Chicago Close - Friday
14/12/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.96, up 19 1/2 cents; Mar 13 Soybeans closed at USD14.91 1/2, up 19 cents; Dec 12 Soybean Meal closed at USD460.10, down USD0.40; Dec 12 Soybean Oil closed at 49.63, up 101 points. Dec contracts went off the board today. For the week Jan 13 beans were 23 3/4 cents higher, with Dec 12 meal USD9.60 firmer and Dec 12 oil losing 119 points. The NOPA monthly crush for soybeans in November was 157.308 million bushels, which was in line with trade estimates, but still the largest monthly crush in almost two years. The number represents an increase of more than 16 million on Nov 2011. On top of the recent succession of strong weekly export sales and shipments, buoyant domestic demand for soybeans will continue to tighten availability until South American supplies come along in the spring. Argentine soybean plantings still lag. The Buenos Aires Grain Exchange weekly report from yesterday said that 63.3% of the bean crop has been planted versus 72.9% a year ago. Meanwhile "widespread rains over the past week have favoured corn and soybeans across Brazil, with the heaviest amounts favouring central and western Mato Grosso and western Rio Grande do Sul," say MDA CropCast.
Corn: Dec 12 Corn closed at USD7.18 3/4, up 6 1/2 cents; Mar 13 Corn closed at USD7.30 3/4, up 10 1/2 cents; For the week that places Dec 12 corn, which went off the board today, losing a net 14 cents. Export demand for US corn continues to lag. Yesterday's weekly export sales of 258,900 MT were uninspiring. South Korea has bought around 630,000 MT of optional origin corn over the past few days, with very little, if any, of that likely to come from the US at this stage. Offers out of South America continue to undercut US corn, with logistics and maybe quality issues the most likely reason for Asian buyers to switch back into US corn. Japan and Taiwan are both said to have recently done so due to port congestion and delayed loading times in Brazil. China are now reported to have an issue with two containers of corn from Argentina containing traces of GMO varieties that are not approved for entry into the country. Some reports suggest that Chinese imports of all corn from Argentina will now be halted until the issue is resolved. It is unclear what kind of volume is in jeopardy, but it's unlikely to be huge. Coceral cut their forecast for EU-27 corn production in 2012 from 56.0 MMT to 54.7 MMT. The Buenos Aires Grain Exchange weekly report said that 61% of the Argentine corn crop has been planted versus 71% a year ago.
Wheat: Dec 12 CBOT Wheat closed at USD8.01, up 8 cents; Dec 12 KCBT Wheat closed at USD8.52 1/4, up 1 1/2 cents; Dec 12 MGEX Wheat closed at USD8.84 3/4, unchanged. Wheat corrected some of the week's sharp declines but CBOT still ended with losses of 43 1/4 cents versus last Friday. Technical buying, short covering and profit-taking was a feature on the day. US wheat badly needs signs of a prolonged pick-up in world demand for it. Yesterday's export sales were OK at 518,600 MT, but more will be needed to convince the market that world demand is switching to the US. Bangladesh bought 50 TMT of what will probably be Indian wheat in a tender, although South Korea did buy 47 TMT and 24 TMT of US wheat in two separate deals for April/May shipment. There's a chance of some long awaited and much-needed rain on the US Plains today, although hard wheat areas are only set to get "light-moderate showers" rather than the soaking they'd like. In a first look into the future, the IGC estimated next year's 2013/14 global wheat crop at 690 MMT, up 5.4% from this year's output. The Argentine wheat crop is just over 42% harvested, according to the Buenos Aires Grain Exchange. Both quality and quantity are likely to be an issue this year due to heavy flooding and persistent rains.
EU Wheat Recovers Some Of Thursday's Losses
For the week however there were still some fairly steep losses attributed to a bearish, at least for wheat, USDA report on Tuesday. Jan 13 London wheat finished with losses of GBP7.00/tonne for the week, with May 13 down GBP8.00/tonne and Nov 13 also falling GBP8.00/tonne. Jan 13 Paris wheat shed EUR8.50/tonne.
After a sharp sell-off yesterday the trade seemed to re-focus on strong world demand for wheat, and that Europe is winning an increasingly larger share of that. Yesterday's 583 TMT of soft wheat export licenses takes the 2012/13 marketing year-to-date total to almost 25% ahead of this time last season.
Ukraine's grain harvest is just about over at 46.61 MMT in bunker weight, and so too would appear to be it's wheat export campaign. The corn harvest is said to be 99% complete at 20.27 MMT, also in bunker weight. They should remain active corn sellers at least until the spring.
Ukraine's Stae Statistics Service said that December 1st grain stocks were 21.4 MMT, down 27% from a year ago. Of that, wheat stocks were only 6.5 MMT, barley stocks 2.1 MMT, and corn stocks 11.2 MMT.
It will be the spring before Abengoa's Rotterdam bioethanol facility is back in the market for corn, having taken a reported "voluntary" 3-month shut-down in order to resolve various issues with the plant. EU bioethanol margins are said to have "turned sharply negative" in recent weeks, so the timing of this downtime may also be tied to that.
Coceral today cut their forecast for the 2012 EU-27 soft wheat crop from 124.69 MMT last time to 123.97 MMT, a drop of 5% on last year's production. They now peg the UK crop at 13.35 MMT this year, broadly in line with the HGCA's 13.3 MMT.
In other news, the Buenos Aires Grain Exchange said that 42.4% of the wheat crop there has been harvested so far versus 50.4% a year ago. They now estimate production at only 9.8 MMT this year, a drop of almost 37% on last year.
The Morning Vibe
14/12/12 -- Guess what? This day in 2011 was the bottom of the soya market. Front month Jan 12 beans closed at USD11/bu a year ago, and never looked back until they got past USD17/bu, apart from a May dip that is. Meal had bottomed a few days earlier at USD275.50. Corn and wheat this time last year were both under USD6/bu, for interest.
Wouldn't it be nice to have a crystal ball and know where things are headed in 2013? There seem to be quite a few of the banks calling for the year's highs to be set in the first quarter, followed by a steady decline throughout the rest of the year, weather depending of course.
For once I have to say that I agree with them.
As ever, how high those highs are will depend on to what extent our old chums the funds fancy the grains sector in 2013. That one is a bit more difficult to predict unfortunately.
Soybean are back up this morning following yesterday's once again impressive weekly export sales and shipments. The USDA surely will be forced to up their forecast on US soybean sales next month, although via the marvels of creative accountancy will probably do so in conjunction with a hike in 2012 yields, thereby managing to keep ending stocks from falling any lower than the current 130 million bushels predicted.
Wheat is also 2-3 cents firmer in overnight trade. Export sales here were towards the upper end of trade estimates of 300-600 TMT at 518,600 MT for 2012/13 and of 54,900 MT for delivery in 2013/14.
It's far too early to say that this is the start of the much heralded switch in demand to US supplies, although it is interesting that Strategie Grains chose to say that there was "absolutely no room for EU wheat to attract any additional demand" in their press release yesterday.
Again, I have to say that I agree with them. EU exports have picked up at a quite alarming rate versus 2011/12 lately. As noted yesterday, at the start of November these were running only 6% up on last season and that figure is now close to 25% - a startling rise, especially when you consider that production is around 4% lower this year.
Argentina's wheat crop is clearly a bag of shite this year, to use a technical term, and the USDA's 11.5 MMT estimate released only on Tuesday is patently as closely linked to reality as Doctor Who's magic screwdriver. In fact somebody who shall be nameless emailed me to describe the USDA's attache in Argentina as "not the sharpest tool in the box". A tool for sure, just not a sharp one, it would seem.
As well as having a wheat crop of 10 MMT at best, it appears that quality as well as quantity has also taken a hit, or rather a bath in this case, this year. It would therefore seem about as likely that Argentine will export 7.5 MMT of wheat this season as Kylie and Dannii inviting me round to their house for an alcohol-fueled game of "strip twister" over the festive period.
New crop northern hemisphere wheat suddenly looks a long, long, way away. Our mates Down Under will no doubt do what they can to keep Asia going with their kangaroo poo infested 20 MMT or whatever they've got. India, always looking for an opportunity, will also feature amongst the not so picky buyers. Bangladesh have bought 50 TMT of what will probably be Indian wheat overnight in fact.
If you're a bit more discerning though, readily available decent quality wheat could be pretty hard to find in Q1 of 2013.
Chicago Closing Comments - Thursday
13/12/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.75 1/2, up 2 cents; Mar 13 Soybeans closed at USD14.72 1/2, up 2 cents; Dec 12 Soybean Meal closed at USD460.50, up USD1.00; Dec 12 Soybean Oil closed at 48.62, down 56 points. Weekly export sales for soybeans in excess of 1.3 MMT comfortably beat trade expectations of 550-900 TMT. Once again weekly shipments were also strong, coming in above the 1 MMT mark for the 11th week in a row, matching a record of unbroken 1 MMT plus per week of exports on records stretching back to 1990. Total net soybean commitments are now in excess of 80% of the USDA's target for the full season. The November NOPA domestic soybean crush report will be released tomorrow with the average trade guess coming in at 157.5 million bushels.
Corn: Dec 12 Corn closed at USD7.12 1/4, down 8 3/4 cents; Mar 13 Corn closed at USD7.20 1/4, down 5 1/4 cents. Weekly export sales of 258,900 MT were an improvement on last week's paltry effort and within trade expectations, but still fell well short of the level required to hit the USDA's full season target. Net total corn commitments at this stage are only 43% of the USDA target for 2012/13. Corn planting in Argentina is said to be 61% done, with a few more dry days on the cards before showers return on Sunday. MDA CropCast raised their 2012 Chinese corn production estimate to 202.8 MMT, even so that's still considerably less than the USDA's 208.0 MMT forecast released on Tuesday. They estimate Brazilian output at 70.7 MMT and Argentine production at 25.2 MMT, both unchanged from a week ago.
Wheat: Dec 12 CBOT Wheat closed at USD7.93, down 1 3/4 cents; Dec 12 KCBT Wheat closed at USD8.57 3/4, up 4 1/2 cents; Dec 12 MGEX Wheat closed at USD8.86 1/4, down 3 3/4 cents. Weekly export sales for wheat were decent at 518,600 MT, and for once beat the weekly level required to hit the USDA's target for 2012/13. That was helped by sales of 183,000 MT to Egypt, most of which was already known about last week. Japan bought 134,157 MT of mostly US wheat in its regular weekly tender. The Buenos Aires Grains Exchange cut its forecast for Argentine wheat production by 320 TMT to 9.8 MMT, well below the USDA's 11.5 MMT estimated on Tuesday. The Rosario Exchange are said to be about to issue a similar sub-10 MMT number on Friday. Harvesting is 42% complete, according to the BAGE.
Paris Wheat Ends At 4-Month Low
13/12/12 -- EU grains closed mostly lower with Jan 13 London wheat down GBP5.25/tonne at GBP215.25/tonne, May 13 also down GBP5.25/tonne to GBP217.75/tonne and new crop Nov 13 GBP4.15/tonne easier at GBP189.75/tonne. Jan 13 Paris milling wheat fell EUR5.50/tonne to close at EUR255.75/tonne.
This was a 4-month closing low for a front month on Paris wheat.
We have an interesting scenario developing between a very tight 2012/13 supply and demand equation in Europe against a more liberal one for 2013/14.
French analysts Strategie Grains today raised their estimate on EU soft wheat exports for the current season by 1 MMT from last month to 18.8 MMT (and versus 16.6 MMT in 2011/12 according to the USDA).
Citing strong demand from Iran and reduced competition from Argentina they said that there was "absolutely no room for EU wheat to attract any additional demand."
Trade gossip suggests that both the Rosario and Buenos Aires Grain Exchanges will cut their Argentine wheat production estimates to below 10 MMT today/tomorrow, contrary to the USDA holding their output forecast unchanged at 11.5 MMT on Tuesday.
MDA CropCast reduced their Argentine wheat crop estimate by 660 TMT today to 9.98 MMT "due to continued wetness."
In their first look into 2013/14 however Strategie Grains forecast EU-27 soft wheat production rising 9% to 134.2 MMT and that of durum wheat increasing 4% to 8.3 MMT. That would give Europe an all wheat crop of 142.5 MMT next year (versus the USDA's forecast for 2012 of 131.7 MMT), assuming a return to trendline yields.
Corn production is seen doing even better, witrh output up 16% to 63.0 MMT, albeit from a sharply reduced 2012 crop.
In other news Brussels issued 583 TMT of soft wheat export licenses this week, bringing the marketing year-to-date total to 8.56 MMT, a 24.4% increase on last year. This percentage has been increasing dramatically in recent weeks. At the beginning of November exports were only 6% up on last season.
Another interesting development to emerge this week is news that the Abengoa facility in Rotterdam, which produces bioethanol from corn and churns out DDGS as a by product, is to "voluntarily" close for three months.
Chicago Closing Comments - Wednesday
12/12/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.73 1/2, up 1 1/2 cents; Mar 13 Soybeans closed at USD14.70 1/2, down 3/4 cent; Dec 12 Soybean Meal closed at USD459.50, up USD4.50; Dec 12 Soybean Oil closed at 49.18, down 69 points. The dollar was lower, adding support. Tuesday's USDA WASDE report, which confirmed the acute tightness in US supplies this year, may in fact have been understated given the robust nature of soybean (and soymeal & oil) sales and exports so far this season. Tomorrow's weekly export sales report will therefore be of particular interest. Last week's soybean sales of 1.14 MMT were more than double trade estimates of 300-500 TMT and between 4-5 times larger than the volume required to hit the USDA's 2012/13 export target of 36.6 MMT. Trade estimates for tomorrow's soybean sales are 550-900,000 MT. Sales at the upper end of that scale would bring total commitments for the season to date to around 80% of that target little more than a quarter of the way into the season.
Corn: Dec 12 Corn closed at USD7.21, down 3 1/4 cents; Mar 13 Corn closed at USD7.25 1/2, down 2 1/2 cents. South Korea's NOFI bought 238 TMT of mostly South American corn for April/May delivery. Despite reports that US corn had been excluded, one cargo was said to have been traded as US/South African origin. Unlike for the soy products, corn sales are lagging the pace needed to hit the USDA 2012/13 export target. Last week's sales were a paltry 51,600 MT against expectations of 300-500 TMT. That brings net commitments for 2012/13 so far to only 42% of the USDA's target. Tomorrow the trade is looking for sales of 150–400 TMT, which in itself is a fairly modest amount for this time of year. Anything less than that would be another disappointment for corn bulls. China's CNGOIC says that the country's corn import needs will fall by more than half in 2012/13. The weekly ethanol grind fell 11,000 barrels/day to 824,000 bpd, although that is in line with the required pace to meet USDA projections for the current season.
Wheat: Dec 12 CBOT Wheat closed at USD7.94 3/4, down 11 cents; Dec 12 KCBT Wheat closed at USD8.53 1/4, down 15 1/2 cents; Dec 12 MGEX Wheat closed at USD8.90, down 6 3/4 cents. Wheat was the weakest leg for the third day running, pressured by the fall-out from Tuesday's bearish USDA report. Tomorrow's export sales will be interesting, as the trade keeps talking about world demand switching to the US, but with little hard evidence so far to back that assumption up. Last week's sales of 353,100 MT were in line with expectations, but hardly spectacular, and below the 511 TMT/week required to hit USDA targets. That target has now been lowered a little, but sales still need to average 500 TMT/week to get to the 29.5 MMT of sales forecast by the USDA in 2012/13, exactly halfway through the wheat marketing year. There are plenty of wheat tenders around, the US now needs to start winning a larger share of them than it has been. FranceAgriMer raised it's forecast for French wheat exports to non-EU destinations to 10 MMT, up 0.5 MMT from last month and a 1.5 MMT increase on last season.
EU Wheat Lower As USDA Fallout Continues
The market is still coming to terms with yesterday's bearish wheat numbers from the USDA, and figure out how close to reality some of the figures are really likely to be.
Certainly some of them at least look questionable, but at least for now that's what the market is stuck with, even if world ending stocks increased from 174.2 MMT to 177.0 MMT, they are still 9.6% down on last season.
FranceAgriMer came out today with some revised production and stocks numbers for 2012/13 themselves. They estimate soft wheat production there at 35.8 MMT in 2012, a 5.4% increase on last year, with durum output up 20% at 2.4 MMT. The bottom line is an all wheat crop of 38.2 MMT versus 36.0 MMT last year and very similar to the USDA's 38.15 MMT estimate.
Exports of soft wheat to non-EU destinations were raised 0.5 MMT from last month, reflecting strong demand from North Africa and the Middle East, to 10.0 MMT, a 17.6% increase on last year's 8.5 MMT.
French soft wheat ending stocks were placed 14% down on year ago levels to 1.96 MMT.
Ukraine said that its domestic grain harvest is now 99% complete at 46.43 MMT, down 20% on a year ago. Exports however are 71% up at 12.78 MMT as of Dec 11, including 5.65 MMT of wheat with a further 178 TMT of wheat sitting at the ports waiting to load. That will likely conclude their wheat export programme for 2012/13.
The corn harvest there is almost over at 98% done, producing 20.06 MMT in bunker weight so far.
Hidden in amongst yesterday's USDA data was an unchanged look for UK wheat production in 2012 of 13.5 MMT, around 200 TMT more than the HGCA estimate, with yields at 6.75 MT/ha versus the HGCA's 6.68 MT/ha.
USDA Report Reaction - And Another Joke
Our chums at the USDA have sprinkled a bit of fairy dust around the world, given everything a good old shake up and come up with some magic all of their own.
First off we have the glaringly obvious question that is "how can Argentina export 7.5 MMT of wheat this year when the government have already said they are capping exports at 4.5 MMT?" Unless the USDA IS the Argentine government, and knows that it's only mucking about.
That's before we even get onto the question of Argentina producing 11.5 MMT of wheat this year after all the problems that they've had from plantings that were said to be their second-smallest wheat area in 110 years.
There are possible question marks too over Australian wheat production at 22 MMT and Chinese output of 120.6 MMT, and that's before we get onto China's massive new 208 MMT corn crop. If in doubt raise China's production, nobody knows what's going on there anyway so who can say it's wrong?
Then we get onto the subject of not increasing US soybean exports for 2012/13 with 78% of the current projection already either shipped or on the books. Sales of 1 MMT in tomorrow's report would take that past 80%.
Bah, humbug. Anyway I'm going to tell you a magic joke to cheer you up....
Snow White, Tom Thumb and Quasimodo are sitting in a pub.
Snow White says, "There's no doubt about it, I'm the fairest in the land."
Tom Thumb says, "There's no doubt about it, I'm the smallest in the land."
Quasimodo says, "There's no doubt about it, I'm the ugliest in the land."
To prove it all three head off to the magic all-knowing mirror in the bogs at the back of the pub.
A few minutes later, the bog door bursts open and Snow White runs in and says, "It's official...I am the fairest in the land!"
Shortly afterwards, the door again bursts open and Tom Thumb runs in and shouts, "It's official...I'm the smallest in the land!"
Five minutes later, the door gets booted open and Quasimodo storms in and says, "Who's Iain Dowie?"
If you're foreign, or a girl, and especially if you're a foreign girl going "Who is Iain Dowie?" then either you must be Quasimodo or you need think carefully before you click the link to find out:
Iain Dowie: Snog, Marry, Is It Human?
Chicago Lower, After Bearish USDA Wheat Numbers
11/12/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.72, down 2 3/4 cents; Mar 13 Soybeans closed at USD14.71 1/4, down 4 1/4 cents; Dec 12 Soybean Meal closed at USD455.00, up USD2.60; Dec 12 Soybean Oil closed at 49.87, down 96 points. There were only minimal changes to the world supply and demand balance sheet for soybeans, with perhaps the most salient alteration being the cut in US ending stocks to 130 million bushels. This was in line with trade estimates, but reinforces the view that there's little room for slip ups from South America come the spring as North America will be pretty much a spent force by then. The USDA left production estimates unchanged in Brazil and Argentina at 81.0 MMT and 55.0 MMT respectively. US soybean oil exports were hiked 50% from last month to 817 TMT (last month's target has already been surpassed). Given the very strong pace of US soybean weekly sales and shipments it was a bit of a surprise that 2012/13 exports weren't increased, although that would have made ending stocks even tighter. Perhaps that will come next month? January often brings a reassessment on final US production, which may allow the USDA to increase 2012/13 exports whilst not tightening carryout further by virtue of extra 2012 output. The USDA also separately announced a 115,000 MT soybean sale to China for 2012/13 delivery under the daily reporting system.
Corn: Dec 12 Corn closed at USD7.24 1/4, down 2 1/2 cents; Mar 13 Corn closed at USD7.28, down 2 cents. US corn ending stocks were left unchanged in today's USDA WASDE report, contrary to trade expectations for a 16 million bushels increase. World production was hiked around 10 MMT though, courtesy of a 8 MMT increase for Chinese output to a record 208 MMT. Global consumption was also increased, by around 9 MMT, meaning that there was little actual change to the overall level of world ending stocks. Argentine production was only trimmed by 0.5 MMT, the trade had been expecting a 2 MMT cut to 26 MMT. Yet, private analyst Michael Cordonnier sees output there at only 22.5 MMT. Exports from both the South American suppliers were left unchanged. The USDA left demand from the ethanol sector the same as last month at 4.5 billion bushels. Tomorrow we get the weekly ethanol grind numbers, with around 825,000 barrels/day needed to hit that target. Thursday we get the latest weekly export sales, these have been consistently poor of late, with the odd exception. Around 435 TMT/week is pace needed to match the USDA's unchanged 2012/13 export target of 31 MMT. Last week's total was just 51,600 MT.
Wheat: Dec 12 CBOT Wheat closed at USD8.05 3/4, down 27 cents; Dec 12 KCBT Wheat closed at USD8.68 3/4, down 21 1/4 cents; Dec 12 MGEX Wheat closed at USD8.96 3/4, down 13 3/4 cents. Wheat got the bearish surprised this month, with world production seen rising from 651.4 MMT last month to 655.1 MMT this time round. Ending stocks were increased accordingly from 174.2 MMT to 177.0 MMT, although that's still 9.6% down on last season. The trade was however expecting a decrease to 173.4 MMT. Australian output was raised 1 MMT to 22 MMT, China's crop was increased 2.6 MMT to 120.6 MMT - largest production since 1997/98 - and Canada's upped 0.5 MMT to 27.2 MMT. Argentina's crop was surprisingly left unchanged at 11.5 MMT. Argentina, Australia, Europe, India, Paraguay and "Others" all saw their exports raised, whilst those of the US were cut 1 MMT to 29.5 MMT, increasing carryout there by almost 1.4 MMT. Argentina's wheat exports were in fact forecast at 7.5 MMT, which is interesting on a number of counts, not least that the government there are said to have capped the volume at 4.5 MMT within the last few days.
EU Wheat Falls On Bearish USDA Report
The USDA basically surprised the market by coming out with a world wheat production increase of 3.7 MMT in 2012, resulting in an ending stocks increase of 2.8 MMT to 177 MMT, versus trade expectations of a decrease of 750 TMT to 173.4 MMT.
They upped this year's Australian wheat production estimate by 1 MMT to 22 MMT and left Argentina's unchanged at 11.5 MMT. The latter, if not the former, was certainly a surprise.
For soybeans the USDA numbers were a little bullish, whilst they were neutral for corn. The trade now needs time to assimilate how accurate these figures are. The answer is maybe not very.
In other news, Russia said that it had sold 63,800 MT of intervention wheat this week, bringing the total volume sold since such sales began on Oct 23 to 884 TMT.
They also announced that total grain exports for the marketing year to date are 12.1 MMT (to Dec 10), down 24% on last year's 16.0 MMT. Full season exports are pegged at 15.5 MMT, down 43% on last year's 27.2 MMT, according to the Ministry.
Now that the USDA figures are out of the way the market may begin to refocus on world supply and demand for the early part of 2013.
On the wheat supply side, things could quickly soon start to get considerably tighter. Demand meanwhile isn't seen shrinking any time soon.
That possibly augurs well for prices in Q1 of 2013, especially with the supply side of the coin likely to switch to the US whilst winter wheat production prospects there decline.
However, the market is the market. As ever, money outflows can always over-ride market fundamentals, and what may spark those are sometimes not easy to predict.
Lunchtime News
11/12/12 -- Well we've all been waiting on the USDA and their numbers were a bit of a mixed bag, but for once didn't contain a major shock.
US soybean 2012/13 ending stocks were cut to 130 million bushels, in line with trade ideas and very tight. That should be supportive to the market going forward, considering the USDA's reputation for caution.
The number is in reality probably still too high as it came courtesy of an increase in the domestic crush (you will recall that the US had already surpassed the USDA's soyoil export target for the entire 2012/13 season, so a crush increase was always on the cards).
They resisted the temptation to raise US soybean exports however, despite that fact that 78% of the anticipated 1.345 billion bushels of foreign sales is already on the books.
Both Brazilian and Argy soybean production potential was left unchanged from last month at 81.0 MMT and 55.0 MMT respectively.
As we know caution is their watchword, so they only cut Argy corn output by 0.5 MMT to 27.5 MMT, contrary to trade expectations for a 2 MMT reduction to 26.0 MMT. Braz corn production was left unchanged at 70.0 MMT.
Chinese corn output was raised a surprising 8 MMT to a record 208 MMT.
US corn ending stocks weren't raised as the market expected, they left them unchanged at 647 million bushels. Demand from the ethanol sector was left the same as last month at 4.5 billion bushels, which is fair enough. US corn exports were also left unchanged at 1.15 billion bushels, which looks increasingly optimistic with each week of shitty export sales that passes.
Wheat got a bearish surprise with world production seen rising from 651.4 MMT last month to 655.1 MMT this time round. Ending stocks were increased accordingly from 174.2 MMT to 177.0 MMT. The trade was expecting a decrease to 173.4 MMT.
Australia's wheat crop was raised from 21.0 MMT to 22.0 MMT, in line with ABARES recent forecast. Argentina's production was left unchanged at 11.5 MMT, contrary to local forecasts of a crop closer to 10.0 MMT.
In other news the USDA have today separately announced a 115,000 MT soybean sale to China for 2012/13 delivery. Already that adds to the notion that 130 million bushels of ending stocks is too high.
USDA Crop Numbers
11/12/12
-- The USDA's eagerly awaited raft of important numbers are out, here's some
of the main ones:
South American 2012/13 Crop Production (MMT):
| Product |
USDA
|
Avg Est
|
Range
|
USDA Nov
|
| Brazil Soy |
81.0
|
80.8
|
78.8-82.0
|
81.0
|
| Brazil Corn |
70.0
|
70.2
|
69.0-73.5
|
70.0
|
| Argy Beans |
55.0
|
54.5
|
52.5-56.5
|
55.0
|
| Argy Corn |
27.5
|
26.1
|
24.0-28.0
|
28.0
|
USDA 2012/13 US Ending Stocks Estimates (billion bushels):
| Product |
USDA
|
Avg Est
|
Range
|
USDA Nov
|
| Wheat |
0.745
|
0.718
|
0.690-0.754
|
0.704
|
| Corn |
0.647
|
0.663
|
0.493-0.752
|
0.647
|
| Beans |
0.130
|
0.130
|
0.123-0.145
|
0.140
|
USDA 2012/13 World Ending Stocks Estimates (MMT):
| Product |
USDA
|
Avg Est
|
Range
|
USDA Nov
|
| Wheat |
177.0
|
173.4
|
170.0-175.7
|
174.18
|
| Corn |
117.6
|
118.0
|
115.7-125.1
|
117.99
|
| Beans |
59.9
|
59.4
|
56.7-60.7
|
60.02
|
Chicago Cautious Ahead Of USDA Numbers
10/12/12 -- Soycomplex: Jan 13 Soybeans closed at USD14.74 3/4, up 2 1/2 cents; Mar 13 Soybeans closed at USD14.75 1/2, up 3 1/2 cents; Jan 12 Soybean Meal closed at USD444.90, up USD2.00; Jan 12 Soybean Oil closed at 51.15, up 2 points. It was a relatively subdued session, with late strength tied to ideas that the USDA will further tighten US 2012/13 ending stocks in tomorrow's WASDE report. Weekly export inspections of 46.631 million bushels, whilst decent, were down compared to 51.943 million last week. Even so, exports are well ahead of schedule. A better weather outlook for Argentina, with drier weather forecast for the rest of the week, capped gains. Meanwhile rain in southern Brazil over the next 7 days is improving corn and bean growing conditions. Customs data shows China's November soybean imports were 4.16 MMT, down 27% vs Nov 2011. For the Jan/Nov 2012 calendar year so far total imports are now 52.49 MMT, up 11.4% vs 2011. December soybean imports are estimated at 5 MMT vs a previous estimate of 3.428 MMT. China imported 920,000 MT of edible oils in November, up 37% from a year ago. That brings Jan/Nov 2012 imports to 7.33 MMT, up 26% from a year ago. The key numbers to look out for in tomorrow's USDA report are US 2012/13 ending stocks, which are seen falling 10 million bushels to 130 million; World ending stocks which are forecast 600 TMT down on last month at 59.4 MMT; Brazilian soybean production which is expected little changed from last month's 81 MMT at 80.8 MMT; Argentine soybean production is likely to be unchanged at 55 MMT.
Corn: Dec 12 Corn closed at USD7.26 3/4, down 6 cents; Mar 13 Corn closed at 7.30, down 7 1/4 cents. Weekly export inspections of only 7.861 million bushels were even worse than last week's pretty poor 10.451 million. The slow pace of exports so far this season may lead the USDA to raise ending stocks in tomorrow's WASDE report. Marketing year-to-date exports are running around 50 percent behind last year's pace. Weekly exports need to average in excess of 24.5 million bushels/week to hit the USDA's projected target for 2012/13. South Korea's NOFI tendered for 210 TMT of South America, Indian, or EU origin corn for Jan–Apr shipment, specifically excluding US corn. South American weather developments are seen improving for corn, with more rains in Southern Brazil, and things turning a bit drier in Argentina. The key numbers to look out for in tomorrow's USDA report are US 2012/13 ending stocks, which are seen rising 16 million bushels to 663 million; World ending stocks are forecast to be broadly unchanged at 118 MMT; Brazilian corn production is expected to also be around unchanged at 70 MMT; Argentine corn production could fall around 2 MMT to 26 MMT.
Wheat: Dec 12 CBOT Wheat closed at USD8.32 3/4, down 11 1/2 cents; Dec 12 KCBT Wheat closed at USD8.90, down 6 cents; Dec 12 MGEX Wheat closed at USD9.10 1/2, down 6 3/4 cents. Weekly export inspections were so-so at 13.938 million bushels. Exports lag last season's pace by almost 14%. It is possible to make more of a case out for wheat exports picking up in the second half of the season than it is for corn. The USDA today announced Egypt bought 115 TMT tons of US wheat for 2012/13 delivery. Saudi Arabia bought 295 TMT of EU, US, and Australian wheat over the weekend. Argentina are reported to now be capping their wheat exports in 2012/13 at 4.5 MMT. Meanwhile US wheat is in bad shape heading into the winter. "Drought has intensified in Kansas, Oklahoma and Texas, with only 57% of normal rainfall since September 1. This has led to the worst hard red wheat conditions on record...Experts anticipate significant wheat losses. Drought and wind erosion may claim 25% of the planted area, well above average," say Martell Crop Projections. In tomorrow's WASDE report US wheat ending stocks for 2012/13 are seen rising 14 million bushels to 718 million and world carryout is seen falling around 750 TMT to 173.4 MMT.
EU Wheat Falls Following Monti Resignation
10/12/12 -- EU grains closed mostly lower with Jan 13 London wheat down GBP2.75/tonne at GBP221.75/tonne, May 13 down GBP1.80/tonne to GBP225.70/tonne and new crop Nov 13 GBP1.25/tonne easier at GBP197.25/tonne. Jan 13 Paris milling wheat fell EUR2.25/tonne to close at EUR266.50/tonne.
This was the lowest close for front month Jan 13 London wheat in a fortnight. European jitters returned following the weekend's surprise announcement from Italian Prime Minister Mario Monti that he was going to resign, putting the euro under renewed pressure. Who will replace him, and how anti-austerity are they likely to be, the market is wondering.
European Council President Herman Van Rompuy said that he hopes "that the policies he (Monti) put in place will continue after the elections." These are now expected to be in February.
Iraq reportedly bought 350,000 MT of Australian and Romanian wheat over the weekend. In addition, Saudi Arabia bought 295,000 MT of hard wheat from the EU, Australia and the US in a weekend tender.
The USDA reported the sale of 115,000 MT of US wheat to Egypt under the daily reporting system. Jordan and Syria are also tendering for wheat indicating that international demand remains strong even at current levels.
It is widely considered that Russia and Ukraine are now more or less sold out of wheat and recent tender results would appear to confirm this. EU exports meanwhile are 21% up on year ago levels, and there is some talk that Europe too could be out of wheat to export by the time spring gets here.
Other interesting weekend developments included a report in an Argentine newspaper, La Nacion, that the government there is to cap wheat exports in 2012/13 at 4.5 MMT due to sharply lower production this year due to widespread heavy rains and flooding.
Some media reports suggest that "several" ships loaded with new crop wheat are currently being held at port in Argentina because they are unable to secure the necessary export papers.
Worries persist concerning the health of US winter wheat meanwhile. "Cool temperatures
are slowing wheat growth, and the crop is pushing into dormancy in many areas. Very cold temperatures this morning resulted in some spotty winterkill across west central NE and east central CO, as readings there dropped below 0 F. However, less than 10% of the wheat was affected, and readings should now moderate the rest of this week," said MDA CropCast.
Ukraine's corn crop is now 98% harvested, with an output of just under 20 MMT in bunker weight, giving total grain production this year of 46.3 MMT versus 57.7 MMT in 2011 - a drop of nearly 20%.
The Morning Vibe
10/12/12 -- The overnight grains are mostly lower with beans generally a couple of cents weaker, corn down around 3-4 cents and wheat in the region of 5 cents easier.
It looks like we may be in for a bit more book-squaring ahead of tomorrow's USDA report.
The trade is expecting further reductions to US soybean ending stocks from the existing, and already very tight, 140 million bushels given the rampant rate of exports and the fact that soyoil sales have already exceeded the USDA's target for the entire season.
But hold on a minute, this is the USDA that we are talking about here. It may be that in order not to cut projected US ending stocks any further they simply increase the supply. A bit like printing more money, let's just print some more soybeans. An increase in US yields for 2012 would enable them to up the domestic crush and exports and still end up with unchanged ending stocks.
Whilst they're about it the may decide to print some more corn as well. If they also then lower US wheat exports as they have been pretty unspectacular so far this season then we could see ending stocks for both corn and wheat increase tomorrow.
US 2012/13 ending stocks estimates:
Corn: average trade estimate 663 billion bushels, from within a range of estimates of 493–752 million and the November USDA report estimate of 647 million.
Beans: average trade estimate 130 million, from within a range of estimates of 123–145 million and the November USDA report estimate of 140 million.
Wheat: average trade estimate 718 million, from within a range of estimates of 690–754 million and the November USDA report estimate of 704 million.
World 2012/13 ending stocks estimates:
Corn: average trade estimate 118 MMT, from within a range of estimates of 115.7-125.1 MMT and the November USDA report estimate of 118 MMT.
Beans: average trade estimate 59.4 MMT, from within a range of estimates of 56.7-60.7 MMT and the November USDA report estimate of 60.0 MMT.
Wheat: average trade estimate 173.4 MMT, from within a range of estimates of 170.0-175.7 MMT and the November USDA report estimate of 174.2 MMT.
South American 2012/13 production estimates:
Argentina: Soybeans average trade estimate 54.5 MMT, from within a range of estimates of 52.5-56.5 MMT and the November USDA report estimate of 55 MMT. Corn average trade estimate 26.1 MMT, from within a range of estimates of 24.0-28.0 MMT and the November USDA report estimate of 28 MMT.
Brazil: Soybeans average trade estimate 80.8 MMT, from within a range of estimates of 78.8-82.0 MMT and the November USDA report estimate of 81 MMT. Corn average trade estimate 70.2 MMT, from within a range of estimates of 69.0-73.5 MMT and the November USDA report estimate of 70 MMT.
