Chicago Closing Comments - Friday
01/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.74 1/4, up 5 3/4 cents; May 13 Soybeans closed at USD14.65 1/2, up 5 3/4 cents; Mar 13 Soybean Meal closed at USD428.20, up USD1.80; Mar 13 Soybean Oil closed at 52.99, up 13 points. For the week nearby beans were up 33 1/4 cents, with meal up USD11.80 and oil rising 89 points. Fund buying in beans was estimated at around 2,000 lots on the day. Yesterday's bullish export numbers added a bit of follow-through positivity for the soycomplex today, despite weakness in corn and wheat. Informa Economics estimated the Brazilian soybean crop at 84 MMT and Argentina's at 54.5 MMT. Both forecasts are a bit higher than the USDA's 82.5 MMT and 54.0 MMT January estimates. The USDA will issue revised forecasts next week. Until then South American weather developments will dominate proceedings. Light showers are forecast in Argentina today and tomorrow before dry weather returns Sunday. Southern Brazil should be in for rain, respected analyst Michael Cordonnier says that these rains are "critical" as the last good rain in the north-central part of Rio Grande do Sul was January 3rd. To highlight just how tight spot soybean availability is right now in South America the Brazilian Trade Ministry report that January soybean exports were just 284 MT versus just over 1 MMT in January 2012. CNGOIC estimated China’s March bean ending stocks at 4.0 MMT, down 35% on 6.2 MMT a year ago. They see Q2 soybean imports rising to 15.0 MMT from 11.6 MMT in Q1 as South American supplies come on stream. Vietnam bought 40 TMT US meal for March shipment along with 80 TMT of Argentine meal for April shipment, they are said to be still shopping for more.
Corn: Mar 13 Corn closed at USD7.36, down 4 1/2 cents; May 13 Corn closed at USD7.37 3/4, down 4 1/4 cents. For the week as a whole that pegs Mar 13 corn up 15 1/4 cents. Funds were said to have been net sellers of around 5,000 contracts on the day. Informa pegged Brazil's corn crop at 70.3 MMT and Argentina's at at 25 MMT. Both those are a little lower than the USDA's 75 MMT and 28 MMT respectively. The USDA's Argentina attaché estimated the corn crop there at 27.5 MMT. Unlike soybeans, there's still plenty of corn left to export in Brazil. The Trade Ministry placed January exports at 3.37 MMT versus 2.79 MMT in December and up dramatically on 846,900 MT in January 2012. The US Energy Dept say that 36 US ethanol plants are currently idle, accounting for around 15% of national capacity. Meanwhile cattle numbers as of Jan 1st were said to be the lowest since 1952 at 89.3 million head. Neither of those two bits of news bode well for US corn demand. Whether the forecast South American weekend rains deliver will decide where the market goes on Monday. "Scattered showers have occurred in Argentina the past 36 hours, but a dry forecast is set to resume in the next 7 days. Recurring high pressure continues to have a stabilizing effect on Argentina weather. Brazil's two southernmost farm states (Rio Grande do Sul and Parana) are expecting scattered showers with the same cool front that triggered rainfall in Argentina, moving up from the south. The Brazil forecast is somewhat wetter than indicated yesterday, especially in Parana, where 1-1.5 inch rains are now predicted. Southern Brazil has grown progressively drier, along with Argentina, with much below-normal January rainfall," say Martell Crop Projections.
Wheat: Mar 13 CBOT Wheat closed at USD7.65, down 14 1/2 cents; Mar 13 KCBT Wheat closed at USD8.22, down 15 3/4 cents; Mar 13 MGEX Wheat closed at USD8.51 3/4, down 13 1/4 cents. For the week Mar 13 Chicago wheat was 11 1/2 cents lower, with Kansas down 7 1/2 and Minneapolis falling 13 1/4 cents, with all of those losses coming today. Fund selling in Chicago wheat today was estimated at around 5,000 contracts. There's talk that the Russian Prime Minister is to hold a meeting next week to discuss suspending the 5% grain import tax until August 1st 2013. Egypt announced a late wheat tender, the US should stand a good chance of being successful in that. India keep picking up business from Asia, the Middle East and Africa. Yesterday's US weekly export sales fell short of the level required to hit the USDA's projected target for 2012/13. There was some talk last month that the USDA may decide to lower that projection in the January report, although they subsequently didn't. Maybe they will do so in the February report due next Friday? South Korea bought 35 TMT of Australian noodle quality wheat for April shipment along with 55 TMT of new crop Ukraine wheat. The USDA attaché in Argentina estimated the wheat crop at 10.3 MMT. Informa went even lower coming out with a forecast of 9.5 MMT, which falls in the middle of estimates from the Rosario Grain Exchange (9.3 MMT) and the Buenos Aires Grain Exchange (9.8 MMT). The USDA attaché forecast Argentine wheat exports at a 24-year low of just 4.3 MMT. Theirs is not just a volume issue but also one of quality this season. The Ukraine Ag Ministry said Ukraine exported 16.3 MMT of grains between July and the end of January, up 47% from 11.07 MMT a year ago. That total included 6.14 MMT of wheat, 7.89 MMT of corn and 1.98 MMT of barley. That should draw a line under wheat exports until new crop, the prospects for which look very good at the moment.
EU Wheat Rises, Weak Pound Supports London Market
For the week overall that places old crop London wheat GBP1.40-GBP2.40/tonne higher and new crop Nov 13 GBP5.70/tonne firmer, whilst Mar 13 Paris wheat added EUR1.25/tonne. Sterling weakness continues to support the London market relative to that in Paris.
The pound has fallen off a cliff against the euro, slumping to close the week at just 1.15 versus the single currency for a 6.5% decline since the turn of the year. After it's biggest one day drop since May 2010 today, sterling hasn't been this low against the single currency since October 2011.
Yesterday's soft wheat export license figures from Brussels now mean that sales in 2012/13 are now running almost 40% up on this time a year ago, an astonishing increase and one that is still rising steadily. This may lead the USDA to review their estimate for EU wheat exports in next week's WASDE report released on Friday. The January report only pegged EU wheat exports 5% higher in 2012/13 than last season.
The American markets continue to be heavily influenced by the weather forecasts from South America. Whilst these are critical for developing corn and soybeans, the wheat harvest there is already passed, and what we do know is that it was a bit of a disaster.
The USDA's attaché in Buenos Aires today cut his estimate on wheat production in Argentina to 10.3 MMT, which is 0.7 MMT lower than the current official USDA estimate (and even that might be optimistic compared to forecasts from the various local grain exchanges of 9.3-9.8 MMT).
What was particularly interesting was the revised forecast from the attaché for wheat exports of only 4.3 MMT this season - the lowest volume in 24 years and down by 66% on the USDA's 2011/12 figure of 12.9 MMT.
We've already had sharply reduced wheat exports from Russia and Ukraine this season, now it looks like Argentina is also to be relegated to only play a relatively minor role on the international stage. There is one country though with plenty of wheat to sell, especially if the buyer isn't too discerning on quality: India. Their wheat reserves at the turn of the year were said to be 34.4 MMT and they start harvesting the 2013 crop at the end of next month.
They've really been flexing their export muscles lately, picking up tenders from Ethiopia, South Korea and Yemen this week. One news wire today is reporting that a UK company has bought two cargoes (80,000 MT) of Indian wheat for shipment by March 10. Of course that doesn't necessarily mean that the wheat is coming to the UK, but it's an interesting development.
Most of the reported Indian business this week has been at around USD314/tonne FOB (circa GBP200/tonne), although they have also been actively selling new crop wheat too for April/May shipment at around USD305-308/tonne FOB (around GBP195/tonne).
One buyer that won't be importing Indian wheat is Egypt, despite saying earlier in the week that they had sufficient wheat stocks to last until the middle of June, they issued a tender for wheat for March shipment late in the day.
Chicago Close - Thursday
31/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.68 1/2, down 10 1/4 cents; May 13 Soybeans closed at USD14.59 3/4, down 7 3/4 cents; Mar 13 Soybean Meal closed at USD426.40, down USD6.40; Mar 13 Soybean Oil closed at 52.86, up 26 points. A better chance for rain in southern Brazil and Argentina over the weekend, and in the 6-10 day forecast got the market on the defensive. That was despite weekly export sales for beans of a combined 1.25 MMT, well above expectations for sales of 6-900 TMT. The US has now already exported 25.8 MMT of soybeans so far this season and has a further 7.6 MMT on the books waiting to go in 2012/13. That's more than 91% of the USDA's projections for the entire season. There has been a noticeable shift in sales from old crop to new crop however, with the latter outselling the former for the second week in a row. In addition, the USDA announced further new crop sales of 220 TMT to China under the daily reporting system. There is unconfirmed talk that China has bought 2-3 US bean cargoes for February shipment in the past day or two due to loading delays in Brazil. The Buenos Aires Grains Exchange said that 99.4% of the Argentine soybean crop is planted, up 2% from a week ago. They also said that the dry Argentine weather is starting to threaten bean yields. Nevertheless, fund selling in beans was estimated at a net 6,000 contracts on the day and so the market moved lower.
Corn: Mar 13 Corn closed at USD7.40 1/2, up 1/4 cents; May 13 Corn closed at USD7.42, up 1 cents. Weekly export sales of 186,800 MT for the 2012/13 marketing year and 66,500 MT for 2013/14 were just about in line with trade expectaitons of 2-400 TMT. At least physical shipments themselves were half decent at 609,200 MT - up 65 percent from the previous week and up noticeably from the prior 4-week average. They also included 167,500 MT for China. Shipments plus outstanding sales are 13.5 MMT, 52% of the USDA target for the season. Old crop corn sales now need to be in excess of 400 TMT/week to match the USDA's estimate for 2012/13. The Buenos Aires Grains Exchange said 98.7% of the Argentine corn crop is planted versus 96.4% a week ago. The Argentine markets were closed today for public holiday. Informa come out tomorrow mid-session with their latest South American crop estimates. Last month they had the Argentine corn crop at 27.0 MMT and the Brazilian corn crop at 66.2 MMT (versus 28.0 MMT and 71.0 MMT respectively from the USDA). Funds were estimated as net buyers of 1-2,000 corn contracts on the day.
Wheat: Mar 13 CBOT Wheat closed at USD7.79 1/2 down 7 1/2 cents; Mar 13 KCBT Wheat closed at USD8.37 3/4, down 3 cents; Mar 13 MGEX Wheat closed at USD8.65, down 4 cents. Weekly export sales of 293,600 MT of old crop and 94,300 MT of new crop were just about in line with trade estimates for sales of 300-550 TMT. Shipments plus outstanding sales are now 70% of the USDA target. Old crop wheat sales now need to be around 490 TMT/week to reach the USDA's target for this marketing year. Russia’s Deputy Ag Min estimated Russia's 2012/13 grain imports at 1.2 MMT, adding that they have already imported 486,000 MT of grain, mostly from Kazakhstan, between July–December 2012. There is still talk that Russia may temporarily lift the existing 5% import tax on grains. They are still bullish on their chances of a rebound in production in 2013/14 however, estimating a grain crop of 95.0 MMT, although they only predict an exportable surplus of 15.0 MMT (versus foreign sales of 14 MMT this season). Presumably that is due to a rebuilding of stocks next season as it would appear that this year's reserves will have been virtually wiped out by the time the 2013 harvest comes around.
EU Wheat Generally A Little Lower, Although Export Pace Remains Robust
The market was generally a little lower, in sympathy with weaker Chicago wheat today, although the old crop availability situation continues to tighten. That said, US weekly export sales of less than 300 TMT of old crop were relatively tepid, and now need to be around 490 TMT for each remaining week to reach the USDA's target for the current marketing year.
Despite US wheat being amongst the most competitively price in the world (currently around USD25/tonne cheaper than EU and Australian wheat) they still don't seem to be picking up as many sales so far in 2013 as many players in the market expected. That is even though Russian wheat is at all time highs (around EUR280/tonne) and Chinese wheat is even more expensive at around EUR300/tonne.
There's talk of US wheat coming into Europe now under the reduced tariff quota system, but there's no official confirmation of it yet. There was in fact a cancellation of 9 TMT of wheat to the UK in amongst today's USDA data. Meanwhile Brussels announced that it had issued 467,079 MT of soft wheat export licenses this past week, bringing the marketing year-to-date total to an impressive 11.3 MMT. Weekly exports only need to be around 200 TMT to hit current export targets, and even that level is forecast to leave ending stocks at the lowest level since before the EU-27 became the EU-27.
Incidentally, most analyst's forecasts for European grain production in 2013/14 are now for the EU-28 with Croatia set to join the bloc in the summer. With an annual wheat crop of less than 1 MMT and consumption of around 600 TMT that won't make too much difference to the overall European supply and demand picture.
MDA CropCast today forecast EU-28 winter wheat production at 132.04 MMT in 2013/14, with OSR output at 18.49 MMT and the barley crop here at 52.9 MMT. All those estimates are unchanged on a week ago.
South Korea bought 55 TMT of non-GM corn from the EU overnight for May shipment, they were also said to have purchased 110 TMT of Indian wheat for May shipment. India keeps picking up sales, although not all buyers are keen on their wheat due to mycotoxin issues. Iraq have issued a tender for 50 TMT of optional origin wheat, although they frequently buy more. Ethiopia are also looking for 35 TMT of optional origin wheat.
The main weather issues grabbing the market's attention continue to be ongoing drought on the US Plains, and how that may impact upon wheat production there in 2013. "Rains returned to southeastern Kansas and northeastern Oklahoma this past week, which helped to improve moisture there slightly. However, precipitation amounts were rather light across the rest of the Plains, allowing significant drought conditions to persist," said MDA CropCast.
A more immediate issue is the daily forecasts coming out of South America, and how that may affect corn and soybean output in Brazil and Argentina. "Rains remain abundant in northern Brazil, which are slowing first crop corn drydown and harvesting. The continued lack of notable rains in Argentina is allowing dryness to persist in western areas, but moisture needs are declining for corn," they add.
EU Rapemeal Prices
31/01/13 -- Rapemeal prices on the continent are generally a little firmer today, mirroring gains in soymeal values in Chicago last night.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:
| Feb13 | 275.00 |
unch |
| Mar13 | 273.00 |
+2.00 |
| Apr13 | 271.00 |
+1.00 |
| May/Jul13 | 247.00 |
+3.00 |
| Aug/Oct13 | 202.00 |
+1.00 |
| Nov13/Jan14 | 206.00 |
+3.00 |
| Feb/Apr14 | 206.00 |
+1.00 |
| May/Jul14 | 204.00 |
+1.00 |
It's Not April Fool's Day Is It?
Well, a little bird now tells me that in their infinite wisdom the CME Group has now decided to reduce CBOT trading hours (by a hitherto unspecified amount), recognising that they might have overdone it a bit with 21-hours/day trading in an embarrassing display of petulance over the establishment of the (very small) rival InterContinental Exchange futures market. You couldn't make it up could you? Anyone who's ever been shopping for a pair of shoes and a dress with the missus for some upcoming party will be all too familiar with this sort of carry on. I'd send them a sarcastic email but there's no satisfaction in getting involved in a battle of wits with an unarmed opponent is there?
We wait with baited breath for further details.
USDA Reveal Another Week Of Large Soybean Sales
31/01/13
-- The USDA's eagerly awaited weekly export sales report is out, giving us another monster set of soybean sales to China. Total old crop soybean sales were 386 TMT, along with a further 867 TMT of new crop, making a combined 1.25 MMT in total sales for the week through to Jan 24. That comfortable exceeds trade expectations for sales of 6-900 TMT.
China took 292 TMT of the old crop and 694 TMT of the new crop. Exports were in excess of 1 MMT once again, now for a record eighteen weeks in a row. The whole lot brings total 2012/13 shipments plus outstanding sales to 33.4 MMT, which is over 91% of the USDA's target for the season and we aren't even halfway through the marketing year yet. Yikes!
Old crop soybean sales now only need to average little more than 100 TMT/week to hit that USDA projection.
On top of that, the USDA have just announced the sale of 220 TMT of US soybeans for 2013/14 to you know who under the daily reporting system. They also bought 175 TMT of the same yesterday and 220 TMT on Monday
Corn sales were a relatively insipid 187 TMT of old crop and 66,500 MT of new crop, at the low end of even the modest trade expectations of 2-400 TMT. Shipments plus outstanding sales are 13.5 MMT, 52% of the USDA target for the season.
Old crop corn sales need to be in excess of 400 TMT/week to match the USDA's estimate for 2012/13.
Wheat sales were a bit disappointing at a combined 388 TMT (of which 293,600 MT was old crop) versus expectations of 3-550 TMT. Shipments plus outstanding sales are now 70% of the USDA target, although note that the wheat marketing year starts earlier for wheat than it does for corn or soybeans.
Old crop wheat sales now need to be around 490 TMT to reach the USDA's target for this marketing year.
Chicago Rallies As Funds Step In
30/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.78 3/4, up 27 cents; May 13 Soybeans closed at USD14.67 1/2, up 27 3/4 cents; Mar 13 Soybean Meal closed at USD432.70, up USD9.00; Mar 13 Soybean Oil closed at 52.60, up 89 points. Funds were said to have been keen buyers at a net 9-10,000 beans and 3-4,000 each on meal and oil. South American weather has the market's attention, with the continuing theme being too wet in the early harvest areas of northern Brazil and too dry in the south of the country and across into Argentina. Lanworth Inc cut their estimate for Argentine soybean production from 55.2 MMT to 53.1 MMT (vs 54 MMT from the USDA). They did however up their Brazilian estimate to 80.9 MMT versus a previous estimate of 79.4 MMT. El Tejar - the world’s largest grain producer - estimated Brazil’s soybean crop at 80-81 MMT, and Argentina's at 50 MMT. The USDA announced the sale of 175 TMT of US new crop beans to China, underlying continued strong demand from that quarter. Oil World estimated China’s 2012/13 oilseed imports at 65.3 MMT versus 63.1 MMT in 2011/12. Oil World said that Canadian farmers would cut their canola plantings by more than a million hectares to 7.7 million, wooed away by wheat. Trade estimates for tomorrow's weekly export sales report are 600-900 TMT.
Corn: Mar 13 Corn closed at USD7.40 1/4, up 10 3/4 cents; May 13 Corn closed at USD7.41, up 11 cents. Funds were also active corn buyers on the day, taking an estimated net 10,000 contracts. That was despite the fact that the latest weekly ethanol production data showed a decline of 22,000 barrels/day on last week to 770,000bpd - a new lowest weekly total since they starting issuing data in mid-2010. That's the third week in a row that the weekly grind has failed to keep pace with the level required to hit the USDA's projection of 4.5 billion bushels of corn going into the ethanol sector this season. South American weather concerns usurped that news however. Lanworth cut their Argentine corn production estimate to 25.6 MMT from 26.0 MMT previously (and the USDA's 28.0 MMT forecast). For Brazil they went 75.8 MMT versus a previous estimate of 75.5 MMT. El Tejar estimated Argentina’s corn crop at 24-25 MMT. Bloomberg reported that as many as 126 vessels are waiting to load 6.2 MMT of grains in Brazil (versus 72 ships and 2.8 MMT this time last year) as the early soybean harvest clashes with attempts to still export what's left of last year's bumper corn crop. Trade estimates for tomorrow's weekly export sales report are 200-400 TMT.
Wheat: Mar 13 CBOT Wheat closed at USD7.87, up 10 cents; Mar 13 KCBT Wheat closed at USD8.40 3/4, up 10 cents; Mar 13 MGEX Wheat closed at USD8.69, up 8 cents. Funds were said to have been net buyers of around 2,000 Chicago wheat contracts on the day. Lanworth estimated the 2013/14 US wheat crop at 52.8 MMT, unchanged from previous estimate and 14.5% down on last year. They also estimated the 2013/14 Russian wheat crop at 49.9 MMT, up 32% on last year, and Ukraine's output at 23.0 MMT, up 48% on last year. Both figures were unchanged from their previous estimates. Russia’s state weather forecaster said 9.5% of the winter grain crop is in poor condition versus 12% a year ago and 8% on average. Russia’s Ag Minister estimated the 2013/14 grain crop at 95.0 MMT, up 34% versus 70.7 MMT in 2012/13. He also estimated 2013/14 grain exports at 15-20 MMT versus 14.0 MMT in 2012/13. Of the current season's reduced projection of 14.0 MMT around 96% has already been shipped. Trade estimates for tomorrow's weekly export sales report are 300-550,000 MT. Sales of around 435,500 MT are needed to keep pace with the current USDA target. India continues to release wheat onto the international market. South Korea bought 55 TMT of what was probably Indian feed wheat overnight. Other parcels are currently on offer for Mar/Apr shipment.
EU Wheat Mixed In Sideways Trade
A sideways trading pattern continues it would seem until we get a clearer picture of how northern hemisphere crops will emerge from winter dormancy.
Defra came out with some revised supply & demand numbers but there were no great changes to their previous estimates. "Wheat imports are supporting record UK consumption levels with little evidence that strong prices are dampening demand. UK imports to end-November were at the highest since 1993/94," they noted.
"Poor weather has resulted in strong demand for compound feed which is pushing higher the total demand for cereals in animal feed. Additional compound feed demand is mainly being met by increased barley and imported maize consumption, as these have been the most competitively priced grains," they added.
They upped their forecast for UK wheat imports this season, as expected, but by less than many in the market would have guessed - only 144 TMT to 2.19 MMT. They did comment however that "imported usage has continued to increase but has yet to find a steady level and consequently imports are challenging to forecast."
Wheat for Human & Industrial (H&I) consumption was forecast at 7.927Mt, 16% higher than 2011/12 but similar to previous estimates. H&I usage of home-grown wheat was reduced by 101 TMT cue to increase utilisation of imported wheat and also some degree of substitution with corn.
The total amount left over for export and carryover stocks was estimated at 2.3 MMT, which was 100 TMT more than projected in November although still a historically tight number.
In international news Syria bought 100 TMT of what is expected to be Black Sea soft milling wheat, possibly Kazakh origin, in their tender. South Korea bought 55 TMT of optional origin feed wheat, said to be most likely of South American or Indian origin. India seems the most likely, they put up a further 60 TMT of state-owned surplus wheat stocks for sale by tender today.
The market remains focused on South American weather as far as supplies for soybeans and corn are concerned, and also a little less concentrated on US winter wheat development on the Great Plains.
As far as the latter is concerned "Heavy rains were noted across southeastern Kansas, northeastern Oklahoma (and parts of the Midwest) yesterday and overnight...However, amounts were too limited to notably improve moisture in the central and western Plains.... Dryness will remain extensive in the Plains next week as showers continue to be very limited," say MDA CropCast.
EU Rapemeal Prices
30/01/13 -- Rapemeal prices on the continent are a little higher in old crop monthss following decent gains last night and again this morning in Chicago soymeal. Reports of vessels already backing up in Brazil waiting to load soybeans and corn look like keeping nearby premiums in the market for some time.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb13 | 275.00 |
+2.00 |
| Mar/Apr13 | 270.00 |
+3.00 |
| May/Jul13 | 244.00 |
+2.00 |
| Aug/Oct13 | 201.00 |
-1.00 |
| Nov13/Jan14 | 203.00 |
-1.00 |
| Feb/Apr14 | 205.00 |
+1.00 |
| May/Jul14 | 203.00 |
+1.00 |
The Morning Muse
30/01/13 -- Is it just me or is the market slowly coming around to the way of thinking that China needs more soybeans than you can shake a shitty stick at, and will pay up whether the price is USD14/bu or USD20/bu?
The Chinese also suddenly seem to have cottoned on to the notion that a record large Brazilian soybean crop is not much good if it's stuck on a truck in a 100km queue to get into Paranagua where a boat to take it to China is 124th in the line waiting to load.
In fact the only useful purpose that the record large Brazilian crop will have done is to temporarily drive the price down in North America so that the Chinese can buy some soybeans that they can physically get their hands on.
What are they going to do when they've had every last soybean for sale from the US 2012 crop and boats to load in South America are facing the currently estimated (and conservative in my view) 45 day shipping delays come March time?
It's been in the news this week that Chinese traders expect to import more than 15 MMT, or 36% more soybeans in the second quarter of this year than in Q1. That number actually seems low compared to Oil World who have Q2 & Q3 imports at a combined 35.9 MMT - which is almost 1.4 MMT/week. That's a lot of kit when your only reliable supplier has gone fishing for six months.
Chicago Close - Tuesday
29/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.51 3/4, up 4 cents; May 13 Soybeans closed at USD14.39 3/4, up 6 1/4 cents; Mar 13 Soybean Meal closed at USD423.70, up USD3.40; Mar 13 Soybean Oil closed at 51.71, down 18 points. The market remains fixated on South American weather as they will have to provide the world with soybeans once the US run out. Oil World said that they expect the US to have shipped 83% of their projected exports by the end of February. Demand from China remains very strong, both for old crop and new crop. They are forecast to import 36% more soybeans in Q2 of 2013 than they do in Q1. Oil World said that they expect US soybean stocks to fall to a 9-year low by the end of the current season. In Brazil, the forecast for Mato Grosso is "super wet" according to Martell Crop Projections, which will continue to hamper early harvest efforts. Southern Brazil meanwhile has received little or no rainfall in the past 10-12 days, they say. Over the border daytime temperatures in Argentina yesterday rose to 92-98 F, which 8- 10 degrees above normal. Hot temperatures are expected to persist for several more days without much rainfall to compensate, they add. Agriculture Consultant Pablo Adreani said he may cut Argentina’s soybean crop estimate to 48.5 MMT from a previous estimate of 51.3 MMT (and the USDA's 54 MMT) if Argentina doesn’t get rain soon.
Corn: Mar 13 Corn closed at USD7.29 1/2, up 1/4 cent; May 13 Corn closed at USD7.30, up 3/4 cent. The same Argentine consultant mentioned above said he may cut his corn crop estimate to 25.5 MMT from a previous estimate of 27.1 MMT (and 28.0 MMT from the USDA) if adequate rains don't arrive soon. The "super wet" forecast for northern Brazil won't help second crop corn get planted. Delays in plantings could be detrimental for corn a few months from now when the dry season begins if the crop hasn't had time to thrive now in these abundant rains. Japan, the world's largest corn buyer, said that it aims to boost it's animal feed grain reserves by 44% in the fiscal year beginning in April. Much of their needs traditionally come from the US, although they have been casting the net a bit wider in the last twelve months. JC Intelligence said Chinese buyers are reluctant to buy large quantities of Argentine corn because of concerns that it won't pass China's photo sanitary requirements. The weekly ethanol production report comes out tomorrow. The bulls will be looking for an increase on last week's 792,000 bpd, which is well below the level required to hit current USDA projections. A Texas plant became the latest producer to announce a temporary shutdown today, following a spate of similar recent closures.
Wheat: Mar 13 CBOT Wheat closed at USD7.77, down 2 1/4 cents; Mar 13 KCBT Wheat closed at USD8.30 3/4, down 2 cents; Mar 13 MGEX Wheat closed at USD8.61, down 5 1/2 cents. A continued deterioration of US winter wheat crops on the Plains was confirmed last night by USDA state offices in Kansas and Oklahoma. A wetter 14-day forecast for these areas offers some glimmer of hope. Egypt's GASC said that they have enough wheat supplies to last until June. Algeria was said to have bought 500-600 TMT of optional origin durum wheat for March/May shipment. MDA CropCast said that wheat conditions favourable across much of the Middle East. In North Africa "rains this past week continued to improve moisture across northern Morocco, northern Algeria, and northern Tunisia, but dryness continues to stress wheat in southwestern Morocco and central Tunisia," they added. Unlike the UK, not everywhere around the world is in for a disastrous wheat crop in 2013. Agriculture and Agri-Food Canada estimated Canada’s 2013/14 wheat crop at 28.5 MMT, up 4.8% from last year. Ukraine's winter grain production (mostly wheat) could rise by 20 to 30 percent in 2013, a senior Ukrainian weather forecaster said. Allendale estimated the 2013/14 world wheat crop at 694 MMT, up around 40 MMT from this season.
EU Wheat Rises, Crop Conditions Support
29/01/13 -- EU wheat closed higher with Mar 13 London wheat up GBP0.60/tonne to GBP214.05/tonne, May 13 up GBP1.55/tonne at GBP216.00/tonne and new crop Nov 13 firming GBP0.60/tonne to GBP190.05/tonne. Front month Mar 13 Paris milling wheat gained EUR0.25/tonne to close at EUR247.50/tonne.
The weakness of the pound continues to underpin wheat in London relative to that in Paris, along with the ongoing very poor UK crop conditions and the outlook for another domestic production disaster in 2013.
Wheat also drew support via news from across the pond that US winter wheat conditions had worsened considerably in the top two producing states of Kansas and Oklahoma compared with last month and the last weekly USDA report released at the end of November.
In Kansas 39% of the crop is now rated as poor/very poor, versus 31% a month ago and 25% at the end of November. In Oklahoma poor/very poor conditions are now a whopping 69%, from 61% at the end of December and 44% in late November. The proportion of Nebraska wheat rated poor/very poor is now 50%.
"If there is any god news on winter wheat potential it would be a favourable crop in the Pacific Northwest, where soft white wheat is grown. Washington, the leading grower, reporting a very promising crop from generous winter precipitation and no significant freeze damage," reported Martell Crop Projections.
The Russian Ministry are lowering their forecast for 2012/13 grain exports from 15.5 MMT to 14.0 MMT, according to the Prime News Agency. That's exactly half the volume exported in 2011/12.
The latest official figures pegged exports so far this season at just over 13.0 MMT as of 16 Jan, meaning that very little grain will leave the country between now and the end of the season. Ending stocks meanwhile are now estimated at 9 MMT, less than half the volume left over at the end of last season.
Rumours of potential imports abound, even if the government don't waive the 5% duty on foreign wheat shipments.
India continue to take advantage of the current relatively high wheat price and dwindling international availability, releasing another 125,000 MT of milling wheat for export overnight, this parcel being for Feb 20 - Mar 31 shipment via the east coast port of Krishnapatnam.
Ag Canada say that they expect all wheat production there this year to come in at 28.5 MMT, 4.8% up on last year due to a combination of increased plantings and better yields. The Canadian Wheat Board yesterday forecast that wheat plantings this season would be 5-10% higher than last year’s 23.8 million acres.
Ag Canada estimated the country's 2013 barley crop at 9 MMT, up 12.5% on last year, with canola output seen at 15.5 MMT, a 16.5% increase on 2012.
EU Rapemeal Values
29/01/13 -- Rapemeal prices on the continent are generally a little lower today despite a firmer tone to soymeal values.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:
| Feb13 | 273.00 |
-2.00 |
| Mar/Apr13 | 267.00 |
-3.00 |
| May/Jul13 | 242.00 |
-2.00 |
| Aug/Oct13 | 202.00 |
unch |
| Nov13/Jan14 | 204.00 |
-1.00 |
| Feb/Apr14 | 204.00 |
-1.00 |
| May/Jul14 | 202.00 |
-3.00 |
US Wheat Conditions Deteriorate Further
In the top US winter wheat producing state of Kansas only 20% of the crop is now rated good/excellent (with only 1% in the top category), down from 24% at the end of December and 29% in the last USDA weekly report at the end of November.
The crop is now rated 39% as poor/very poor, versus 31% a month ago and 25% at the end of November.
Very considerable declines, made all the more shocking by the news that the ratings at the end of November were the worst on record for the US winter wheat crop heading into dormancy.
"Temperature averages for the month of January over most of the State were two to five degrees above normal. Rainfall was received in most areas of the State, with all 53 stations recording at least trace amounts of moisture for the month, but none received an inch or more," the report says.
Things are even worse in neighbouring Oklahoma, the second top wheat producing state in the US. Here the US Drought Monitor continues to report that the entire state is in a severe to exceptional drought. None of the crop at all is rated excellent and only 5% good, versus 11% at the end of December and 14% in late November. Poor/very poor conditions meanwhile are now a whopping 69%, from 61% at the end of December and 44% in late November.
Chicago Moves Higher To Start The Week
28/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.47 3/4, up 6 3/4 cents; May 13 Soybeans closed at USD14.33 1/2, up 7 1/2 cents; Mar 13 Soybean Meal closed at USD420.30, up USD3.90; Mar 13 Soybean Oil closed at 51.89, down 21 points. Funds were said to have been modest net buyers of around 2,000 soybean contracts on the day. The anticipated mass exodus of buying interest to South America doesn't seem to have begun yet, with China buying 220 TMT of soybeans for 2013/14 delivery, the USDA announced today under the daily reporting system. It is interesting that they have been recent featured buyers of new crop beans as news starts to circulate of vessels lining up in Brazil waiting to load beans. Truck freight rates are said to have risen in the last week and those increases are expected to accelerate as harvest progress. The early soybean harvest in Mato Grosso is said to be 7.1% complete with yields variable, but generally in line with expectations. Last week's robust US export sales mean that weekly old crop sales now only need to be 111,000 MT to hit the USDA target for 2012/13. Weekly export inspections today were 40.667 million bushels - 1.1 MMT. Weather forecasts for South America offer little change, abundant rains for northern Brazil which will hamper the early harvest, and dryness in Argentina.
Corn: Mar 13 Corn closed at USD7.29 1/4, up 8 1/2 cents; May 13 Corn closed at USD7.29 1/4, up 7 3/4 cents. Fund buying was estimated at a net 3,000 corn contracts on the day. The excessive rains in northern Brazil that are hindering the early harvest of soybeans could also therefore have a negative impact on second crop corn plantings in those areas. Export inspections of 21.127 million bushels (around 537 TMT) beat expectations of 5-15 million for a change, adding a bit of support. This total actually beat the level required to hit the USDA's target for exports of 26 MMT in 2012/13, something that hasn't been happening too much lately. Vietnam is tendering for 50 TMT of optional origin corn, with Malaysia looking for 60 TMT of the same. US exports have been dragging all season so far, recent data from the Energy Dept and last week's announcement of another ethanol plant closure may mean that demand for corn from that sector will fall short of the USDA projections of 4.5 billion bushels too. It will also therefore be a concern that livestock numbers in the US are falling based on Friday's cattle on feed report.
Wheat: Mar 13 CBOT Wheat closed at USD7.79 1/4, up 2 3/4 cents; Mar 13 KCBT Wheat closed at USD8.32 3/4, up 3 1/4 cents; Mar 13 MGEX Wheat closed at USD8.66 1/2, up 1 1/2 cents. Weekly export inspections of 22.283 million bushels (around 606 MMT) beat trade expectations and may provide another small hint that the anticipated pick up in demand for US wheat finally has arrived. Jordan and Bangladesh are tendering for wheat, the results of the recent Syrian tender are also expected any time now, although it may be unlikely that US wheat will feature into any of these. Nevertheless, whoever wins it leaves less wheat in circulation. European exports are well ahead of last year, Ukraine and Russia are effectively sold out and Australian prices are rising. US winter wheat on the Plains got only very light rains over the weekend, and the outlook is for continued dryness. The Canadian Wheat Board said that the 2013 wheat area there may be 5-10% higher than last year’s area of 23.8 million acres.
EU Wheat Mixed, Weak Pound Supports London Market
London wheat once again garnered some support from the pound slipping to it's lowest level since August 2012 against the US dollar and below 1.17 against the euro for the first time since Dec 2011.
The weekend widespread snow and subsequent rapid melt and flooding will have done little to improve the already pretty dismal crop prospects for the UK harvest in 2013. Still, the destiny of UK prices will be heavily influenced by production across Europe and beyond, as much as what is going on here. New crop Ukraine corn is said the be available at a substantial discount to the Nov 13 London wheat future.
Defra are due to issue revised estimates for UK supply & demand on Wednesday, with wheat imports likely set to rise above the current 2 MMT forecast.
Jordan are tendering for 100 TMT of optional origin wheat for March/April shipment. Syria's tender for wheat is now closed, with the results due in the next few days. Morocco is tendering to buy 176 TMT of soft wheat on the domestic market. Egypt remains absent, although that may have more to do with the ongoing civil unrest in the country than playing the market.
The last couple of week's worth of export sales from the US indicate that things are picking up for them. Both have been ahead of the required level to hit the USDA's targeted level of 29.5 MMT of foreign sales in 2012/13.
They will need to maintain that momentum, but might just do it as supplies elsewhere around the world tighten. The market is also focused on US winter wheat conditions which are very far from ideal on the Great Plains.
"Weekend precipitation was near expectations. Light rain showers occurred in eastern CO, northern KS, southern NE, far eastern OK and eastern TX. Amounts were 0.10 to 0.50 inches with less than 10% coverage. Isolated rain and snow showers will be confined to western NE, eastern CO, eastern OK and eastern TX from today through Tuesday. Amounts through Friday will be 0.10 to 0.75 locally up to 2.0 inches with less than 10% coverage," said MDA CropCast
State-by-state crop condition updates will be released later today, although many are expecting little to no improvement.
Canadian farmers hope to plant 5-10% more wheat for the 2013 harvest, according to the CWB. Potential margins for wheat are said to be significantly better than those of other grains like oats and rye.
Ukraine said that it exported 1.6 MMT of grains during the Jan 1-25 period, bringing the 2012/13 marketing year-to-date total to 15.8 MMT, an increase of 46% on last year. Wheat exports have now hit the 6 MMT mark and will be reduced to a trickle, if anything, for the remainder of the season.
Chicago Closing Comments - Friday
25/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.41, up 5 3/4 cents; May 13 Soybeans closed at USD14.26, up 2 1/4 cents; Mar 13 Soybean Meal closed at USD416.40, up USD1.70; Mar 13 Soybean Oil closed at 52.10, down 1 point. For the week nearby beans rose 10 3/4 cents, meal USD2.00 and oil 42 points. The USDA reported weekly export sales of almost 1 MMT versus expectations of 700 TMT-1.2 MMT, although it was interesting to see new crop (595 TMT) outstrip old crop. Ever present China took 210 TMT of old crop and 355 TMT of new crop. The remainder of the new crop sales were marked as "unknown". Sales/shipments for 2012/13 are now 90% of the USDA forecasts. In addition to these there were also sales of 126 TMT of optional origin old crop beans to China along with 246 TMT of new crop. The world's largest soybean buyer would appear to be putting a little "insurance" down with these purchases from the US, knowing full well that supply disruptions are pretty inevitable in South America this year. Safras e Mercado estimated this year's Brazilian soybean crop at 84.7 MMT, versus CONAB’s estimate of 82.7 MMT and the USDA's 82.5 MMT forecast. The Buenos Aires Cereals Exchange said 97.4% of Argentine soybeans are now planted versus 96.4% a year ago. The Rosario Grain Exchange said that so far forward selling has been light, with only only 5 MMT of the 2013 crop currently sold versus 10 MMT this time a year ago.
Corn: Mar 13 Corn closed at USD7.20 3/4, down 3 1/2 cents; May 13 Corn closed at USD7.21 1/2, down 2 3/4 cents. Mar 13 corn was 6 3/4 cents lower on the week. Unlike soybeans, US corn sales continue to lag, with the USDA only reporting weekly export sales of just 138,500 MT of old crop and 51,300 MT of new crop. Total commitments are now 55% of the USDA target, versus 63% normally. Domestic demand from the ethanol sector if also waning, judged on the last couple of week's worth of data from the Dept of Energy. POET, one of the biggest US ethanol producers, today announced that it was mothballing a facility in Missouri due to poor margins and difficulties in sourcing corn locally. This is just the latest in a spate of recent ethanol plant closures. The Buenos Aires Cereals Exchange said 94% of the Argentine corn crop is now planted versus 97% a year ago. The Rosario Grain Exchange estimated Argentina’s corn crop at 26.5 MMT versus the USDA's 28.0 MMT forecast. There's continued talk of dryness being a potential problem for shallow rooted corn in Argentina. The latest weather forecast calls for below normal rains in the upcoming week, according to Martell Crop Projections. Indonesia bought 25 TMT of Indian corn for Jan shipment. Vietnam is looking for 50 TMT of optional origin corn for Feb shipment. Malaysia seeks 60 TMT of South American corn for March shipment.
Wheat: Mar 13 CBOT Wheat closed at USD7.76 1/2, up 8 cents; Mar 13 KCBT Wheat closed at USD8.29 1/2, up 8 cents; Mar 13 MGEX Wheat closed at USD8.65, up 9 1/2 cents. That puts Chicago wheat 14 3/4 cents lower on the week, with Kansas wheat down 14 1/4 cents and Minneapolis falling 11 cents. Weekly export sales from the USDA beat expectations of 300-550 TMT at 572,500 MT of old crop (beating the required 430,800 MT needed to hit USDA targets), along with 75,000 MT of new crop which included a 55,000 MT sale to China. Exports of 559 TMT were almost double last week and the 4-week average. Nevertheless net commitments so far this season are only 72% of the USDA target versus 85% normally at this time. The Rosario Grain Exchange pegged this year's Argentine wheat crop at only 9.3 MMT, versus 15.5 MMT a year ago and the USDA's current estimate of 11.0 MMT. Next week should see us get an update from USDA state departments on winter wheat crop conditions. On the weather front "the continued drier trend across the central and southern Plains will maintain low moisture supplies there," said MDA CropCast. "Our latest 16-30 day temperature outlook has trended cooler across the northern Plains and Midwest, and warmer in the Southeast. The cooler trend across the northern and eastern Midwest would increase risks of winterkill there for the wheat, while winterkill risks should be low in the central and southern Plains," they added.
EU Wheat Trading Sideways
25/01/13 -- EU grains were mixed with Mar 13 London wheat unchanged at GBP213.00/tonne, May 13 also unchanged at GBP214.00/tonne and new crop Nov 13 up GBP0.30/tonne to GBP187.30/tonne. Mar 13 Paris milling wheat was EUR0.50/tonne firmer to close at EUR247.25/tonne.
For the week as a whole that places May 13 London wheat GBP1.00/tonne lower, Nov 13 London wheat GBP1.25/tonne weaker and Mar 13 Paris wheat EUR0.75/tonne easier as the trade adopts a sideways pattern.
Brussels reported that they'd issued 354 TMT of soft wheat export licenses this past week, taking the cumulative marketing year-to-date total to 10.8 MMT. That's now almost 37% up on this time last year.
Currently the USDA only have the EU-27 down to export 8.6% more wheat this season than in 2011/12, yet the pace of shipments versus this time a year ago has been steadily increasing since the beginning of November (see chart).
That would suggest that 2012/13 ending stocks in Europe may ultimately be far tighter than the 10 MMT that the USDA currently have factored in - and that number is the lowest this century.
So who is going to pick up the slack? Not Russia that's for sure, they've just reported Jan 1 grain stocks of 25.3 MMT, down almost 30% on this time a year ago. Rumours persist that they may need to import wheat to see them through to the 2013 harvest, a notion flatly denied by the Deputy PM it has to be said.
Ukraine have also hung up the "sold out" sign now that wheat exports have hit the 6 MMT mark.
The Rosario Grain Exchange today estimated Argentina’s recently harvested wheat crop at just 9.3 MMT, versus a previous estimate of 9.5 MMT and the USDA's current over optimistic looking 11.0 MMT. That's a drop of 40% on last year's 15.5 MMT if the local exchange's forecast is correct, which would obviously impinge on their ability to export the 7.5 MMT in 2012/13 that the USDA are persisting with.
US wheat exports meanwhile do finally seem to have picked up, with the USDA today revealing weekly export sales of 572,500 MT of old crop plus a further 75,000 MT of new crop (most of which was for China). Physical shipments of 559 TMT meanwhile were almost double last week and the 4-week average.
India are newly arrived on the wheat export scene after a succession of record harvests and another potentially on the way, although their reputation in terms of quality is less than sparkling.
Australia still has wheat to sell, although their harvest was down by more than a quarter this season and their prices aren't the most competitive around. Canada also has wheat to market, although it's generally a premium product at a premium price.
Syria are expected to announce the results of their recent wheat tender early next week.
