is 15% complete versus 10% a week ago and 5% for the 5-year average. Good /excellent crop conditions were left unchanged at 22%. Ukraine has exported 1.18 MMT of corn in the Jul 1st-Sep 7th timeframe compared to just 56,300 MT a year ago. Their 2012/13 grain export estimate of 20 MMT is expected to be dominated by corn (at around 12 MMT). The average trade estimate for US corn production from the USDA on Wednesday is 10.403 billion bushels with a range of 9.860 to 10.779 billion and 10.779 billion last month.

Wheat: Sep 12 CBOT Wheat closed at USD8.68 1/4, down 16 1/2 cents; Sep 12 KCBT Wheat closed at USD8.84 1/2, down 14 3/4 cents; Sep 12 MGEX Wheat closed at USD9.27 1/4, down 13 1/2 cents. Funds were estimated to have been net sellers of around 3,000 Chicago wheat contracts on the day. Weekly export inspections for wheat came in at 19.586 million bushels versus expectations of 21-24 million. The USDA reported winter wheat plantings at 4% complete, two points behind average, which is perhaps due to Plains dryness and Midwest/Delta wetness following Hurricane Isaac. It's early days yet, there are chances of beneficial moisture on the Plains Weds/Thurs. India is flexing it's muscles on the international wheat export stage, making sales to Asian and Middle Eastern buyers in the past few days. Trade estimates are that private exporters will sell around a further 2 MMT between now and the end of the year. The Indian government said that wheat production in 2013 (planting begins next month) will at least match this season's record. ABARES comes out tomorrow with their latest 2012/13 Australian grain crop estimates. The trade is generally forecasting a wheat crop of around 22.0-23.0 MMT versus their previous estimate of 24.1 MMT and 29.5 MMT in 2011/12.

EU Wheat Close - Monday

10/09/12 -- EU wheat closed mixed on the day, with Nov 12 London wheat up GBP0.55/tonne to GBP206.50/tonne and Nov 12 Paris wheat climbing EUR0.25/tonne to EUR265.25/tonne.

Trade ideas are that sooner or later, and probably the former, Russia will be sold out of wheat for 2012/13 and that Ukraine will also quickly follow.

The notion is not without foundation. Firstly, Russia has already exported 5.3 MMT of grains between July 1 and September 5, out of an implied maximum of 14 MMT. Secondly, at 3.76 MMT Ukraine has already exported 67.8% more grains in the 2012/13 marketing year so far than it had this time a year ago.

The Ukraine Ministry have set an export ceiling of around 20 MMT for total grain exports this year, and 12 MMT of that is likely to be corn.

Thirdly, both are thought to have existing significant commitments already between now and the end of next month.

Finally, Black Sea prices are on the rise. An analysis of last Thursday's tender shows that Egypt paid on average around USD8/tonne more than their last purchase made just a few days previously. When freight is included into the offers made, French wheat was around USD11.50/tonne dearer than Russian wheat for the Oct 21-31 position. Five Russian cargoes were offered for this position, four of which were booked.

However, for the Nov 1-10 delivery period only one cargo of Russian wheat was offered outright (one seller offered only one cargo for each delivery period on a strictly either/or basis), which was subsequently accepted with Glencore named as the seller. It is interesting to note that the price paid for this cargo was over USD7/tonne higher than for shipment just a week or two earlier, narrowing the differential between Russian and French wheat landed in Cairo to less than USD5/tonne.

FranceAgriMer have slightly cut their domestic soft wheat production estimate for 2012 to 36.5 MMT from 36.7 MMT previously, although still 7.5% more than they harvested last year. Oilseed rape production is now seen at 5.4 MMT from 5.3 MMT previously and at up 1.1% marginally higher than last year.

Heat and dryness sees the corn crop rating cut from 73% good/excellent to 69% this past week. Production is seen at 15.25 MMT versus 15.73 MMT a year ago. Concerns about the current conditions are already giving rise to worries over winter rapeseed and wheat plantings for the 2013 harvest.

Much of France has only picked up a maximum of 50% of normal moisture in the past 30 days. Large parts of Spain, Germany and Poland are also dry with similar conditions seen persisting across Slovakia, Hungary, Romania, and Bulgaria.

The trade will likely spend the next couple of days in limbo, awaiting Wednesday's USDA WASDE report. Revised production estimates for this year's US corn and soybean crops will be of particular interest, with wheat likely to be given only a supporting role. US 2012/13 wheat ending stocks are seen rising slightly to 709 million bushels from a forecast last month of 698 million bushels.

On the other hand, world wheat ending stocks for 2012/13 are seen falling from the 177.17 MMT estimated last month to 174.5 MMT this time round.

Lunchtime News

10/09/12 -- The overnight electronic market sees wheat around 4-6 cents higher, with corn mostly 3-4 cents firmer and soybeans flat to up 3 cents.

Fresh news to start the week is somewhat limited. Wheat was the leader Friday and looks like starting that way this week too, with London and Paris wheat also nudging higher.

Chinese Customs data pegs August soybean imports at 4.42 MMT, the lowest monthly total for six months. Even so that still makes 2012 YTD imports 39.34 MMT, up 17.4% on same period in 2011. The CNGOIC think tank say that soybean imports will continue to tail off in September and October, to maybe only 3.5 MMT each month, as Chinese crush margins tighten.

India say that they plan to keep exporting wheat after recent rains improved conditions ahead of the sowing of the 2012/13 crop. They lifted an export ban this time last year and private exporters are said to have shipped out around 3 MMT of wheat since then (with the government offloading a further 600 TMT). Up to 2 MMT more could be sold off by private enterprises between now and the end of the year it is reckoned.

Asian buyers were said to have been picking up Indian wheat over the weekend.

The harvest in Ukraine stands at 26.29 MMT off 68% of the planted area. Yields are averaging 2.58 MT/ha, down 15% on last year. Sowing of the 2013 winter rapeseed crop is already well advanced at 86% complete, say the Ministry.

Exports are going well too. Ukraine has exported 3.76 MMT of grains in the 2012/13 marketing year so far, up 67.6% on year ago. Of that total wheat accounts for 1.67 MMT; barley 870 TMT and corn 1.18 MMT.

Kazakhstan's harvest is at a similar stage of completion, although their grain crop is mostly wheat, with very little corn. So far they've cut 8.678 MMT of grains off 69.8% of the planted area with average yields of just 0.8 MT/ha vs 1.52 MT/ha in 2011 - a drop of 47%.

Australia remains dry, and wheat production forecasts there are falling, although the 6-10 day outlook is wetter in Western Australia, eastern New South Wales, and southeastern Queensland.

Dryness concerns in Europe are already being voiced in some quarters, with much of France only picking up around 50% of normal moisture in the past 30 days. Large parts of Germany and Poland are also dry, detrimental ahead of winter wheat planting. Dryness is also seen persisting across Slovakia, Hungary, Romania, and Bulgaria.

On the US Plains dryness today/tomorrow is expected to give way to showers Wednesday/Thursday, although more rain is needed to replenish soil moisture deficits for winter wheat planting.

EU Rapemeal Prices

10/09/12 -- Rapemeal prices on the continent show little change to begin the week. Friday's modest losses in Chicago soymeal have largely been erased by corresponding gains in the overnight electronic market.

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

Chicago Closing Comments - Friday

07/09/12 -- Soycomplex: Sep 12 Soybeans closed at USD17.31 3/4, down 12 3/4 cents; Nov 12 Soybeans closed at USD17.36 1/2, down 10 1/2 cents; Sep 12 Soybean Meal closed at USD531.60, down USD0.20; Sep 12 Soybean Oil closed at 56.07, down 71 points. For the week Sep 12 beans fell 32 3/4 cents and Nov 12 beans 20 cents. Sep 12 meal was down USD15.50 and Sep 12 oil dropped 35 points. The USDA's delayed weekly export sales report came in at 5,100 MT of old crop beans and 520,600 MT of new crop, below the range of 700-900 TMT expected. Fund selling was estimated at around 5,000 soybean contracts on the day. Informa Economics said that they expect the USDA to lower US soybean yields next week to 35.4 bu/acre, from 36.1 bpa last month, giving a final crop of 2.639 billion bushels (versus 2.692 billion in August). They also gave their own estimate for 2012 US soybean production of 2.686 billion bushels. Stats Canada reported rapeseed stocks there at the end of July at at 0.788 MMT, lower than the 1.0 MMT that the trade was expecting and 54% down on the 1.719 MMT of a year ago. CNGOIC said that China imported 1.75 MMT of rapeseed the first seven months of 2012, and estimated full 2012 imports at a record 3 MMT, in what appears to be some degree of switching away from soybeans.

Corn: Sep 12 Corn closed at USD7.95, down 2 1/4 cents; Dec 12 Corn closed at USD7.99 1/2, up 1 cent. Sep 12 corn was 7 3/4 cents lower on the week, with Dec 12 unchanged as the market continues to flit either side of the USD8/bu mark. Funds were said to have been net buyers of around 2,000 corn contracts on the day. Weekly export sales were another disappointment for corn, even though the bar wasn't set too high at an anticipated 200-350 TMT what we actually got was a net reduction of 104,200 MT in old crop and sales of just 129,200 MT for new crop. There was also a small sale of 19,000 MT for 2013/14 delivery, giving total net sales of just 44,000 MT. South Korea have been buying optional origin corn this week, most likely from Brazil. Informa said that the USDA will come out with a corn yield of 119.8 bu/acre next week, pegging production at 10.310 billion bushels. Last month's USDA estimates had yields at 123.4 bu/acre and production at 10.779 billion bushels. As with soybeans, in addition to estimating what the USDA will say next week, they also gave their own forecast for US corn production. That was 690 million higher than what they think the USDA will say at 11 billion bushels. The USDA's monthly supply & demand and crop report will be out September 12th.

Wheat: Sep 12 CBOT Wheat closed at USD8.84 3/4, up 12 3/4 cents; Sep 12 KCBT Wheat closed at USD8.99 1/4, up 11 3/4 cents; Sep 12 MGEX Wheat closed at USD9.40 3/4, up 11 1/2 cents. On the week wheat was the leader, with Chicago adding 14 3/4 cents, Kansas 18 1/2 cents and Minneapolis 9 cents. Weekly export sales of 554,400 MT for 2012/13 delivery and 19,000 MT for 2013/14 delivery were towards the top end of expectations of 450-650 TMT. StatsCanada estimated wheat stocks there at the end of July at 5.879 MMT, a bit lower than the expected 6.1 MMT and versus 7.176 MMT a year ago. Rabobank cut their Australian wheat production estimate for the coming year to 22.79 MMT versus 29.5 MMT this year. That's one of the lowest estimates around, a Bloomberg survey suggests 23.25 MMT, ABARES estimate 24.1 MMT and the USDA 26.0 MMT. Meanwhile there's some talk of potential flood damage to wheat in Argentina. Funds were estimated as net buyers of around 3,000 Chicago wheat contracts on the day. The Commitment of Traders report shows funds adding to their existing longs in CBOT and KCBT wheat on the week through to Tuesday.