Chicago Market Gives In To Month End Pressures

30/11/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.38 3/4, down 9 1/4 cents; Mar 13 Soybeans closed at USD14.32 1/2, down 8 1/2 cents; Dec 12 Soybean Meal closed at USD442.40, down USD0.10; Dec 12 Soybean Oil closed at 49.41, down 36 points. On the week Jan 13 beans were 20 cents higher, with Dec 12 meal up USD13.80 and Dec 12 oil gaining 37 points. Month-end positioning and profit-taking dragged beans lower on the day but they still finished the week with decent gains. The Buenos Aires Grains Exchange say that 45% of the Argentine bean crop has been planted versus 36.4% a week ago and 56% a year ago. More rain is in the forecast for the weekend which may further hamper planting efforts. Southern Brazil meanwhile is dry. The IGC yesterday estimated the Argentine soybean crop at 54 MMT, with production in Brazil seen at 80.5 MMT. Both are a little lower than the USDA who go 55 MMT and 81 MMT respectively, although both are still well up on year ago levels of 41 MMT and 66.5 MMT. Neither crop is made yet of course with plantings of both still ongoing. There's still some talk of an emerging La Nina weather pattern.

Corn: Dec 12 Corn closed at USD7.48, down 3 1/2 cents; Mar 13 Corn closed at USD7.52 3/4, down 6 cents. For the week Dec 12 corn ended 2 1/2 cents higher. Fund selling was estimated at a net 7,000 contracts on the day. The Buenos Aires Grains Exchange said that 52% of the Argentine corn crop has been planted versus 49.6% a week ago and 64.4% a year ago. A Reuters poll of 9 analysts put the 2012/13 Brazilian corn crop at 70.0 MMT versus 73 MMT in 2011/12. That's in line with the current USDA estimate. The IGC yesterday forecast the global corn crop at 830 MMT - unchanged from their previous estimate. World ending stocks were trimmed 1 MMT to 116 MMT. The Ukraine grain harvest is now 98% done at 45.6 MMT in bunker weight with yields averaging 3.14 MT/ha, down 16% on last year. The corn harvest is 95% complete at 19.25 MMT. A wheat export ban in some form or another is expected anytime, but they should remain keen sellers of corn well into the new year.

Wheat: Dec 12 CBOT Wheat closed at USD8.44 3/4, down 24 1/2 cents; Dec 12 KCBT Wheat closed at USD8.97 1/2, down 19 3/4 cents; Dec 12 MGEX Wheat closed at USD9.18 1/2, down 12 3/4 cents. It was a mixed performance for the week, with Chicago wheat ending it 3 cents lower, with Kansas wheat up 19 1/4 cents and Minneapolis up 4 3/4 cents. Fund selling in Chicago was estimated at around 4,000 wheat contracts on the day. Having been noticeable by their absence lately, Egypt announced late in the day that it would be tendering for wheat for LH Jan/FH Feb shipment over the weekend. Given US wheat's dismal showing in the Algerian tender earlier in the week it will be interesting to see if US wheat will feature, we shall see. The Indian government have agreed to release a further 2.5 MMT of their surplus wheat stocks onto the market as confidence grows in prospects for 2013, ahead of their harvest kicking off in the spring. India’s state-run PEC Ltd issued a new tender for the sale of 125 TMT of wheat earlier today.

London Wheat Lower On The Day, Higher On The Week/Month

30/11/12 -- EU grains closed lower with Jan 13 London wheat down GBP1.70/tonne to GBP223.75/tonne, May 13 down GBP2.00/tonne to GBP227.00/tonne and new crop Nov 13 GBP1.50/tonne easier at GBP197.50/tonne. Jan 13 Paris milling wheat fell EUR4.25/tonne to close at EUR269.50/tonne.

Today appeared to be a mixture of consolidation, profit-taking and month-end book-squaring. For the week London wheat still ended with decent gains with Jan 13 up GBP5.75/tonne, May 13 up GBP7.00/tonne and Nov 13 adding GBP8.15/tonne. In contrast Jan 13 Paris wheat ended the week EUR0.25/tonne lower.

For the calendar month May 13 London wheat gained GBP9.75/tonne, whilst Nov 13 advanced GBP11.00/tonne compared to Jan 13 Paris wheat posting only a EUR3.00/tonne advance.

London wheat is clearly pricing in the fact that if you want 72.0-72.5kg/hl wheat in any quantity then you are going to have to import it. May 13 London feed wheat is now around the equivalent of an EUR12/tonne premium over May 13 Paris milling wheat. The market is also pricing in both quality and volume concerns over next season's UK crop with Nov 13 London wheat now running at around parity with it's Parisian counterpart.

Brussels reported that they'd issued 438 TMT of soft wheat export licenses this week, bringing the marketing year-to-date total to 7.3 MMT, more than 12% up on this time a year ago despite a drop of more than 5% in output in 2012. EU-27 barley exports meanwhile are 28% higher whilst corn imports are running 125% ahead of year ago levels.

The AHDB/HGCA/ADAS say that 25% of the planned UK wheat area remains unsown and that 7% of what has been planted is at risk of failure. In the case of OSR 20% of this year's autumn plantings are "of questionable viability" they add.

The IGC yesterday said that "following slight revisions for Australia and the EU, the forecast for world wheat production is trimmed by 1 MMT to 654 MMT, a 6% year-on-year decline."

"While global consumption is also expected to fall 2% year-on-year, ending stocks are still set to contract by 23 MMT year-on-year," they added. Europe's 2012 wheat crop was lowered 0.3 MMT from last month to 130.3 MMT, a fall of just over 5% on last year.

In an early glimpse into 2013 they placed the world wheat area up 2% to a 15-year high of 223.2 million hectares, although they already noted early problems in the US, UK and France.

The Russian Hydrometeorological Service say that 12% of winter grains in Russia’s southern region are rated poor/very poor versus the 5-year average of 7.6%. In North Caucasus, poor/very poor conditions are 17% versus 6.9% on average.

Weird Thoughts

30/11/12 -- Was in the pub at lunchtime (yes, yes, surprise, surprise) and they were playing River Deep, Mountain High. I don't know why but when Tina Turner opened with "When I was a little girl I had a rag doll, The only doll I've ever owned, Now I love you just the way I loved that Rag doll." I was sorely tempted to shout "that's why I'm going to have your eyes out, the car, the house, the lot." A bit misogynistic I know, but I can't help myself. Why do I do that? I think I must have some sort of medical problem.

The Morning Vibe

30/11/12 -- The overnight grains are lower, and Europe has followed suit in what looks like pre-weekend, month-end related consolidation.

Brussels issued 438 TMT of soft wheat export licenses this week, taking the marketing year-to-date total to 7.3 MMT, up more than 12% on this time a year ago. Cumulative barley export licenses are up 28% at 2.5 MMT. Tellingly, year-to-date corn import licenses have more than doubled - up 125% to 3.6 MMT.

The IGC yesterday said "the rapeseed/canola market remains very tight, with (world) output projected at a four-year low."

Also of interest from the IGC were comments that wheat outflows from the Black Sea have "defied expectations (which) has limited price upside from weather-related worries for 2012/13 crops currently being harvested in the southern hemisphere, and conditions for the recently planted winter wheat in the north."

Cheap early season wheat coming out of the Black Sea hasn't defied my expectations. If it were to continue to come onto the market in the second half of 2012/13 then it would. The fact that EU-27 exports are 12% up in the face of this competition, when production here is 5% down probably tells you everything you need to know.

In a little peek into 2013/14, the IGC forecast the world wheat area for next year's harvest to increase 2%, including at 3.2% increase in the EU-27. They didn't put any production numbers out for next year, although they did note that "conditions for parts of the US crop are a concern."

The Indian government have agreed to release a further 2.5 MMT of their surplus wheat stocks onto the market, bringing the total amount approved for sale to 4.5 MMT to date, which is less than the 6-7 MMT that the market is expecting.

The Ukraine grain harvest is now 98% done at 45.6 MMT in bunker weight with yields averaging 3.14 MT/ha, down 16% on last year. The corn harvest is 95% complete at 19.25 MMT.

South Korea has bought 75,800 MT of Australian wheat overnight.

Chicago Closing Comments - Thursday

29/11/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.48, up 1 3/4 cents; Mar 13 Soybeans closed at USD14.41, up 6 cents; Jan 13 Soybean Meal closed at USD435.80, up USD3.10; Jan 13 Soybean Oil closed at 50.12, down 26 points. Weekly export sales of only 319,100 MT versus expectations of 500-750 TMT took the shine off an attempted soybean rally. Even so this was for a holiday shortened week, as too were once again impressive weekly shipments of 1.354 MMT - the ninth week in a row exports have been over 1 MMT. Total commitments have now reached 75% of the USDA export projections for the current marketing year which only began in September. Wet weather continues to disrupt Argentine plantings, where only 37% of soybeans were in the ground by Nov 22, according to the Buenos Aires Cereals Exchange. Normally plantings should be well past halfway by now. Early spring rainfall was 2-3 times normal in September and October, according to Martell Crop Projections. "The greater worry is worsening drought in South Brazil. Parana and Rio Grande do Sul both experienced very dry conditions over the past 30 days. Parana drought is more concerning, since the dry conditions have prevailed for several months, interrupted only by increased rain in October. The moisture deficiency is now 60 to 125 millimetres (2.4–5 inches) in the western and southern growing areas, and 30-35% of normal. This is a one month moisture deficit," they add. Funds were said to have been net buyers of around 2,000 soybean contracts on the day.

Corn: Dec 12 Corn closed at USD7.51 1/2, down 8 3/4 cents; Mar 13 Corn closed at USD7.58 3/4, down 5 1/4 cents. Fund selling was placed at a net 5,000 lots on the day. Weekly export sales of 236,100 MT for the 2012/13 marketing year and 27,400 MT for 2013/14 fell short of trade aspirations of 400-650 TMT. Once again this falls well short of the 426,000 MT/week needed to hit the USDA's projected total sales for 2012/13. If US corn exports are going to fail to hit the USDA's current season target, there are signs that domestic demand from the ethanol sector is also going to fall short of USDA projections. US ethanol production fell to a five week low for the week ended Nov 23, the Energy Dept said yesterday. Almost half the week's corn exports of 368,800 MT were destined for Japan, which appears to corroborate talk of them switching away from Brazil due to congestion however. Japan also took around half of this week's sales. Argentine corn is 59% planted as of Nov 22, according to the Buenos Aires Cereals Exchange. This is around 10 points behind normal. Ukraine’s 2013 corn area is estimated at 5.0 million hectares versus 4.5 MH in 2012.

Wheat: Dec 12 CBOT Wheat closed at USD8.69 1/4, down 6 3/4 cents; Dec 12 KCBT Wheat closed at USD9.17 1/4, down 1 cent; Dec 12 MGEX Wheat closed at USD9.31 1/4, down 7 1/2 cents. Weekly export sales of 279,300 MT were uninspiring compared to the 300-500 TMT expected and last week's 635,400 MT. So too were weekly shipments of only 228,600 MT. Maybe the widely expected switch in world demand to US origin wheat hasn't begun just yet? Algeria bought 375 TMT of optional origin wheat at USD374.50 C&F, which is said to be well below US offered levels. Concerns remain over the US winter wheat crop. "The new forecast is very dry in the US Great Plains. Virtually no rain is anticipated over the next 5 days as a warm ridge of high pressure takes control of the Central United States. The 6-10 day rainfall forecast points to persistent dryness in hard red winter wheat. However, northern spring wheat area may receive useful rain and snow," said Martell Crop Projections. The IGC cut it's world wheat production forecast for 2012/13 by 1 MMT to 654 MMT, pegging ending stocks at 173 MMT - a 23 MMT decline on 2011/12.

EU Wheat Mixed

29/11/12 – EU grains closed mixed with Jan 12 London wheat up GBP0.30/tonne to GBP225.45/tonne, with benchmark May 13 also GBP0.30/tonne higher at GBP229.00/tonne and new crop Nov 13 edging GBP0.05/tonne higher to GBP199.00/tonne. Jan 13 Paris wheat fell EUR2.25/tonne to EUR273.75/tonne.

On the week so far May 13 London wheat is up GBP9.00/tonne and new crop Nov 13 GBP9.65/tonne firmer compared to Jan 13 Paris wheat only rising EUR4.00/tonne as it becomes clearer that the UK is going to be more heavily reliant on imports this season, and possibly even next season too.

Ukraine increased their wheat export ceiling from 5.5 MMT to 5.8 MMT, seemingly to accommodate what has been shipped already (5.4 MMT) and what is loaded or waiting to load at the ports.

There's some talk that this limit may eventually be nudged a little higher yet, possibly to around 6.5 MMT, but as ever with Ukraine nothing is ever very clear with various government ministers regularly contradicting each other on a day to day basis.

Algeria's 50 TMT wheat tender turned into a purchase of 375 TMT of optional origin wheat for February shipment. France is thought to be the most likely supplier at the end of the day.

Conab estimated Brazil wheat crop at only 4.4 MMT this year, down by almost a quarter on 5.7 MMT a year ago. Domestic consumption there is pegged at 10-11 MMT a year, with 2012/13 wheat imports placed at 7 MMT, up 16.7% from a year ago. They are recently said to have bought one or two cargoes of German wheat.

Argentina continues to suffer from heavy rains, delaying corn/soybean plantings and undermining wheat quality there. This is possibly one reason why Brazil is having to look further afield to cover it's wheat deficit.

India are said to be gearing up to possibly release a further 3-4 MMT of it's surplus wheat stocks onto the world market, enthused by current prices.

The Morning Vibe

29/11/12 -- The overnight grains are a bit firmer, with beans up 6-8 cents, corn 2-3 cents higher and wheat a cent or so better.

The Ukraine government are said to have increased their wheat export ceiling from 5.5 MMT to 5.8 MMT. Not exactly a game changer that one then. They've already shipped 5.436 MMT and there's a further 360 TMT sat at ports waiting to load, so it would seem that all they've done is authorise that to leave to make room for some further corn exports.

Dryness in Mato Grosso, Brazil's largest soybean producing state, which has delayed bean planting there may also have the knock-on effect of reducing the so-called safrinha second crop corn area, according to state analysts IMEA. They peg safrinha corn production in the state at 13.3 MMT in 2012/13 versus 15.6 MMT in 2011/12.

Rabobank have released their grain price forecasts for 2013, and as ever they make interesting reading, with grains seen rallying to the highs of the year in the first quarter before declining into Q4.

Chicago wheat is seen rising to an average USD9.10/bu in Q1 but falling to USD7/bu by by the end of the year. Paris wheat ditto, from EUR290/tonne to close to EUR200/tonne. Corn is seen following a similar pattern, ending the year at USD6/bu. For soybeans they suggest USD14.75/bu in Q1 falling to USD13.00/bu in Q4.

Read more about Rabobank's crystal ball gazing here on

Also catching the eye this morning is a report in the Daily Wail saying that Britain is in for the coldest winter in 100 years with temperatures falling to -20C. Yes, I know, "they" say that every year - especially on a quiet news day. I suppose by the law of averages if they say it's going to be the coldest winter for 100 years every year for 100 years then they are going to call it right eventually.

Chicago Closing Comments - Wednesday

28/11/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.46 1/4, down 3 cents; Mar 13 Soybeans closed at USD14.35, down 2 1/2 cents; Jan 13 Soybean Meal closed at USD432.70, down USD0.70; Jan 13 Soybean Oil closed at 50.38, down 3 points. Funds were said to have likely been around even on the day. Even if they don't fancy soybeans too much at the moment China do, with the USDA confirming the sale of 290,000 MT of US soybeans to the world's largest buyer. Weather outlook offers little change, Argentina is too wet and southern Brazil too dry. Talk of a possible developing La Nina signal is supportive. So too is market chatter of an imminent Argentine debt default. Fitch cut their sort-term rating for the South American country to just one level above "default" yesterday. Celeres said that 74% of the Brazilian soybean crop was planted versus 80% a year ago, adding that half of next year's crop was now sold compared to 39% this time a year ago. Weekly US export sales for tomorrow are expected to be in the range 500-750 TMT.

Corn: Dec 12 Corn closed at USD7.60 1/4, up 1/4 cent; Mar 13 Corn closed unchanged at USD7.64. Funds were said to have been modest net buyers of around 1,000 contracts on the day. Weekly ethanol production fell to 803,000 barrels per day versus 811,000 a week ago. Trade estimates for tomorrow's weekly export sales report are 400-650 TMT. It will be interesting to see if they get close to that or whether last week's sales of close on 1 MMT were a one-off. There's talk of US corn sales to Japan declining in the face of increased competition from South America. Low water on the Mississippi continues to restrict barge traffic. Current water levels "already ranks in the bottom 20 all-time, in a record that dates back more than a century. With the flow of the Missouri expected to drop further in the coming weeks and little precipitation forecast across the central U.S. for the next two weeks, water levels will continue to drop along the Mississippi River, reaching near historic lows," say MDA CropCast.

Wheat: Dec 12 CBOT Wheat closed at USD8.76, up 3 cents; Dec 12 KCBT Wheat closed at USD9.18 1/4, up 2 1/2 cents; Dec 12 MGEX Wheat closed at USD9.38 3/4, up 2 1/2 cents. Fund buying in Chicago wheat was estimated at around 2,000 lots. Russia sold 62,300 MT of intervention wheat onto the domestic market, bringing the total since sales began on 23 Oct to 651 TMT. There's little respite in sight for US winter wheat on the arid US Plains. "The drier trend will continue across the Plains through next week, though, which will keep significant drought conditions there in place. Very windy conditions are expected across the Plains early next week as well, which will likely increase erosion," said MDA CropCast. Estimates for tomorrow's weekly export sales are 300-500 TMT. The forecast for the next 10 days is warmer than normal and dry. Above average temperatures mean that there's no protective snow cover for poorly established wheat as and when winter finally does arrive.

London Wheat Breaks More Records

28/11/12 -- EU grains closed with Jan 13 London wheat GBP1.15/tonne firmer at GBP225.15/tonne, with benchmark May 13 up GBP1.70/tonne at GBP228.70/tonne and new crop Nov 13 up GBP2.95/tonne to GBP198.50/tonne. Jan 13 Paris wheat ended EUR2.75/tonne higher at EUR276.00/tonne.

For London wheat it was fresh contract and historic highs all round, with new crop Nov 13 touching the magical GBP200/tonne mark for the first time in it's history - a level than many growers had said would be sufficient to encourage them to part with some of next season's crop. Volume was also unusually high.

Confusion reigns over how much of the intended 2013 winter wheat crop has been planted here in the UK. Many think only 70%, and some of that of course is unlikely ever to see a combine. Yesterday's AHDB/HGCA Early Bird Survey was more optimistic at 88% or 1.76 million ha.

Even if the latter is correct, and we could achieve a return closer to "normal" yields in 2013 of say 7.5 MT/ha  (although plenty would give you an argument now that we can't), then we'd still end up with a 2013 crop no higher than this year's. At least not without a large wholesale increase in spring wheat plantings.

Based on tonight's closes, old crop UK feed wheat is now around EUR3.00/tonne more expensive than French milling wheat and new crop Nov 13 is running at around parity. What a difference a year makes! A year ago to the day Jan 12 London wheat was around EUR13/tonne cheaper than Paris milling wheat.

The cost of imports looks likely to govern where UK prices go from here. Yesterday Defra increased their 2012/13 UK import projections from 1.7 MMT to just over 2.0 MMT, commenting that "processors are reviewing their requirements on an on-going basis and consequently import levels are challenging to forecast."

As far as availability from our near neighbours in Europe goes, this is more than adequate now but could easily tighten as we get into 2013.

Ukraine's Deputy Agriculture Minister followed the recent trend (few can decide if they are doing this on purpose, or if they really are just plain stupid) by contradicting ideas that some kind of formal or informal wheat export ban will be introduced on Dec 1st. He said that it was "possible to continue exports" without saying how or by what amount.

Most traders seem to think that this is nothing more than a ruse to placate the WTO, but only time will tell. As of yesterday they were said to have exported 5.42 MMT of wheat already this season with a further 382 TMT at port-side waiting to load. They are supposed to have agreed a "voluntary" ceiling with exporters of 5.5 MMT.

You Ain't Seen Nothing Yet?

28/11/12 -- Oh my Lord, it couldn't be could it? In the words of Mr Reginald Kenneth Dwight "you'd better watch out because the bitch is back." The bitch in question is La Niña.

My US weather chum, Gail Mertell, says that there are signs that a La Niña signal has emerged in the United States in recent weeks, even though officially ENSO-neutral conditions are said to be in effect.

"October-November rainfall has been virtually absent in the southern third of the United States, intensifying drought, while heavy rains have pounded the Pacific Northwest in recent weeks. Recently, colder temperatures have developed in the Midwest. These developments suggest a La Niña influence may be in play," says Gail.

Intriguingly it is almost 12 months ago to the day that UK soya prices bottomed and the market went up in virtually a straight line for 8 months solid barring a brief period of optimism in May, appreciating by GBP200/tonne from early December to the late August highs.

The catalyst then was La Niña slashing South American soybean production across the southern hemisphere summer. In Nov 11 the USDA was forecasting a Brazilian soybean crop of 75 MMT (it subsequently ended up at 65.5 MMT) and an Argentine crop of 52 MMT (eventually only 41 MMT), wiping around 24 MMT off world supplies if we also throw Paraguay into the equation (down from 7.6 MMT in Nov 11 to only 4 MMT at the bitter end).

If another full blown La Niña was to develop, with similarly devastating reductions in soybean production in South America again this year, then who knows where prices could end up? Given the already extremely tight projected US 2012/13 ending stocks and the fact that all America's exports are heavily skewed towards the front end of the season it could be Bachman Turner Overdrive that we are humming in the spring rather than Elton John.

Chicago Rallies Led By Wheat

27/11/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.49 1/4, up 24 1/2 cents; Mar 13 Soybeans closed at USD14.37 1/2, up 25 1/4 cents; Jan 13 Soybean Meal closed at USD433.40, up USD6.50; Jan 13 Soybean Oil closed at 50.41, up 83 points. Funds were given credit for being net buyers of around 4,000 soybean contracts on the day. Very strong recent soyoil sales have pushed 2012/13 existing commitments even higher than those for soybeans compared to the USDA's targets for the season. How will they manage to increase soyoil sales without also upping the domestic crush and thereby reducing 2012/13 ending stocks even further from the already tight 140 million bushels that they have pencilled in? As well as potentially increasing domestic soybean usage the USDA also have the problem that 74% of their export projection for soybeans for the entire season has already been met - with 79% of 2012/13 still remaining. Chinese demand hasn't tailed off as much as was touted towards the end of the year, encouraged no doubt by the recent sharp price dip. Imports will soon start to pick up again ahead of the Chinese New Year approaches in February. Sinograin estimated China’s ‘12/13 bean imports at 60.0 MMT

Corn: Dec 12 Corn closed at USD7.60, up 12 3/4 cents; Mar 13 Corn closed at USD7.64, up 12 3/4 cents. Funds were said to have been net buyers of around 10,000 corn contracts on the day, adding to their newly established length. Spillover strength for wheat added support for corn in late trade. Safras said that the Brazilian corn crop is 89% planted versus 94% a year ago. Excessive wetness in Argentina remains a concern with more rain in the forecast in the coming days. There's talk that this will delay the corn harvest there. Maizar estimated Argentina’s 2012/13 corn crop at 25-28 MMT. Michael Cordonnier yesterday said 22.5 MMT. The USDA currently come in at the high end of the range at 28 MMT. Ongoing concerns about barge traffic on the Mississippi River due to low water are keeping the cash market firm.

Wheat: Dec 12 CBOT Wheat closed at USD8.73, up 24 cents; Dec 12 KCBT Wheat closed at USD9.15 3/4, up 31 1/2 cents; Dec 12 MGEX Wheat closed at USD9.36 1/4, up 21 1/4 cents. Last night's worst ever crop condition ratings for US winter wheat heading into dormancy were supportive. The US Plains remain dry with no rain in the forecast for 6-10 days. Ukraine look like they will be out of the wheat export market by the end of the week, having shipped 5.4 MMT of the grain so far this season. Iran are said to have finalised a barter deal to take 1 MMT of wheat from Pakistan in exchange for iron ore and urea after agreeing on quality terms. Sudan bought 55 TMT of Australian wheat. Jordan, Syria and Algeria are also shopping for wheat. Japan are also in the market for 150 TMT of mostly US wheat in it's normal weekly tender.

London Wheat Sets New Records

27/11/12 -- EU grains closed higher with London wheat posting particularly impressive gains with Jan 13 up GBP4.00/tonne to GBP224.00/tonne, May 13 up GBP3.35/tonne to GBP227.00/tonne and new crop Nov 13 GBP4.50/tonne higher at GBP196.00/tonne. Jan 13 Paris milling wheat added EUR3.50/tonne to close at EUR273.25/tonne.

Jan 13 London wheat set an all-time front month closing high, May 13 matched the contract closing high and Nov 13 set a new contract closing high.

Sharply higher US wheat futures added late support that saw all these London wheat contracts close at the highs of the day.

Another widespread round of rain brought more misery to many UK home-owners, commuters and farmers alike. An AHDB/HGCA Early Bird Survey that suggested that only 12% of the UK's planned winter wheat area remains unplanted, whilst still a significant number, was largely discounted.

Last week's Farming Online survey, estimating that currently 30% of the planned winter wheat area hasn't yet made it into the ground, is more in line with trade estimates.

Adding further support was last night's last USDA crop condition report until the spring cutting good/excellent winter wheat conditions to 33% - the lowest on record for the end of November by a staggering 10 percentage points.

Ukraine announced that it had exported 11.5 MMT of grains so far in 2012/13 - a record for this point in a marketing year. That includes 5.4 MMT of wheat, within a whisker of the government's suggested ceiling, adding weight to the belief that they will be out of the wheat export market by the end of the month.

The Morning Vibe

27/11/12 -- The overnight grains are firmer and Europe has followed suit opening higher too. Last night's USDA winter wheat crop ratings coming in at the lowest on record is supportive. So too might be a success for the US in one of the various wheat tenders kicking around at the moment.

Last night's Commitment of Traders report shows funds pulling out of both wheat and soybeans, potentially capping downside and increasing the chance of an upwards short-covering bounce. In fact funds are now sitting on their smallest net long in soybeans for 9-months, possibly even a reason to think that a rally could be on the cards.

They just don't seem to fancy commodities at the moment, but I wouldn't like bet on that trend continuing for too long, especially if some of their outside market concerns go away.

Greece has been given the nod to qualify for the next tranche of bailout cash, in exchange for an agreement that (wait for it...) it will have it's house in order ten years from now when it has promised to bring its debt below 110% of GDP. Didn't you just know that that was going to happen?

All we need now is an eleventh hour resolution (another thing that we just know is going to happen) to the US fiscal cliff and it's game on again for the funds to get themselves off to a flyer in 2013 courtesy of their old easy to manipulate mate the Ag Market.

The fundamentals also look conducive for a Q1 2013 rally, which could be particularly impressive in it's magnitude if the funds were also to decide to wade in simultaneously.

It's still too early to talk of crop losses in South America, where it's too wet in Argentina and there are pockets of dryness in Brazil. At this exact moment in time IF there are going to be any losses then they are more likely to be in corn than beans.

It is a strong probability however that if the do get a record soybean harvest then hand-in-hand with that will come record logistical problems. Record long lorry queues into the ports, record long vessel waiting times, and record long shipping delays. And then there's the inevitable strike potential to add on top of that.

I mean, we've had Japan and Taiwan switching to US corn due to congestion problems in Brazil when they've virtually got no soybeans to ship, so what's it going to be like if and when they have a record soybean crop to market as well?

At the very least that points to front end tightness in soya and soy products in Q1 of 2013, probably acute front end tightness.

Given the imminent removal from the export market of Ukraine, Russia being more or less sold out too, and the prospect therefore of increased EU exports in the second half of the season (which already well ahead of last year's pace despite lower 2012 production), wheat appears to have strong upside potential.

Demand from North Africa and the Middle East should remain strong in Q1 and Q2 of 2013, against a backdrop of the record poor state of the US crop heading into winter, and large question marks too over conditions here in the UK and France, wheat could be the strongest leg of the soybean/corn/wheat complex between now and the spring.

US Wheat Ratings At An All-Time Low

26/11/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.24 3/4, up 6 cents; Mar 13 Soybeans closed at USD14.12 1/4, up 9 1/4 cents; Jan 13 Soybean Meal closed at USD426.90, up USD3.50; Jan 13 Soybean Oil closed at 49.58, up 26 points. Fund buying in beans was estimated at 2,000 contracts on the day. The USDA announced 20 TMT of US bean oil sold to unknown destinations for 2012/13 delivery - the latest in a sudden spike in such sales. Total net commitments are already running at around 83% of the USDA's target for the full 2012/13 season. Weekly export inspections for beans slowed to 45.5 million bushels from last week's 62 million, although that's still pretty respectable as this was for a holiday shortened week. Ag Rural said as of 25 Nov 77% of the Brazilian bean crop had been planted versus 86% a year ago. As of the same date 37% of the Argentine bean crop has been planted versus 47% a year ago, they added. The Commitment of Traders report showed funds liquidating 12,755 lots of soybean long positions in the week through to last Tuesday, cutting their net long down to just 82,779 lots.

Corn: Dec 12 Corn closed at USD7.47 1/4, up 1 3/4 cents; Mar 13 Corn closed at USD7.51 1/4, up 1 1/2 cents. Fund buying was estimated at around 4,000 corn contracts on the day. Somar said that some of the Brazilian corn crop has been hurt due to dry weather. Private analyst Michael Cordonnier reduced his estimate for the Brazilian corn crop by 1 MMT to 71 MMT. His estimate for Argentina was left unchanged at 22.5 MMT - although that's still well below the USDA's prediction of 28 MMT. The Ukraine corn harvest is said to be 93% complete or 18.9 MMT. ProAgro said that Ukraine has exported 4 MMT of corn so far this season, and that export restrictions on corn may be possible by April 2013. Weekly export inspections of 15.92 million bushels were an improvement on last week but fell well below the 23.8 million needed to meet the USDA's 2012/13 export target. The Commitment of Traders report shows funds sitting on a net corn long of 178,823 lots.

Wheat: Dec 12 CBOT Wheat closed at USD8.49, up 1 1/4 cents; Dec 12 KCBT Wheat closed at USD8.84 1/4, up 6 cents; Dec 12 MGEX Wheat closed at USD9.15, up 1 1/4 cents. Weekly export inspections were poor at 7.8 million bushels, placing year-to-date inspections at 446.5 million vs. 519.0 this time last year. After the close the USDA cut good/excellent winter wheat crop ratings by one percentage point to 33% - an all-time low for this time of year. The previous low for late November was 43% in 1999. Poor/very poor was increased two points to 26%. These are the last wheat crop ratings until the spring, so the market now has a long time to dwell on how US crops will come out of winter dormancy next year. In a flurry of international tenders Iraq are back in the market less than a week after booking 350 TMT of wheat. Jordan, Syria and Algeria are also said to be shopping for wheat. A partial victory for US wheat in one or two of those would support the market.

EU Grains Mostly Higher, Weather Issues Remain

26/11/12 – EU grains closed generally higher with Jan 12 London wheat up GBP2.00/tonne to GBP220.00/tonne, with benchmark May 13  GBP1.65/tonne higher at GBP223.65/tonne and new crop Nov 13 climbing GBP2.15/tonne to GBP191.50/tonne. Jan 13 Paris wheat ended unchanged at EUR269.75/tonne although other months were modestly higher.

Another weekend of wretched wet weather continues to raise eyebrows concerning crop production potential here for 2013. The general consensus being that around 30% of the intended winter crop acreage currently remains unplanted in the UK.

"Conditions are particularly unfavourable in the UK since the ground is still saturated by the heavy rainfall that dominated most of 2012 and much of what is sown is under serious attacks by slugs," note MARS in a report today.

In France, they've at least now managed to get 94% of their winter crop in the ground. Although only 72% of it has so far emerged versus 97% normally, according to FranceAgriMer. They place 76% of the crop in good/excellent condition versus 95% a year ago.

It is interesting to see Iraq back in the market tendering for "at least" 50 TMT of wheat so soon after buying 350 TMT of the grain just last week. Jordan are also in the market for 100 TMT each of wheat and barley.

Another interesting snippet of news was a report on Reuters of Brazil supposedly buying one or two cargoes of German wheat in an unusual move from such a distant supplier. Brazil's domestic wheat harvest has quality issues this year, but they would normally buy virtually all of their import requirements from neighbouring Argentina. The inference is that maybe Argentina's crop, which has been dogged by rain all season, is also failing to meet Brazilian millers' quality requirements.

Russia said that it has shipped just over 1 MMT of grain so far this month (to Nov 21), including 670 TMT of wheat, 189 TMT of barley and 154 TMT of corn. That brings their total 2012/13 marketing year-to-date exports to 11.38 MMT, down 17% on last year and fulfils nearly three quarters of the Ag Ministry's projected 15.5 MMT full season total.

Ukraine said that it's corn harvest is 93% complete at 18.9 MMT with yields down 25% at 4.62 MT/ha. That brings this season's grain harvest to 45.27 MMT to date, with the Ministry forecasting a final crop of 45.5-46.5 MMT in bunker weight against 56.7 MMT a year ago.

MARS placed final 2012 EU-27 corn yields down 20.6% this year, noting a recurrent theme of "extreme heat waves and precipitation deficiencies caused serious grain maize yield losses in Romania, Hungary, Bulgaria and Italy." Yields in those four countries slumped by 48%, 42%, 37% and 20% respectively.

SheMale Farmers

26/11/12 -- An interesting article from the Beeb today highlights the growing number of female farmers in the UK - 23,000 against "virtually none" 9-10 years ago.

Even more telling is that in 2012 there are 6,000 more female farmers against 5,000 fewer males. Two remarkably similar numbers don't you think that may hide the truth here? Next time you meet a female farmer I suggest that you ask to "see her credentials" so to speak.

A guaranteed order winner either way that one if you play your cards right. If she IS a she you say "I thought you must be, you're so gorgeous you just couldn't be fake. Would you like to go out for dinner and discuss your next feed order?" If she IS a he: "Well fair play to you, if it wasn't for the beard I'd never have guessed. Let me put you through to our Very Convincing Trannie Customer Services Dept who'll be delighted to take your next feed order."

Banks Look Into 2013

26/11/12 -- Come on then, who ordered all this rain? I think it must have been a fat finger trade. A bit like when MrsN#2 worked at Tesco's on the home delivery jobbie and an order would come in from somebody who's ordered 8 kilos of bananas online. Nobody it would seem thought to check whether this order had come from the zoo before sending somebody out onto the shop floor to strip the shelves of bananas. Of course invariably the customer wanted 8 bananas not 8 kilos of the wretched things and would look on aghast as half the Windward Islands came down the drive.

Well that's exactly what I reckon has happened with this rain. Someone has been working out how much we need for a nice wheat crop in 2013 and have ordered it all to be delivered in November 2012 by mistake, completely forgetting to put a tick in the equal monthly quantities box.

Farming Online said last week that they reckoned only around two thirds of the intended 2013 wheat crop was in the ground. Origin Enterprises estimate that "poor weather has prevented UK farmers from sowing 30% of winter crops," according to a story on today. Note that's winter crops not winter wheat.

All of which seems to tie in rather nicely with the general vibe I've picked up on across the last few weeks talking to farmers all down the eastern side of the country from Suffolk to Market Rasen to Newcastle.

Which throws up far many more questions than answers. Like what are UK farmers going to plant for 2013? And when? Spring barley? Not me, every bugger is gonna plant that has been a common response. Spring wheat? We don't really have any figures on our normally miniscule spring wheat acreage in the UK, but it looks a certainty that we'll probably grow far more of it than normal in 2013. What else? Beans? Peas? Linseed? Spring OSR? Oats? They all get a mention, depending on which part of the country you are in. In fact bananas is about the only one I haven't heard get a mention lately.

It's particularly interesting then to read today that HSBC are forecasting a UK wheat price of GBP165/tonne for the 2013 crop, according to various media reports. Having done a fair bit of internet foraging I've managed to find a copy of their interesting and in depth Forward Planning 2013 publication here.

On a scan through it's 35-pages I can't actually see that they (sensibly) whip out their gonads and place them on the chopping block and say "feed wheat will average GBP165/tonne for the 2013/14 crop year." What they do say is that they have set the (feed) wheat price at GBP165/tonne for the purposes of their costing illustrations which they admit "may seem conservative compared to spot prices" but that they expect 2013 to have "fewer unseasonal weather patterns." A bank that can also do weather forecasts, great!

They do specifically forecast one thing though "that the euro will strengthen through 2013, to reach 87 pence this time next year" against the pound. That's around 7.5% higher than the current exchange rate of just under 81 pence.

If they're right, then current levels offer a great opportunity to sell some wheat at around GBP20/tonne over the market based on the current Nov13 futures price. Personally, I don't think that they are right but even so fair play to them I say, a bank with bollocks. Now, where did I put that meat cleaver...

Incidentally, they aren't the only bank that's looking for downside movement in 2013. Saxobank say that they are "outright bearish" on the Ag Sector. See here (you'll need to scroll down to P14 onwards).

The Morning News Headlines

26/11/12 -- The overnight grains are firmer, and Europe has opened higher too. May 13 London wheat currently trades GBP2.00/tonne higher at GBP224.00/tonne and new crop Nov 13 is GBP1.65/tonne firmer at GBP191.00/tonne. Both are now back within around a fiver of their respective contract highs set earlier this month.

Another extremely wet Great British weekend will not have done anything to improve wheat planting prospects. Across the Channel, our cheese-munching chums the French have soldiered on, no doubt spurred on by the current attractive price of wheat and managed to get 94% of their winter crop in the ground.

Only 72% of it has so far emerged however versus 97% normally, according to FranceAgriMer. They place 76% of the crop in good/excellent condition versus 95% a year ago.

Iraq are reported to be tendering for 50 TMT of wheat, although they usually buy more than they tender for, with US, Canada, Australia and Russia said to be the preferred orgins. They bought 350 TMT of Australian (200 TMT), Canadian (100 TMT) and Russian (50 TMT) wheat only last week.

Jordan are also said to be in the market for 100 TMT each of both wheat and barley.

A report on Reuters suggests that Brazil may have bought one or two cargoes of German wheat. That would be an unusual move, and may reflect on the poor quality of their own domestic wheat crop this year. It may also indicate that Argentina's wheat crop isn't the best and/or they've got plenty of it sold already.

In the US: "Below normal precipitation across the central and southern Plains will maintain low moisture supplies for wheat," say MDA CropCast. Not good. The USDA will report on crop conditions tonight. Last week's ratings of just 36% good/excellent were the worst on record for this time of year you will doubtless recall.

In Argentina: "Widespread showers will overspread the region on Wednesday and Thursday. Amounts will through Friday be 0.50 to 1.5”, locally 3”, with 95% coverage. Showers this week will increase wetness concerns and stall corn/soybean planting," they add.

Things are looking better in Brazil however, where they say: "Rains should push across northern crop areas this week, favouring northwestern Mato Grosso do Sul, Mato Grosso, Goias, Minas Gerais, and Bahia. Amounts will be 0.50 to 1.5”, locally 3”, with 50% coverage. Showers will improve moisture in northern crop areas, but dryness will remain in Santa Catarina and Rio Grande do Sul."

German rapeseed crushing facility Prokon Bio-Ölwerk apparently claimed force majuere on some rapemeal sales contracts on Thursday after "damage to crushing machinery" cut output at its plant in Magdeburg, East Germany. The problem is likely to continue "until late January" I hear.

On Wednesday last week rapemeal FOB Lower Rhine was offered for Dec delivery at EUR291/tonne, today the price is EUR302/tonne.