Soybean Jam, Tomorrow
21/09/12 -- Soycomplex: Nov 12 Soybeans closed at USD16.21 3/4, up 3 cents; Jan 13 Soybeans closed at USD16.22, up 4 1/4 cents; Oct 12 Soybean Meal closed at USD484.50, up USD2.20; Oct 12 Soybean Oil closed at 54.45, down 18 points. On the week overall Nov 12 beans lost over USD1.17, or 6.7%, with nearby meal falling just over USD40 and oil almost 220 points. Beans settled within the middle of the day's range in volatile trade, in what Reuters said was probably its biggest weekly loss in a year. Informa Economics increased their forecast for the 2012 US soybean planted area to 77.14 million acres, more than a million above the latest USDA number, based on recent new findings from the Farm Service Agency. That places the soybean crop at 2.662 billion bushels versus the USDA's 2.634 billion based on a harvested area of 75.698 million acres. Informa also estimated US 2013 plantings at a record 79.9 million acres, around 5% up on this year. Oil World currently estimate the Brazilian soybean crop in 2013 at 82 MMT (up 23%), Argentina at 56 MMT (up 37%), Paraguay at 8.6 MMT (up 115%), Uruguay at 3.1 MMT (up 94%) and Bolivia at 2.45 MMT (up 11%). All five would be record production levels for each country. So it looks like 2013 is going to be "year of the soybean" - all we need now is to get there on the proceeds of this year's limited availability, and hope that the weather doesn't spoil the party. Soybean jam, tomorrow.
Corn: Dec 12 Corn closed at USD7.48 1/4, up 2 1/4 cents; Mar 13 Corn closed at USD7.51, up 1 1/2 cents. On the week overall Dec 12 corn fell 33 3/4 cents. Informa issued a re-appraisal of US corn planted area too, based on fresh data from the FSA, coming up with an estimate of 97.2 million acres, a new 75 year high and over 750 million higher than the number currently in use by the USDA. They placed the corn crop at 11.093 billion bushels which is 366 million higher than the USDA's September forecast, using a yield estimate of 126.6bpa versus the USDA's 122.8bpa. Pro Ag estimated this year's US corn yield at 135.0 bpa. Informa, in their first estimate for 2013 plantings, put the corn area next year even higher at 97.537 million acres. As with soybeans there are also reports of corn yields improving as the harvest progresses north. Unlike soybeans, corn sales for 2012/13 are currently only around a third of the full USDA target for the new season. Stiff competition will be faced from Ukraine, who have harvested around 3 MMT of an anticipated 20 MMT corn crop so far, and also from Brazil and Argentina later in the season. The Buenos Aires Grains Exchange said Argentina has planted 5% of their 2012/13 corn crop versus 7.7% a year ago. Very heavy August rains are slightly hampering plantings, but should get the crop off to a great start.
Wheat: Dec 12 CBOT Wheat closed at USD8.97 1/4, up 17 3/4 cents; Dec 12 KCBT Wheat closed at USD9.26 1/4, up 16 3/4 cents; Dec 12 MGEX Wheat closed at USD9.57 3/4, up 17 1/4 cents. Chicago and Kansas wheat were little changed on the week, whilst Minneapolis was around 15 cents or so weaker. Funds were said to have been net buyers of 3,000 Chicago wheat contracts on the day. Informa put the US wheat crop at 2.273 billion bushels, slightly above the USDA's current forecast of 2.268 billion. Russia's Economy Minister said that some for of limit on grain exports was "entirely possible" only for the Deputy PM to dismiss the idea shortly afterwards. Japan's corn usage in animal feed reportedly reached a 20-year low in July and the world's (and America's) largest corn buyer said that plans to buy 1.21 MMT of feed wheat in 2012/13 versus a previous estimate of 764 TMT. "Scattered showers and cooler temperatures improved winter wheat planting conditions slightly in the Southern Great Plains. Planting was 5-11% complete last weekend in Kansas, Oklahoma and Texas," say Martell Crop Projections. Elsewhere "showers have increased in Victoria and New South Wales in September, brightening the wheat outlook somewhat, along with cooler temperatures recently. Western Australia wheat prospects have worsened however as conditions there remain hot and dry," they add.
EU Wheat Closing Comments
For the week overall Nov 12 London wheat finished GBP0.60/tonne off last week's near 17-month closing high, with Nov 12 Paris wheat shedding EUR2.75/tonne.
Early support came from comments by Russia's Economy Minister saying "it's entirely possible that the government will decide to limit (grain) exports" although within a couple of hours the Deputy PM appeared to discount the idea saying "no limiting measures for the agricultural market will be taken."
The latter had previously said "as long as I am in charge of this sector, I will be against any export restrictions."
Sources inside Russia say that there is already little wheat left for sale within easy striking distance of the Black Sea. What is still available in places like Siberia is said to be priced too highly to compete on the current export market given the cost of transportation from such remote areas.
Unlike in 2010 when the last export ban was introduced, domestic Russian prices are holding up well it would seem. It looks therefore as if the Russian market will indeed regulate itself, without the government having to intervene. The latter course of action would cause them extreme embarrassment to say the least only weeks after finally gaining membership of the WTO.
The UK exported 2.545 MMT of wheat in 2011/12, according to the final figures from Defra. Carryover wheat stocks at the end of the season were said to be 1.5 MMT (although if you know where all that was then you probably win a prize) along with 0.9 MMT of barley.
EU exports continue to rub along at a decent pace, with Brussels granting 390.5 TMT of soft wheat export licenses this week, bringing the 2012/13 marketing year to date total to 2.93 MMT, although still a little behind last year's pace. Barley exports on the other hand are soaring compared with last year with a further 166 TMT of export licenses added this week.
Elsewhere, Kazakhstan said it had harvested 12.5 MMT of grains in bunker weight off 92% of the planted area, less than half of last season's volume.
The Morning Vibe
21/09/12 -- The overnight electronic market sees soybeans 12-14 cents higher, with corn up 4-5 cents and wheat 10-14 cents firmer.
Even so, soybeans have had a right old mauling this week, heading for their biggest weekly loss in a year, according to Reuters this morning.
Nothing that much has changed though really. There is some talk of better US yields coming through for soybeans, which I guess if you combine that with the possibility of an increase in planted area, based on the recent findings of the Farm Service Agency, then there's the potential to increase US production a little from the USDA's current 2.634 billion bushels.
What about the demand side of the coin though? Yesterday's weekly export sales report means that 75% of the USDA's entire 2012/13 target has already been achieved - and we're only in the second week of the marketing year!
The world desperately needs bumper soybean production from South America in 2013, but they haven't even started planting yet, the earliest beans from Brazil are still at the very least four months away.
Bumper production though is what we are likely to get, if the weather plays ball. Oil World currently estimate the Brazilian soybean crop in 2013 at 82 MMT (up 23%), Argentina at 56 MMT (up 37%), Paraguay at 8.6 MMT (up 115%), Uruguay at 3.1 MMT (up 94%) and Bolivia at 2.45 MMT (up 11%).
There's just such a hell of a long way to go until that lots starts coming onto the market, and we are of course assuming here that we don't get another South American crop problem like last year.
So is this a soybean buying opportunity, or a major reversal? Before you make your mind up on that one it may be worth considering the strong seasonal trend for soybeans to bottom out around now, it is harvest time after all. Check out the twenty year seasonal chart for Nov beans here.
In other news, Russia's Economy Minister is quoted on the wires this morning as saying "it's entirely possible that the government will decide to limit (grain) exports" after all this season.
That would appear to have provided a bit of upward impetus for wheat. Note if you will though that yesterday's weekly export sales from the USDA only brings existing US wheat commitments to 38% of the USDA's 2012/13 target, versus 55% normally, and we are much further into the 2012/13 marketing year for wheat which begins on Jun 1 than we are for soybeans.
Elsewhere, Kazakhstan said it had harvested 12.5 MMT of grains in bunker weight off 92% of the planted area. Russia said, "erm, I think you'll find that belongs to us now."
In trivia that means nothing at all but is interesting nevertheless, this time last year Nov 11 London feed wheat was GBP159.50/tonne and en route to GBP140.00/tonne in the run-up to Christmas, with top spec milling wheat premiums as low as a fiver!
Chicago Soybeans Slump For Third Day In Four
20/09/12 -- Soycomplex: Nov 12 Soybeans closed at USD16.18 3/4, down 50 3/4 cents; Jan 13 Soybeans closed at USD16.17 3/4, down 51 1/2 cents; Oct 12 Soybean Meal closed at USD482.30, down USD17.40; Oct 12 Soybean Oil closed at 54.63, down 120 points. It was a third mauling out of four for the soycomplex this week, with funds dumping an estimated 16,000 soybean contracts on the day, that would place them exiting around 40,000 contracts on the week so far. This was the lowest close for a front month on soybeans in more than six weeks. There's continued talk of better than expected yields as the US soybean harvest moves north, with some analysts now estimatinbg average yields in the 37-38bpa range versus the USDA's 35.3bpa. Weekly export sales of 717,700 MT were in line with trade estimates of 600-800 TMT and take 2012/13 commitments to around three quarters of the USDA's projections for the entire marketing year. Oil World estimate the combined soybean production of Brazil, Argentina, Paraguay, Uruguay and Bolivia at around 152 MMT in 2013, an increase of 32% on 2012.
Corn: Dec 12 Corn closed at USD7.46, down 10 1/2 cents; Mar 13 Corn closed at USD7.49 1/2, down 9 1/4 cents. Fund selling was placed at 10,000 corn contracts on the day, which would also place them net sellers of around 40,000 on the week so far. Unlike soybeans though, there appears to be less of a chance of any upside to final US corn yields this year. Weekly export sales were very poor at less than 70,000 MT compared to the 300-400 TMT that the trade was expecting. The brings net commitments for 2012/13 to around 32% of the USDA's projected total for the marketing year, which is about normal at this stage of the season. Japan's corn usage in animal feed reportedly reached a 20-year low in July at 42.9% versus 45% in June. Customs data shows Japan’s August grain imports were 2.2 MMT, down 6.2% from a year ago including 1.2 MMT from the US, down 21.3% from a year ago. Clearly there is some corn substitution going on, with switches to alternative grain sources and origins. Ukraine have made significant inroads into Japan with their corn this year.
Wheat: Dec 12 CBOT Wheat closed at USD8.79 1/2, down 2 cents; Dec 12 KCBT Wheat closed at USD9.09 1/2, down 1/2 cent; Dec 12 MGEX Wheat closed at USD9.40 1/2, down 1 1/2 cents. Wheat did a magnificent job of attempting to resist the negative pull from corn and soybeans on the day, with funds estimated at being around even on the day. Weekly export sales of 488,900 MT beat trade expectations of 300-400 TMT, that brings the marketing year-to-date commitments to 38% of the USDA's forecast for the full season. Normally they would be expected to be past halfway at 55% by now. India’s weather office said that monsoon rains were 44% above average this past week. India's Ag Minister says that the late arrival of this year's monsoon has been offset by the late departure of rains, and that they are confident of a wheat crop of "at least" 90 MMT again in the coming season. Plantings there will be underway around a month from now. Meanwhile they keep plugging away selling some of their surplus wheat from the 2011 and 2012 harvests, issuing another tender to sell 50,000 MT of wheat today.
EU Grains End Mixed But Mostly Lower
20/09/12 -- EU grains closed mostly lower with Nov 12 London wheat down GBP1.25/tonne at GBP205.10/tonne and Nov 12 Paris wheat up EUR0.25/tonne to EUR261.25/tonne.
The HGCA pegged the UK wheat harvest at 95% complete, and cut their average yield forecast to 6.9-7.2 MT/ha from an indicated 7.1-7.4 MT/ha of just a week ago.
Final yields are expected to ultimately come in "at the lower end of (the) range" they warned. With A UK planted area of around 2 million hectares, that suggests a likely crop of only 13.8-14.0 MMT - the worst output since 2007.
A UK wheat yield of below 7.1 MT/ha would be the lowest since 1992.
Winter barley and oilseed rape harvesting is complete. The spring barley crop is 85% in the barn, along with 80% of the spring OSR crop, they added.
Defra released their final English (not UK) acreage figures, placing the wheat area up 2.2% to 1.9 million hectares, and the OSR area up 7.9% at 713,000 hectares.
MDA CropCast cut their Australian wheat production estimate by 1.4 MMT from last week to 24.0 MMT, which is 2 MMT below the USDA but still towards the upper end of the range of other trade forecasts.
They also cut Russia's output by 1 MMT to 38.3 MMT versus the USDA's 39.0 MMT.
China's Ag Minister says that the 2012 grain harvest there is likely to be a new record and the ninth consecutive year of growth, according to the Xinhua News Agency. Hurrah!
Ukraine said that they'd exported 4.39 MMT of grains so far this season in the Jul 1 - Sep 17 period, a 60% increase on last year. Of that total 2.13 MMT was wheat, 1.25 MMT corn and 0.96 MMT barley. The Ministry say that they will harvest a grain crop of 46.0-46.5 MMT this year (18-19% down on last year), with exports at 20 MMT (8% down on 2011/12) - around 12 MMT of that will be corn.
So far corn yields in Ukraine are said to be disappointing, although early harvest results are from the frequently arid south of the country. Yields should pick up as the harvest progresses north and west.
A report in today's FT says that Ukraine are close to signing a deal with China to supply them with 3 MMT of corn a year in exchange for a cash loans which they will use to buy "Chinese agricultural technologies" with the aim of increasing grain output in the coming years.
Ukraine produced a record grain crop of 56.7 MMT last season, but that could conceivably increase to 80 MMT with better use of modern seed, machinery and agronomy methods in the near future, according to Agritel.
UK Harvest Latest
"Additional yield information from Scotland and confirmation of yields from other areas have resulted in (this) downward revision," they say. Trust the Jocks to let you down when push comes to shove eh?
They went on to warn that final yields will probably come in "at the lower end of (the) range" too. Ouch, that would suggest a crop of 14 MMT at best, maybe more like 13.8 MMT - the UK's lowest output since 2007 when planted area was much lower. An average yield of 6.9-7.0 MT/ha would in fact be the worst performance in 20 years.
On the face of it, all that sound s pretty bullish for wheat doesn't it? And it probably is, if you're one of the lucky ones with 72kg/hl bushel weight or above to sell.
Yet, one northern compounder tells me this morning that where he's got used to delivered wheat being around GBP5-7/tonne over the London futures price, he can currently pick it up at only GBP2/tonne over. The reason being that his mill's current practise of only penalising anything down to 66kg/hl on a pound per point allowance basis is seen as attractive relative to what some other homes are demanding.
Another spin-off of all this is suddenly there seems to be more wheatfeed offered in the market, a function it would appear of the low quality of this year's crop throwing up more of the by-product. A by-product that competes directly with feed wheat in compounder's rations.
UK wheat imports will undoubtedly prove to be higher in 2012 than was originally anticipated on a combination of the tight end to 2011/12, the delayed harvest, and the low quality of new crop. At current levels, there won't be any demand for UK wheat on the export front either, so maybe a 13.8-14.0 MMT crop won't make things quite as tight in the second half of 2012/13 as you might have thought?
Mind you, there is also the Ensus/Vivergo conundrum to factor in. Never easy this job is it?
USDA - Happy To Help
20/09/12 -- The USDA have announced that as from January they will be issuing their major crop reports at 11am Chicago time, as opposed to the current 7.30 am.
You will recall the hoo-ha when CME Group altered the trading times for the electronic market, and the subsequent little climb down to allow the open outcry session to open early on the days of a major USDA crop report.
The new move from the USDA means that both markets will be open during their normal trading hours when things like the monthly WASDE and quarterly stocks reports come out. More volatility there then.
This also means that these major USDA reports will now come out at 5pm London time, or even later in the evening of course of you're on the Continent. Thanks for that the USDA. I think that the dog might have a present for you...
Morning News Snippets
20/09/12 -- The market seems a bit confused, forgetting entirely about Turnaround Tuesday, then remembering it on Wednesday before dismissing the notion again this morning.
The funds too are displaying signs of Alzheimer's, having pretty much bought back in last night everything that they sold on Tuesday.
Whoever said that volatility was you new norm was right (it was you you soft get, oh yes so it was).
Right now, where was I? Cup of tea anyone? I remember when all this was fields...right the news this morning...
Ukraine have hit the ground running in 2012/13, having exported 4.39 MMT of grains so far from Jul 1 - Sep 17. That's a 60% increase on last year, although early season exports in 2011/12 were disrupted by the hangover of export duties from the previous season.
Of that total 2.13 MMT is wheat, 1.25 MMT corn and 0.96 MMT barley. The Ministry say that they will harvest a crop of 46.0-46.5 MMT this year (18-19% down on last year), with exports at 20 MMT (8% down on 2011/12).
A report in today's FT says that Ukraine are close to signing a deal with China to supply them with 3 MMT of corn a year in exchange for a sack of cash which they will use to buy "Chinese agricultural technologies" and melamine. No, I'm only joking about the melamine, China has a sufficient domestic requirement for all the melamine it can eat. The FT story is here
South Korea has used the latest price dip to book 110,000 MT of US soymeal from ADM, according to wire reports.
Oil World estimate that China's soybean stocks are currently 13.0 MMT, and may drop by a further 4-5 MMT between now and February as the government step up their domestic auctions. The USDA currently peg 2012/13 Chinese ending stocks at 11.7 MMT.
Oil World also point out that as of Sep 7 as well as China's confirmed soybean purchases from the US of 13.119 MMT (versus 10.279 MMT a year ago), the US have also sold 4.848 MMT to "unknown" versus 1.912 MMT a year ago.
The USDA report that around three quarters of their entire 2012/13 marketing year export forecast as already being sold with 90% of the crop still in the field.
Brazil's 2012/13 soybean forward sales are close to being 50% of the crop, and planting of that hasn't really started yet.
That's what you call strong demand.
Iraq bought 150 TMT of Russian wheat yesterday for November shipment. Egypt's Nomani Nomani is now sitting on his fat greasy hands, saying that they now have 7-months worth of wheat supplies.
Informa Economics are due to release revised acreage estimates this afternoon, which are said to incorporate recent data from the Farm Service Agency, which was thought to indicate larger plantings for both corn and beans than previously reported by the USDA.
Liverpool FC have confirmed that they are to sign Lenny Henry in the transfer window to ensure that they get to stay in the Premier.
Chicago Market Recovers Some Of Recent Losses
19/09/12 -- Soycomplex: Nov 12 Soybeans closed at USD16.69 1/2, up 29 1/2 cents; Jan 13 Soybeans closed at USD16.69 1/4, up 30 cents; Oct 12 Soybean Meal closed at USD499.70, up USD8.30; Oct 12 Soybean Oil closed at 55.83, up 92 points. The market recovered somewhat from a hefty two day sell-off on bargain hunting, despite crude oil slumping more than USD4/barrel at one point. Funds were estimated to have bought in around 9,000 of the 12,000 soybean contracts they sold yesterday. Unconfirmed reports suggest that China has been back buying US beans on this latest break in prices over the past couple of days. Harvest pressure remains though. A cold snap for the Upper Midwest isn't thought likely to hold much damage potential thanks to the crop being well forward. Rains in southern Brazil's Rio Grand do Sul, the second good rain event in as many weeks, are seen extending into the southwest parts of Parana tonight/tomorrow. That will be beneficial ahead of soybean planting. Further north, the top soybean state of Matto Grosso which has been very dry since May, is also seen starting to pick up some much-needed rain by the weekend. Trade estimates for weekly export sales are 600-800,000 MT.
Corn: Dec 12 Corn closed at USD7.56 1/2, up 16 1/2 cents; Mar 13 Corn closed at USD7.58 3/4, up 14 3/4 cents. Corn also put in a consolidation day, with funds said to have bought a net 11,000 contracts on the day. A Reuters trade survey estimated US corn yields at 121bpa, versus 122.8bpa from the USDA earlier this month. Weekly US ethanol production was seen at 834,000 barrels/day up from 816,000bpd a week ago, but behind the 871,000bpd of a year ago. US ethanol stocks were reported to be the highest in 7 weeks. Corn output in Canada is forecast 11.4% higher than last year at 11.7 MMT, they are expected to be a net exporter rather than an importer in 2012/13. As with soybeans, the advanced condition of the early planted US corn crop makes damage from this week's cold snap minimal. Harvesting corn continues at a record early pace. The USDA reported Monday night that 26% of the crop has already been harvested, that could be past halfway by the end of the month. Trade estimates for tomorrow's weekly export sales report are 300-400 MT.
Wheat: Dec 12 CBOT Wheat closed at USD8.81 1/2, up 18 cents; Dec 12 KCBT Wheat closed at USD9.10, up 21 cents; Dec 12 MGEX Wheat closed at USD9.42, up 17 1/2 cents. Fund buying was estimated at 3,000 of the 4,000 Chicago contracts that they sold yesterday. The Canadian government pegged wheat production there this year at 27 MMT, up 0.3 MMT from last month and a 7% increase on last year. Iraq bought 150,000 MT of Russian wheat for November delivery, with US wheat well priced out again (and also by Ukraine and Canadian offers). Egypt said that their recent buying spree means that they now have almost 7-months worth of wheat supply. South Korea bought 28,700 MT of US wheat for December shipment. Japan are looking for 120 TMT of feed wheat for December, Australia might be the most likely seller of that. India are also filling in some of the Asian enquiries, with very large stocks under it's belt. So the US isn't having all it's own way with international wheat tenders, and is having to scrap for every order. Trade estimates for tomorrow's weekly export sales report are 300,000-400,000 MT.
EU Grains Consolidate Higher
19/09/12 -- EU grains ended higher with Nov 12 London wheat GBP1.25/tonne firmer to close at GBP206.35/tonne and with Nov 12 Paris wheat EUR2.00/tonne higher at EUR261.00/tonne.
European markets followed US grains higher after two days of steep losses on what appeared to be "bargain hunting" - if you can call London wheat within GBP2.00/tonne (as of last night's close) of a near 17-month closing high a bargain.
It is interesting to note that open interest in nearby Nov 12 London wheat has almost halved in the past 4/5 weeks. That seems to be a function of nervous shorts getting out, as they aren't confident that they retain the ability to come up with enough wheat of sufficient quality to make delivery against those sales, should they so chose.
Russia's Ag Minister has narrowed his 2012 grain harvest estimate to 72-73 MMT. With 63 MMT already in the bin off 76% of the planted area, that would appear to suggest an abandonment rate of around 10% this year.
Full season 2012/13 exports remain forecast at 10-14 MMT, despite the fact that 6.1 MMT has already been shipped out between Jul 1 and Sep 12th.
Egypt has gone quiet after a flurry of recent wheat purchases. Their next tender will be interesting as Russian offers rose to parity, to even a slight premium over French quotes in their last tender. We may have to wait a while for that as Egypt now say that they have almost 7-months worth of supplies following last week's purchases that went as far forward as Nov. 21-30 shipment.
The Russian government seem determined not to undermine their recently WTO membership by attempting to restrict foreign wheat sales. It may be that sales have been so strong in the first quarter that the trade will regulate itself in the months ahead as supplies within easy striking distance of the Black Sea run dry.
Separately, reports continue to suggest that Russia may import up to 2 MMT of Kazakh wheat in 2012/13.
Elsewhere, the Canadian government pegged wheat production there this year at 27 MMT, up 0.3 MMT from last month and a 7% increase on last year.
Corn output is forecast 11.4% higher at 11.7 MMT, with Canada expected to be a net exporter rather than an importer in 2012/13. Barley production is seen increasing by almost 23% to 9.51 MMT.
Continuing with that theme, they have rapeseed output at a record 15.4 MMT, almost 1 MMT more than a year ago, whilst Oil World go one step further pegging production at 15.7 MMT. The latter place world OSR output at 62.4 MMT vs 59.8 MMT last year, having recently raised their estimate on EU-27 production from 18.0 MMT to 18.9 MMT, although still slightly below last season's 19.2 MMT.
The predicted emerging El Nino weather signal seems to be weakening. "Argentina is soaking wet in the wake of heavy August-September rainfall. Rainfall has been from 3 to 6 times the normal value in the past 6 weeks. Soaking rains needed to replenish parched fields were viewed as positive, to begin with, but now have turned into too much of a good thing," say Martell Crop Projections.
Meanwhile, "frost and freeze conditions are predicted Sunday morning in the northern United States affecting Iowa, Minnesota, Wisconsin, Nebraska and the Dakotas. Ordinarily, freezing temperatures this early in the fall would be a cause for concern in the Midwest. Not this year, however. Severe summer drought and heat stress has rushed development causing premature ripening," they add.
The Morning Vibe
19/09/12 -- After crashing and burning for two night's on the trot, the bottom pickers are out this morning with grains attempting to stage a recovery led by soybeans.
Speaking at a conference in Bristol yesterday, volatility seemed to be the theme on everyone's lips, and we've certainly had plenty of that again this past few days.
Since Thursday night Nov 12 beans were down USD1.07 1/4, or 6%,as of last night's close with Dec 12 corn falling 33 3/4 cents, or 4.4%, and Dec 12 wheat down by 60 3/4 cents, or 6.6%.
It would seem that a spot of bargain hunting was therefore due, and that appears to be this morning's theme, with beans up 25 cents or so nearby, corn up 5-7 cents and wheat 12-15 cents firmer.
There's no hugely fresh news out to explain a sudden change of heart, maybe just a feeling that things have been overdone to the downside for now.
Russia's Ag Minister has narrowed his 2012 grain harvest estimate to 72-73 MMT. With 63 MMT already in the bin off 76% of the planted area, that would appear to suggest an abandonment rate of around 10% this year.
Full season 2012/13 exports remain forecast at 10-14 MMT, despite the fact that 6.1 MMT has already flown between Jul 1 and Sep 12th.
Russia's ultra price-competitiveness has certainly dried up in the past month or so, with Egypt's latest purchases showing them now running at a slight premium to French wheat offers. With Nov Paris wheat last night falling to the lowest close for a front month in more than four weeks, French wheat should now be even more competitive.
Lack of on-farm storage and a desire/need to generate funds for winter planting is a common theme in the FSU countries, necessitating plenty of selling in the first quarter after the harvest, Agritel said at yesterday's Bristol Corn Trade conference.
It would seem that we are now seeing that initial deluge dry up, with most of the cheaper "distressed" sellers now exhausted.
Welcome, India then. Who are quietly chugging away, offloading some of their hefty wheat stocks diligently (and expensively) built up over the last few years. If Russia and Ukraine are Matalan and Primark, then India must surely be TKMaxx.
The government there keep their stock in a mess on the floor, looking like something the dog has slept in, but try to sell it at better money than their more illustrious competitors as they paid through the nose for it in the first place.
"South Brazil may finally get rainfall this week in the southern farm states, easing a serious drought. The GFS model predicts scattered showers from .50 to 1.5 inches in northern Rio Grande do Sul but somewhat less rain for states o the north," say Martell Crop Projections.
"Parana, Sao Paulo and Mato Grosso do Sul are all expecting scattered showers Wednesday and Thursday, as a wave of low pressure presses northward. The emphasis is on “scattered”. While some farms are expected to receive up to 1.5 inches of rain, others may miss out entirely. Parana last received measurable rainfall on June 21. Conditions are extremely dry," they add.
"Mato Grosso (the top soybean and second top corn state) is not expecting a few scattered showers later this week. August conditions were extremely hot and dry, and more stressful than normal. Soybean planting usually begins around mid October pending the beginning of the wet monsoon season," they conclude.
Jordan has bought 50 TMT of optional origin barley at USD328 C&F. Taiwan are said to be looking fors 110–120 TMT of US or Brazilian origin beans for Dec/Jan shipment. South Korea has bought 28,700 MT of US wheat for shipment in December.
Chicago Market Extends Decline On Fund Selling
18/09/12 -- Soycomplex: Nov 12 Soybeans closed at USD16.40, down 29 cents; Jan 13 Soybeans closed at USD16.39 1/4, down 30 3/4 cents; Oct 12 Soybean Meal closed at USD491.40, down USD12.10; Oct 12 Soybean Oil closed at 54.91, down 7 points. The recent theme of next spring/summer months narrowing the gap with the nearer by positions continued, with May 13 beans down 16 3/4 cents and Jul 13 falling "only" 9 cents. Fund selling, at an estimated 12,000 contracts, was heavy for a second day of a high volume session. Harvest pressure, reports of better than expected US yields and fund liquidation all drove the market sharply lower. Highly regarded analysts Michael Cordonnier estimated Brazil's 2012/13 soybean planted area at 27.0 million hectares, up 8% from a year ago, placing the crop at a record 81.9 MMT. That's almost a million tonnes above the USDA's latest estimate and more than 23% up on output 2011/12. There are reports of China helping Brazil to improve transport and port infrastructure to facilitate more efficient exports. There is also talk of China stepping up their sale of state-owned soybeans to cool domestic prices.
Corn: Dec 12 Corn closed at USD7.40, down 8 cents; Mar 13 Corn closed at USD7.44, down 8 1/2 cents. As with soybeans, funds were heavy sellers for a second day in a row, exiting an estimated 9,000 contracts on the day. Also, as with soybeans, as the harvest moves north reports of "better than feared" yields are coming in. In addition, the US Farm Service Agency indicated that the planted area for both corn and beans may in fact be higher than the USDA's current estimates suggest. An increase in planted area may help the USDA to lower yields next month without cutting production much further from the current 10.73 billion bushels estimate. A Reuters survey placed 2012 US corn yields at a fraction over 121bpa, with production estimated at 10.42 billion bushels. Both are a bit lower than the USDA said last week. Michael Cordonnier goes lower still at 119bpa and 9.87 billion bushels. The USDA cut poor/very poor crop conditions by two points Monday night, raising good/excellent by the same. Maybe that is simply a function of some of the worst crops being harvested first?
Wheat: Dec 12 CBOT Wheat closed at USD8.63 1/2, down 14 1/2 cents; Dec 12 KCBT Wheat closed at USD8.89, down 12 1/4 cents; Dec 12 MGEX Wheat closed at USD9.24 1/2, down 6 1/4 cents. Wheat tried to divorce itself from getting sucked lower by soybeans, but eventually capitulated. Fund selling was placed at 4,000 CBOT contracts on the day. US winter wheat planting on the Plains has increased following some decent rains last week. The USDA last night placed plantings at 11%, up seven points from a week ago and close to the 5-year average of 14% at this time. ABARES estimted the 2012/13 global wheat crop at 665.0 MMT, down 4% from a year ago but more than 6 MMT higher than the USDA. They also see Australia remaining a major competitor to US wheat, exporting 23 MMT in 2012/13 despite a lower production number this year. They also said that due to last year's bumper crop, Australia’s wheat stocks at the start of August were a healthy 11.5 MMT. After a huge flurry of activity Egypt has gone quiet so far this week. Russia’s Ag Ministry said that Russia had exported 6.1 MMT of grain between Jul 1 and Sep 12th. Add on around 1.5 MMT for the remainder of the month and 3 MMT next month and they should be around the 10.5 MMT mark by the end of next month.
EU Grains Close - Tuesday
The markets did a pretty good job of ignoring tumbling US soybean prices, which were sharply lower for a second day in succession.
ABARES maintained their view that Australia would export 23 MMT of wheat in 2012/13 - matching the 2011/12 record and 2 MMT more than the USDA currently predict. They are also more bullish than Washington on global wheat prospects this year, pegging the world wheat crop at 665 MMT - 6 MMT more than the USDA's estimate.
The Russian Ministry stuck by their forecast of a grain crop there of 70-75 MMT this year, around 20-25 MMT less than a year ago.
Nobody is sure how, when or even if they will make any move to restrict exports, although most are convinced that something will have to be done before too long.
The Kazakh Ministry said that their grain harvest was 87% complete, producing 11.5 MMT to date. The Ukraine Ministry said that their harvest was 72% done producing 28.5 MMT so far. Yields are averaging 2.63 MT/ha, 14.6% down vs 3.08 MT/ha last year.
Corn harvesting there is only in the early stages, producing 2.63 MMT so far. Agritel estimate a total harvest there this year of 19.5 MMT of corn, 14 MMT of wheat, 6.76 MMT of barley and 1.1 MMT of rapeseed.
France said that they are to convene an emergency meeting of the G20 in October to discuss possible measures to avert an emerging food crisis. On the agenda are said to be proposals to limit the usage of biofuels derived from crops to a less than 5% inclusion rate.
That would potentially be a stark about turn, one about which the Secretary General of the EU Biodiesel Board said he was "surprised, concerned and shocked." Some recent reports have suggested that biofuels from food crops are maybe "not as environmentally friendly as first thought."
Chicago Closing Comments - Monday
17/09/12 -- Soycomplex: Nov 12 Soybeans closed at USD16.69, down 70 cents; Jan 13 Soybeans closed at USD16.70, down 70 cents; Oct 12 Soybean Meal closed at USD503.50, down USD20.00; Oct 12 Soybean Oil closed at 54.98, down 199 points. Funds were heavy sellers, dumping an estimated 20,000 soybeans, 7,000 soyoil and 5,000 soymeal contracts on the day. Talk of a looming trade dispute with China, much needed rains for Brazil ahead of planting, and some reports of better than expected US soybean yields rattled the confidence of the bulls. The USDA announced the sale of 210TMT of US beans to unknown for 2012/13 delivery, but that offered little comfort today. When the funds want out the only thing to do is stand to one side and let them run for the door. Harvest pressure was probably also a feature, the USDA pegged the US soybean harvest at 10% complete, with good/excellent conditions raised one point to 33%
Corn: Dec 12 Corn closed at USD7.48, down 34 cents; Mar 13 Corn closed at USD7.52 1/2, down 33 1/2 cents. Funds were said to have been net sellers of around 22,000 corn contracts on the day. The USDA said that the corn harvest is 26% done and upped good/excellent crop conditions two points to 24%. The News agency Telam estimated the 2012/13 Argentine corn crop at a record 25-26 MMT versus the official Argentine estimate of 24.5 MMT, although that's still lower than the 28 MMT forecast from the USDA.
Wheat: Dec 12 CBOT Wheat closed at USD8.78, down 46 1/4 cents; Dec 12 KCBT Wheat closed at USD9.01 1/4, down 46 3/4 cents; Dec 12 MGEX Wheat closed at USD9.30 3/4, down 47 1/4 cents. Funds were net sellers of 5,000 CBOT wheat contracts on the day. There's some rains in the forecasts for Australian wheat areas. US winter wheat areas also picked up some useful rain last week, although more is needed in both cases. Russia’s Grain Union estimated Russia’s 2012 grain crop at 72 MMT with an exportable surplus as 16-17 MMT.
EU Wheat Starts Week On The Defensive
17/09/12 -- EU wheat closed lower with Nov 12 London wheat down GBP2.50/tonne at GBP204.50/tonne and Nov 12 Paris wheat falling EUR6.25/tonne to EUR260.25/tonne.
It was a subdued start to the week, with news of a potential trade dispute brewing between the US and China knocking market confidence a little. With funds holding large speculative long positions in US corn, soybeans and wheat then any possible sudden moving of the goalposts such as this immediately sparks profit-taking liquidation.
Russia said that it had harvested 63 MMT of grains so far off 75% of the planted area. The Russian Grain Union said that the final harvest volume would be 72 MMT, down 23.6% on last year.
The Ukraine Ministry said that it had harvested 27.63 MMT of grains so far off 70% of the planted area, with yields averaging 2.61 MT/ha, down 14.7% on last year. They expect a final harvest result of 47 MMT this year, versus 56.7 MMT in 2011.
The corn harvest is only 12% complete so far, producing 1.81 MMT with yields coming in at 3.45 MT/ha, they add. Offre et Demande Agricole say that they expect a Ukraine corn harvest of 20.2 MMT this year, a little below the USDA's 21 MMT expectation.
Within 5 years Ukraine aim to have an annual grain harvest of 100 MMT, using more westernised farming methods, including better quality machinery and seed, the Ministry said. They didn't say where the investment was coming from in a country that habitually retains VAT refunds legitimately due to grain exporters.
Ukraine has exported 4.2 MMT of grains so far in 2012/13, an increase of 57% compared to the same period of 2011/12. Of that total so far, wheat exports account for 1.97 MMT, up 61% and corn exports 1.22 MMT. The USDA has Ukraine down to export 12.5 MMT of corn, 4 MMT of wheat and 2.5 MMT of barley in 2012/13. Corn exports will dominate once the harvest nears completion.
Australia exported 2.38 MMT of wheat in August, cutting ending stocks there to just over 9 MMT with one month of their marketing year to go. That implies that maybe the USDA's carryover estimate for 2011/12 may be a bit high at 7.7 MMT. They are using an export figure this season of 23 MMT, the Commonwealth Bank think that this could be closer to 24-24.5 MMT.
This would suggest that with many 2012/13 wheat production estimates now falling well below the USDA's suggested 26 MMT, then possibly Australia won't be quite such an aggressive exporter next season.
