Nogger's Blog

Chicago Soybeans Crash Following USDA Report

08/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.52 1/2, down 34 1/4 cents; May 13 Soybeans closed at USD14.36 3/4, down 36 1/2 cents; Mar 13 Soybean Meal closed at USD422.40, down USD15.20; Mar 13 Soybean Oil closed at 51.43, down 42 points. For the week that puts the nearby months down 21 3/4 cents on beans, down USD5.80 on meal and 156 points lower on oil. The market reaction to the USDA report was probably more interesting than the WASDE numbers themselves. The USDA lowered US soybean ending stocks for 2012/13 by a bit more than anticipated to a very tight 125 million bushels. It is important to note that this came by virtue of an increased US crush. Exports were left completely unchanged from last month at 36.6 MMT, despite the fact that 93.5% of that target is either already sold and/or shipped with seven months still remaining in the 2012/13 marketing year. Brazil's crop was raised 1 MMT to 83.5 MMT and Argentina's was lowered by a similar amount to 53.0 MMT. World ending stocks were placed at 60.1 MMT versus 59.5 MMT last month. Essentially these extra stocks will all be in Brazil. The market reaction seemed to be one of "buy the rumour, sell the fact" as heavy fund selling drove soybean prices around 20 cents lower in the last hour of trade. Estimates I've seen on the net volume sold today by the funds vary from 8-17,000 contracts. Given the size of the decline, the larger number looks the more likely. Yet fundamentally nothing has changed. Indeed, the USDA have not yet addressed the fact that US soybean exports are pouring out of the country at an unprecedented rate. Without large scale cancellations or deferral of old crop sales into new crop, ending stocks are likely to be far smaller than even today's number suggests - and that represents the tightest stocks/use ratio in almost 50 years. Meanwhile there are reports that a port strike in Brazil is planned for February 18th-19th over wages.

Corn: Mar 13 Corn closed at USD7.09, down 1 3/4 cents; May 13 Corn closed at USD7.08 3/4, down 3 1/4 cents. For the week as a whole that puts corn 27 cents lower. Net fund selling on corn on the day was estimated at 5-6,000 lots. The USDA raised US corn ending stocks by more than anticipated, up by 30 million bushels from last month to 632 million. That came courtesy of a 50 million bushel reduction in US corn exports and a 20 million increase in domestic feed usage. US corn exports in 2012/13 are now placed at 24 MMT, down 38% on last season's 38.4 MMT. America's loss in Brazil's gain, with their exports forecast 2 MMT higher this month at 24.5 MMT - they are now seen as the world's largest corn exporter in 2012/13 - bigger even than the US. If they so prove to be then it will be interesting to see how their infrastructure copes, especially given that the USDA is also predicting that they will export 38.4 MMT of soybeans as well in 2012/13. Brazil's corn crop was increased 1.5 MMT to 72.5 MMT versus the average trade guess of 71.1 MMT and marginally behind last year's record 73.0 MMT production. The Argentine corn crop wasn't dropped by as much as anticipated, only being lowered 1 MMT to 27.0 MMT. World ending stocks were raised more than expected to 118.0 MMT, with the majority of that likely to be in Brazil. Corn consumption in Europe was raised 2 MMT to 66 MMT, with imports also up 2 MMT to 10 MMT. China's corn consumption was raised 0.5 MMT to 208.5 MMT, and their imports were increased a similar amount to 2.5 MMT. Egypt and Mexico saw their import requirements lowered.

Wheat: Mar 13 CBOT Wheat closed at USD7.56 1/4, up 1/4 cent; Mar 13 KCBT Wheat closed at USD7.99 3/4, down 1 1/4 cents; Mar 13 MGEX Wheat closed at USD8.36 1/4, down 3 cents. For the week that places Chicago wheat 8 3/4 cents lower, with Kansas down 22 1/4 cents and Minneapolis falling 15 1/2 cents. The USDA lowered US wheat export potential, although only slightly, from 29.5 MMT to 29.0 MMT. There was a noticeable shift class in the exports, with HRW down 25 million bushels to 425 million and SRW up 25 million to 160 million. Given the recent subdued pace of US exports hitting this target looks ambitious, weekly volumes will have to move up a gear or two for the remainder of the season. There is still export competition out there, EU exports were raised 0.5 MMT to 18.5 MMT and so too were India's to 8.5 MMT. Brazil's wheat crop was cut 0.5 MMT to 4.3 MMT, although their imports were left unchanged. Increased domestic feed usage of wheat in the US saw ending stocks fall 25 million bushels to 691 million, contrary to trade expectations for a small increase to 728 million. World ending stocks were barely changed at 176.7 MMT, a little higher than the average trade guess of 175.5 MMT. Ukraine's 2012 wheat crop was raised from 15.5 MMT to 15.76 MMT, whilst Kazakhstan's was reduced from 10.5 MMT to 9.84 MMT.

London Wheat Sharply Lower On The Week As Pound Recovers

08/02/13 -- EU wheat futures closed mixed with Mar 13 down GBP0.75/tonne at GBP207.55/tonne, benchmark May 13 also down GBP0.75/tonne at GBP209.05/tonne and new crop Nov 13 also GBP0.75/tonne lower at GBP186.25/tonne. Mar 13 Paris wheat was EUR0.75/tonne higher at EUR245.75/tonne.

For the week as a whole May 13 London wheat crashed GBP7.35/tonne, and new crop Nov 13 fell GBP6.75/tonne. Mar 13 Paris wheat declined EUR2.75/tonne.

The pound rebounded above 1.18 from a torrid time last week that saw it close at a 16-month low of 1.15 against the euro last Friday, after ECB chief Mario Draghi said that recent euro strength could post a threat to the inflation outlook and hamper the recovery on the continent, increasing expectations of an interest rate cut.

That helped Paris wheat relative to London. The latter was also under pressure from imported wheat pouring into the country, something that a weak pound doesn't of course favour.

The long awaited Feb USDA WASDE report came out too late in the day to influence European markets too much, being issued at it's new time slot of 17.00 GMT. Trade was understandably quiet ahead of the news, although wheat did manage to put in a little rally in mid-afternoon trade when US futures turned higher.

Unconfirmed rumours circulate of US wheat trading into all sorts of unusual destinations - even the UK. Yesterday's US weekly export sales report however mentioned none of this, coming up with old crop sales of only 290,800 MT versus the 431,000 MT average that was needed to hit the USDA's target of full season exports of 29.5 MMT.

Defra/the HGCA said that 26.5% of the wheat used by UK flour, starch and ethanol processors in December was imported, up from normal levels of around 10-11% and the largest percentage since 1993/94.

A total of 593 TMT of wheat was milled in December, up 9.4% on a year previously. Wheat usage in retail feedstuffs fell 7.1% to 276.5 MMT as manufacturers switched into cheaper raw materials like barley (usage up 47.5%) and wheatfeed (up 24.7%).

FranceAgriMer said that winter wheat plantings there are up 2.3% to 4.97 million hectares and winter barley plantings are up 12.4% to 1.1 million hectares.

Tunisia bought 92 TMT of optional origin soft wheat and 75 TMT of barley optional origin for March shipment yesterday. France could well be the most likely supplier of the wheat, their exports to the end of December were 7.73 MMT, down 12% on year ago levels. Even so EU wheat exports as a whole are still raging ahead.

Various wires are also reporting US wheat allegedly sold into Russia. One report yesterday said that the Russian government themselves are considering imports with intervention stocks there set to fall to 300,000 MT by the end of the season, versus 5 MMT a year previously. Agritel report domestic Russian wheat prices of USD390/tonne, so it certainly could be possible, particularly in he last quarter of the season now that they have agreed to temporarily lift the 5% import duty on grains.

India's Farm Ministry forecast a wheat crop there of 92.3 MMT this year, down on their figure of 94.9 MMT for production in 2012, but well above consumption levels. They remain an aggressive exporter.

In the US, the promised chance of some decent rains for parched winter wheat areas seems to be fizzling away. "Key wheat states Kansas, Oklahoma and Texas continued dry this week, despite a forecast that looked hopeful for very generous precipitation. The longer dry weather continues, the greater the risk for a very poor wheat harvest. These 3 bread-wheat states make up 43 percent of US winter wheat. When Nebraska, South Dakota and Colorado are included, wheat farms there are also very dry, the “at risk” wheat increases to 58% of United States winter wheat," said Martell Crop Projections.

A mid-winter report on wheat conditions indicated Kansas and Oklahoma wheat in dire straits from drought. Kansas wheat was rated 39% poor-very poor, Oklahoma wheat had 69% in the bottom two categories -these are the United States top 2 wheat states," they added.

USDA Feb WASDE Numbers

08/02/13 -- 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):

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


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

Chicago Consolidates Heading Into USDA Report

07/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.86 3/4, down 3/4 cent; Aug 13 Soybeans closed at USD14.31 1/2, down 8 cents; Mar 13 Soybean Meal closed at USD437.60, up USD0.50; Mar 13 Soybean Oil closed at 51.85, down 60 points. Deferred months fell relative to the nears as shipping delays and wet weather in northern Brazil continued to hamper grains movement out of the region. Bloomberg reported that there were 135 ships loading/waiting to load soybeans, feed or corn on Feb. 5 at the five major Brazilian ports versus 67 vessels a year ago. Talk of loading delays of around 50 days are already commonplace. This should continue to maintain front-end premiums for some time yet. The USDA reported weekly export sales for soybeans of a combined 1.667 MMT, the second highest weekly number for the marketing year. Contrary to recent weeks, sales were split roughly 50:50 between old and new crop, which maybe indicates some degree of switching back into old crop US beans due to South American logistical problems. Heading into tomorrow's Feb WASDE report we now have total US soybean commitments for the 2012/13 at a whopping 93.5% of the USDA's target for the season. No wonder then that the trade is anticipating the USDA to further tighten US soybean ending stocks to an average guess of 130 million bushels tomorrow, which on a stocks to usage basis of 4.2% would be the tightest in almost 50 years. CONAB estimated the Brazilian soybean crop at 83.4 MMT versus a previous estimate of 82.68 MMT. Exports were estimated at 37.78 MMT versus their previous estimate of 36.4 MMT.

Corn: Mar 13 Corn closed at USD7.10 3/4, down 11 3/4 cents; May 13 Corn closed at USD7.12, down 12 cents. Funds were active sellers once more, dumping an estimated 10,000 contracts heading into tomorrow's USDA report. Corn export sales were poor at 169 TMT of old crop and net reductions of 8,500 MT for new crop, even though that just about managed to scrape in at the bottom end of modest expectations of 150-400 TMT. Whilst exports are lagging behind the target set by the USDA for 2012/13, demand from the ethanol sector has also started to decline in recent weeks. That has the trade anticipating a modest rise in US 2012/13 ending stocks to 615 million bushels from 602 million last month. There are some however who think that if we are to get a bearish surprise from the USDA then this is where it might come from. Others suggest that increased domestic feed usage will mop up any reduction in export or ethanol demand. World corn inventories are expected to be little changed in tomorrow's report at 115.74 MMT. CONAB estimated the Brazilian corn crop at 76.0 MMT versus a previous estimate of 72.19 MMT. They see more than half that total (40.9 MMT) coming from "safrinha" or second-crop corn. They also voiced their concern about Brazilian port logistics.

Wheat: Mar 13 CBOT Wheat closed at USD7.56, down 5 1/2 cents; Mar 13 KCBT Wheat closed at USD8.01, down 8 3/4 cents; Mar 13 MGEX Wheat closed at USD8.39 1/4, down 5 1/2 cents. Fund selling was estimated at around 2,000 Chicago contracts on the day. Weekly export sales of just over 300 TMT were almost exclusively old crop, versus expectations for sales of 200-500 TMT. There was no sign in the official report of any of the rumoured sales to the UK or Russia. As with corn the slow pace of US exports is seen nudging the USDA to raise ending stocks in tomorrow's WASDE report, with the trade anticipating a modest increase from 716 million bushels last month to 728 million this time round. Also as with corn there is talk of increased domestic feed usage of wheat keeping those ending stocks from rising too much. World wheat ending stocks are seen around 1 MMT lower at 175.54 MMT. Serious concerns remain for US winter wheat. "Drought still covers approximately 92% of the central and northern Plains and 56% of the southern Plains and Delta, but the Midwest has been reduced to 47.5% (down from 51%)," report MDA CropCast. Warmer and even drier is the 31-60 day outlook for winter wheat on the Plains.

EU Wheat Slides Lower Ahead Of USDA Report

07/02/13 – EU grains closed mostly lower with Mar 12 London wheat down GBP2.20/tonne to GBP208.30/tonne, benchmark May 13 GBP2.70/tonne lower at GBP209.80/tonne and new crop Nov 13 down GBP1.30/tonne to GBP187.00/tonne. Mar 13 Paris wheat fell EUR1.00/tonne to EUR245.00/tonne.

The market slid lower anxiously waiting for tomorrow's USDA WASDE report, hoping for some much-needed direction. For US wheat the trade is expecting exports to be lowered and ending stocks to rise. On a global level, world ending stocks are expected to decline. Russia's and India's stocks situation will be of interest given developments since last month's report.

The FAO today said that world wheat production in 2012/13 was 662 MMT, some 7.7 MMT more than the USDA said in January, yet they placed ending stocks at 159 MMT which is 7.6 MMT lower than the USDA.

Production prospects for 2013/14 are generally better than last year, they said, noting favourable conditions in India, Russia and Ukraine. EU wheat plantings they see 4-5% higher than in 2012. They did however acknowledge dryness concerns for US wheat.

The Ukraine Ministry said that 96.6% of winter grains there are in good/satisfactory condition, versus 66.8% a year ago. They forecast wheat production in 2013 at 22-23 MMT, a rise of around 42-48% on last year's drought-reduced crop.

US weekly export sales were towards the low end of expectations for wheat at 290,800 MT of old crop and 10,000 MT of new crop. There's talk of US wheat making it's way into unusual homes like Russia and the UK, although there's no official confirmation of either just yet. Agrimoney.com report that 25,000 MT of US SRW wheat is to be shipped to the UK in March, possibly to Tilbury, the first such consignment for at least 20 years, they say.

Reuters quoted Russia's agriculture minister as saying that the government themselves were considering importing grain itself for the first time in two decades.

Meanwhile EU exports continue to rise unabated. The latest data from Brussels today showed 408,725 MT of soft wheat export licenses were issued this past week, bringing the marketing year-to-date total to 11.68 MMT, almost 40% up on year ago levels.

Syria, Jordan, and Iraq all have wheat tenders pending. Bangladesh issued a new 50 TMT tender. Tunisia bought 92 TMT of optional origin wheat. Thailand bought 50 TMT of Canadian wheat for May-June shipment. Indonesia bought 180 TMT of Australian wheat for April-May shipment. Australia also sold 40,500 MT to South Korea. India continues to offer wheat for international tender. Vietnam bought 37 TMT of Indian corn for March shipment.

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.

"Snow cover is beginning to rebuild across central and northeastern Europe as colder temperatures return. Snow cover is melting a bit in FSU as warmer temperatures prevail, and mild temperatures should continue this week. Showers are improving moisture in the Yangtze Valley, which will favour wheat this spring," they said.

Vegetation index maps highlight significantly worse crop conditions in the southern half of the UK and much of northern France, whilst conditions in Spain and Italy show strong improvements compared with a year ago.

Kansas received needed rainfall overnight in central and east areas, but western areas remain very dry. There is hope for a significant rain event Saturday night and Sunday.

A Glimpse Into The Future (Maybe)

07/02/13 -- Have you ever been on a train and gone to the buffet car and been stung into paying a fiver for a (microwaved) bacon butty and a (crap) cup of tea? Even though you know that a bacon butty and a cup of tea isn't worth a fiver. You could buy a much better one at the cafe near the station for half that. Except you're on the train, not in the street near the station. If you want a bacon butty and a cup of tea now it's a fiver, take it or leave it. If you want to wait until you get to your destination, or get off the train at the next stop and rummage around for ten minutes to find yourself a nice cafe where they do a lovely fresh bacon butty and a proper cup of tea, then you can save yourself a few quid. But if you want a cup of tea and a bacon butty now then it's a fiver. Now. Thanks, help yourself to sugar...

Well, Septic Peg, my spirit guide from beyond the grave, has been on the blower (yes, it's been a while, she's had the painters in) with her two penneth on the soya market which she says is very much like the scenario above and one which I thought I'd share with you.

US soybean export sales are showing no sign of letting up, in fact they are accelerating. They've shipped more than a million tonnes a week for a record 19 weeks on the trot now (the previous record was 11).

Ships are already backing up in Brazil and yet they're only just scratching the surface with the harvest. Things can only get worse, much worse.

Various commentators in this report are signalling sharply higher prices in the months ahead:

US Soy Supply at 48-Year Low as Brazil Ships Held

As pointed out there, if China wants beans next month it doesn't matter how big the crops are in Brazil and Argentina if they can't physically get them onto the market.

I see potentially record breaking nearby tightness in the physical markets for soybeans/soy products in the months ahead, regardless of what the futures market says. Physical kit that you can get your hands on is likely to be extremely difficult to source and the premiums you will have to pay to get it (if indeed you can get it at all) could be unprecedented in their magnitude.

And all this is occurring before the the Brazilian/Argy farmers/truckers/dockers start thinking what a golden, God-given opportunity to strike and get our demands met once and for all by the govt/employers this is.

USDA Report More Huge Soybean Sales

07/02/13 -- The USDA's weekly export sales report showed no sign of a let up in demand for soybeans, with sales of nearly 1.7 MMT (for both old and new crop combined) comfortably exceeding trade expectations for sales of 800 TMT to 1.3 MMT.

The numbers included almost 900 TMT of old crop soybeans and highlighted weekly shipments of 1.55 MMT (in excess of 1 MMT for a record nineteen weeks in a row) That now means that the US has now shipped 27.3 MMT of soybeans already this marketing year, with a further 6.9 MMT on the books, taking total commitments to 34.2 MMT, or 93.5% of the USDA's target for the entire season. Meanwhile, Agritel are today reporting shipping delays of two months out of Brazil already.

In addition to these numbers, the USDA also reported sales of 120 TMT of optional origin new crop soybeans to China. The word insatiable and China are frequently used in the same sentence, and in the case of soybeans not without justification.

Wheat export sales of just over 300 TMT were almost exclusively old crop, versus expectations for sales of 200-500 TMT. Corn sales were pants yet again at 169 TMT of old crop and net reductions of 8,500 MT for new crop. Expectations for corn were 150-400 TMT.

EU Rapemeal Prices

07/02/13 -- Rapemeal prices on the continent are mostly lower today, in line with a slump in soymeal values in Chicago last night and again this morning. Nearby availability remains tight.

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

Chicago Closing Comments - Wednesday

06/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.87 1/2, down 8 cents; May 13 Soybeans closed at USD14.77 1/4, down 8 1/2 cents; Mar 13 Soybean Meal closed at USD437.10, down USD1.40; Mar 13 Soybean Oil closed at 52.45, down 53 points. Fund selling in beans was estimated at a net 3,000 contracts on the day. The market seems reluctant to break through USD15/bu ahead of Friday's USDA report, having put in a half-hearted effort to break through this level a couple of times this week and failed. Production prospects in Brazil are holding steady, or even increasing in some cases, although estimates for output in Argentina are falling. "Argentina weather remains threatening for corn and soybeans with ongoing heat and dryness. Maximum temperatures are predicted above 90 F, starting Friday and continuing through next week with hardly any rainfall. Drought has intensified in top farm provinces Buenos Aires and eastern Cordoba with only 10-40% of normal rainfall over the past month. Shallow-rooted crops, planted into wet fields, are in jeopardy," said Martell Crop Projections. Lanworth Inc estimated the Brazilian soybean crop at 80.3 MMT versus a previous estimate of 80.9 MMT. They placed Argentine output at 51.6 MMT compared to a previous estimate of 53.1 MMT. Michael Cordonnier estimated the Brazilian bean crop at 81.0 MMT, unchanged from previous estimate. He pegged the Argentine bean crop at 51.0 MMT, down 1 MMT from his previous estimate. CONAB comes out tomorrow with their Brazilian crop estimates, their previous estimates were for a bean crop estimated at 82.68 MMT and 2012/13 bean exports of 36.4 MMT (versus 82.5 MMT and 38.4 MMT from the USDA in January). Estimates for tomorrow's weekly export sales report for beans are a robust 800 TMT to 1.3 MMT. Chinese New Year starts this weekend, so some of next week's demand may get brought forward, with next week expected to be quiet.

Corn: Mar 13 Corn closed at USD7.22 1/2, down 6 1/2 cents; May 13 Corn closed at USD7.24, down 6 3/4 cents. Funds were said to have been net sellers of around 5,000 corn contracts on the day. The weekly ethanol production data disappointed, but maybe didn't surprise, with output up only marginally from last week's low of 770,000 barrels/day to 774,000 bpd. This is well under the level required to hit the USDA's demand target from this sector. With 37 US ethanol production plants currently closed the USDA may decide to reduce that target slightly on Friday, although there is some talk of margins having improved a little in the last couple of weeks. Michael Cordonnier forecast the Brazilian corn crop at 70.0 MMT and the Argentine corn crop at 22.5 MMT, both are unchanged from his previous estimates and below the USDA's 71 MMT and 28 MMT respectively. Lanworth Inc placed the Brazilian corn crop at 75.6 MMT versus a previous estimate of 75.8 MMT. In Argentina they went 25.1 MMT versus a previous estimate of 25.6 MMT. They also released tentative early projections for US corn yields and production in 2013/14, going for 155.6 bu/acre and a crop of 13.8 billion bushels. These would represent increases of 26% and 28% respectively if achieved. CONAB release their February Brazilian production estimates tomorrow. Last month they estimated the corn crop at 72.19 MMT and exports at 15.0 MMT. Estimates for tomorrow's weekly export sales are a modest 150-400,000 MT

Wheat: Mar 13 CBOT Wheat closed at USD7.61 1/2, up 4 cents; Mar 13 KCBT Wheat closed at USD8.09 3/4, up 2 1/2 cents; Mar 13 MGEX Wheat closed at USD8.44 3/4, up 3 cents. Wheat garnered support from talk that Russia may have already bought US wheat under the table. Even if they have it is only likely to be the odd cargo or two of high quality milling wheat. If they were to show up in tomorrow's or next week's weekly export sales report it would be interesting. Estimates for tomorrow are 200-500,000 MT. Old crop wheat sales need to be around 490 TMT/week to reach the USDA's target for this marketing year. Lanworth Inc estimated the US wheat crop in 2013/14 at 1.932 billion bushels versus a previous estimate of 1.941 billion. That's 52.6 MMT in English money and would represent a decline of 15% on the USDA's estimate of production in 2012/13. The USDA haven't yet put a figure on production this year, but the Congressional Budget Office released their 2013 US baseline projections today (made in October/ November). Back then they were forecasting a 2013/14 US wheat crop of 2.2 billion bushels, which is just under 60 MMT. Crop conditions have deteriorated markedly since then. MDA CropCast say that the 31-60 day outlook is trending warmer and drier, so there may not be too much improvement in sight for winter wheat. "The continued drier pattern across the Plains and western Midwest will maintain notable moisture shortages there, which will stress wheat as the crop greens up," they said.

EU Wheat Lower Despite Russian Import Duty Waiver

06/02/13 -- EU wheat futures closed mixed but lower with Mar 13 London wheat down GBP1.50/tonne to GBP210.50/tonne, benchmark May 13 falling GBP1.50/tonne to GBP212.50/tonne and new crop Nov 13 GBP1.45/tonne weaker at GBP188.30/tonne. Mar 13 Paris wheat fell EUR0.25/tonne to EUR246.00/tonne.

Confirmation that Russia had decided to remove it's 5% import duty on grains only made minor ripples when it was revealed that the action could take until April to implement and that the volumes concerned weren't likely to be very large. Most of what they require will continue to come via an existing duty-free agreement in place with neighbouring Kazakhstan it would seem.

The Russians sold another 60 TMT of their intervention stocks today, in their second tender of the week. That brings the total volume sold so far to 1.684 MMT. They've authorised the release of government-owned intervention stocks at the rate of around 130 TMT/week for the remainder of the season, which should effectively clear them out by harvest time. Total grain stocks at the end of the season are estimated at 7.7 MMT, including those held in commercial and private hands, which is far less than the 19 MMT left over at the end of 2011/12.

Even so, it looks like Russia may just scrape through to the next marketing year with only minimal imports. Production potential for 2013/14 will obviously want monitoring closely.

Ukraine said that it has exported 16.5 MMT of grains to the end of January, with the Ministry cutting their full season export forecast from 23.2 MMT to 21.0 MMT. January exports were 1.9 MMT, of which only 175,500 MT was wheat, with the vast majority of what is left to ship now being corn (accounting for 1.5 MMT of exports last month).

In Europe "Winter weather conditions have vacillated from unseasonably warm to cold calling into question the hardiness of winter grains. Nueremburg, Germany, recorded a 29 degree F temperature swing, from 51 F Christmas Eve to 22 F four weeks later in mid January," say Martell Crop Projections.

"Winter temperatures have been mostly moderate in the 3 top winter wheat producing countries France, Germany and United Kingdom. As long as bitterly cold weather does not develop (that would be zero F), winter grains should be safe from freeze damage. The bigger worry may be is persistently wet field conditions in winter wheat in United Kingdom and northern France," they add.

Agritel also noted that excessive wetness in many parts of France is a problem for winter wheat and rapeseed.

In the US the updated forecast is suddenly drier in hard red winter wheat areas. "The High Plains would receive spotty and light rain, at best, while central Kansas and Oklahoma get .10 to .50 inch rains. This is a major change from yesterday’s forecast that was very wet in the top 2 wheat states Kansas and Oklahoma. Springlike temperatures occurred yesterday in Southern Plains wheat, with low-mid 60s F, as warm and dry air streamed northward out of the Mexico desert. Perhaps there will be another rain event next week. The 6-10 forecast gives the Great Plains a 40-50% chance of showers, not terribly promising for drought relief," report Martell Crop Projections.

Following their own disappointing crop, and similar problems in neighbouring Argentina, the Brazilian government announced that they would exempt 1 MMT of wheat from outside of the Mercosur trade block from import tariffs between April and July.

The trade remains locked into a cautious mode ahead of Friday's USDA WASDE report. As far as wheat goes the trade is expecting maybe reduced export potential from the US, although that could at least partially be balanced by increased feed usage. Ending stocks there are forecast to rise, but only slightly, to around 728 million bushels (19.8 MMT from 19.5 MMT last month). World ending stocks are expected to fall from 176.64 MMT to 175.54 MMT, which would be 10% down on 2011/12 stocks of 195.78 MMT.

Syria announced a new tender for 100 TMT of wheat for March/May shipment. Black Sea origin was said to have won the business last time. The deadline for bids is March 4th so there's a good bit of time yet before we know the results of that tender.

Russia Latest: Another Non Event

06/02/13 -- The Russians have agreed to lift their 5% import duty on grains it would finally appear, although as ever things aren't quite as straightforward as they might seem.

Namely, the move needs regulatory approval, which could take a couple of months to sort out. Neighbouring Kazakhstan is already able to export wheat to Russia duty-free under the rules of a Customs Union launched in January 2010 between Russia, Kazakhstan and Belarus which effectively removed customs controls from the internal borders of all three.

Essentially it would seem that Kazakhstan will at the very least continue to supply whatever Russia's import needs will be until at least April, keeping the potential impact in Europe and beyond relatively minimal. It may at least make Kazakhstan less of a competitor on the global export market between now and the autumn. Having said that, India would appear to be more than capable and only too willing to take up any slack.

EU Rapemeal Prices

06/02/13 -- Rapemeal prices on the continent are firmer again, extending their recent bullish run although most gains in Chicago soymeal values last night have been subsequently eroded in overnight trade.

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

Confusion: Read All About It

06/02/13 -- Various news reports started to emerge late yesterday afternoon that Russia had after all lifted the 5% import duty on grains, although official confirmation of this still seems to be lacking this morning.

What we do know is that the Minister of Agriculture is currently forecasting grain stocks in Russia to fall to 7.7 MMT by the end of the current season. Whether that total includes any provision for further grain imports between now and then is unclear.

This figure of 7.7 MMT does seem to stack up alongside 2012 grain production, plus carry-in, minus domestic consumption and exports. Whether that is enough of a comfort zone is another matter.

Agritel say that "the authorities estimate that 10 MMT of stocks are necessary in order to secure the end of campaign transition period." Clearly 7.7 MMT is below that threshold, causing Russia's discomfort.

The HGCA meanwhile say this morning that the import tariff HAS been lifted and that 2012/13 ending stocks of 7.7 MMT are "above the USDA’s estimate of 5.60 MMT but the lowest since 2007/8." Although they seem to be getting slightly confused between grain ending stocks and wheat ending stocks.

Elsewhere I read that "grain closing stocks could hit 7.7 million tonnes by July vs. the current USDA estimate of 10.50 million tonnes." Exactly where the figure of 10.5 MMT comes from is unclear. The USDA's own Jan WASDE report places Russian wheat ending stocks at 5.6 MMT and coarse grain stocks at 1.2 MMT.

We do know that the Russians have sold off around 1.6 MMT of intervention stocks between late October, when sales began, and now. They say that they were sitting on 3.3 MMT worth of intervention stocks in late January, and that they expect to sell around 3 MMT of these before the end of the season. They should certainly have little trouble doing that as they've just announced that as from next week they will also begin selling in other parts of European Russia (sales thus far have almost exclusively been in Siberia and the Urals).

What most people do seem to agree on is that even if they have, or do, lift the import tariff then it won't suddenly mean that Russia suddenly become a huge importer of grain. A 5% import duty surely doesn't make that much difference between minimal and large-scale imports? Watch this space.

In other news, cheap as chips India have apparently received a top bid of USD312/tonne in a tender to sell 35,000 MT of wheat by March 10 from the eastern port of Vizag, along with a best bid of USD312.20/tonne in s separate tender to sell 55,000 MT of wheat, also for shipment by March 10, from the eastern port of Karaikal.

Chicago Soybeans Rise, Corn And Wheat Fall Again

05/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.95 1/2, up 6 3/4 cents; May 13 Soybeans closed at USD14.85 3/4, up 5 1/2 cents; Mar 13 Soybean Meal closed at USD438.50, up USD4.20; Mar 13 Soybean Oil closed at 52.98, down 13 points. Funds were said to have ended as net buyers of around 1,000 soybean contracts on the day. A tentatively wetter outlook for Argentina a week from now kept a lid on potential price rises. Mar 13 beans had another attempt at reaching USD15/bu but failed. Aboive estimated Brazil’s 2013 soybean crop at 82.3 MMT versus their previous estimate of 81.6 MMT. Ahead of Friday's USDA report the average trade estimate for Brazilian soybean production this year is 83.1 MMT from within a range of estimates of 81.5-84.0 MMT. The January USDA estimate was 82.5 MMT and last year's crop was 66.5 MMT. Argentina's soybean crop is estimated at an average 53.0 MMT out of a range of estimates of 51.0-55.7 MMT. The USDA's previous estimate was 54.0 MMT and the 2011/12 crop was 40.1 MMT. The trade is also anticipating a likely reduction to US 2012/13 ending stocks of 6 million bushels to 129 million, given the strong pace of exports and robust domestic crush.

Corn: Mar 13 Corn closed at USD7.29, down 5 1/4 cents; May 13 Corn closed at USD7.30 3/4, down 5 1/2 cents. Fund selling was estimated at around a net 7,000 contracts on the day. The demand side of the coin for US corn isn't anything like as rosy as it is for soybeans. Export sales continue to disappoint and ethanol plants are closing on a weekly basis. Brazil remain an aggressive exporter of corn at prices around USD15-20/tonne below those from the US. The average trade estimate for the Brazilian 2012/13 corn crop on Friday is 71.1 MMT, from within a range of estimates of 69.75–73.0 MMT. The USDA's January estimate was 71.0 MMT and the 2011/12 crop was 73.0 MMT. Argentina's crop is seen being reduced from last month's 28.0 MMT to an average 26.6 MMT, from within a range of estimates of 25.0-28.0 MMT and the 2011/12 crop of 21.0 MMT. Stats Canada's estimated corn stocks on Dec 31st there up 9.8% from a year ago at 10.365 MMT. The US Energy Dept will issue their weekly ethanol production data tomorrow. Last week's output was only 770,000 barrels/day - a new lowest weekly total since they starting issuing data in mid-2010. The trade is expecting only a relatively modest rise in US 2012/13 corn ending stocks to 615 million bushels in Friday's report. Last month's forecast was 602 million bushels.

Wheat: Mar 13 CBOT Wheat closed at USD7.57 1/2, down 5 1/2 cents; Mar 13 KCBT Wheat closed at USD8.07 1/4, down 9 3/4 cents; Mar 13 MGEX Wheat closed at USD8.41 3/4, down 5 1/4 cents. Fund selling was estimated at a net 2,000 Chicago wheat contracts on the day. Acute dryness for winter wheat on the Great Plains may finally be in for a break. "The Southern Great Plains may receive heavy rainfall on the weekend that boosts wheat development. The southern jet stream is making a new appearance, after a prolonged absence, improving chances for significant rainfall. Rainfall would be heaviest in Kansas, the top US wheat state, with 0.50-0.75 inch of rainfall in the western half of the wheat belt, and 0.75–1.25 inches in central Kansas. Oklahoma is also is slated to receive soaking rains from 0.50 to 1 inch. One inch of rainfall would go a long way, cutting the soil moisture deficit in half to 1.1 inches, compared to 2 inches presently," said Martell Crop Projections. A decline in US wheat exports may see the USDA raise 2012/13 US ending stocks on Friday to 728 million bushels, from within a range of trade estimates of 706-783 million and the USDA's January estimate of 716 million.

EU Wheat Down But Off The Lows

05/02/13 -- EU wheat futures closed mostly lower with Mar 13 down GBP0.50/tonne at GBP212.00/tonne, benchmark May 13 also down GBP0.50/tonne at GBP214.00/tonne and new crop Nov 13 GBP0.25/tonne lower at GBP189.75/tonne. Mar 13 Paris wheat was EUR1.25/tonne lower at EUR246.25/tonne. May and Nov London wheat did at least close a pound or two up off the lows of the day, whilst Mar Paris wheat was a couple of euros off the intra-day low.

After a brief one day respite, the pound was back under the cosh again, falling close to the 1.15 level against the euro in late trade. The recent strength of the euro has really knocked EU wheat prices despite exports themselves running well ahead of last season. US dollar strength also seems to be harming America's export hopes, with many expecting the USDA to revise downwards their projections for US wheat sales this season in Friday's WASDE report, with an at least partially corresponding jump in ending stocks.

Monday's weekly export inspections of only 15.206 million bushels were another setback for a US wheat market aiming to export 29.5 MMT in 2012/13. To do that they need exports in excess of 26 million bushels, and time is running out with the US wheat marketing year ending in May. Egypt's weekend purchase of just one cargo of US wheat offered little encouragement. Aside from a couple of tenders in the pending tray until the middle of the month from Jordan and Iraq there's little foreign interest around for America to get it's teeth into. India meanwhile seem to have opened up their own new discount store to fill the void left by Ukraine and Russia.

There are reports of an Indian delegation being sent to Australia to investigate better ways of storing/handling wheat to improve quality and efficiency and thereby open up a wider export market for themselves, embracing this new found way of earning dollars.

Funds also seem to have lost their confidence in grains, at least for the time being. Maybe the recent gains in equities around the world are proving more enticing? Whatever the reason, Friday's Commitment of Trader's Report showed trend-following funds holding a net short position of 50,125 CBOT wheat contracts, up 3,667 lots on the week through to last Tuesday night. Maybe the size of that short itself could offer a glimmer of hope for the bulls? Only time will tell.

It's not like there isn't any supportive news out there though. For one, America's own wheat crop for the coming 2013 harvest is looking in a very shabby state.

For two, unconfirmed reports circulating late in the day suggested that Russia had indeed decided to suspend it's 5% import tax on grains, although before everyone gets too excited their Ag Ministry said that they only expect the country to import a relatively modest 800 TMT of grains in the Jan/Jun 2013 period. That would take their 2012/13 marketing year total to around 1.2-1.3 MMT. The Ministry did confirm that they'd sold another 60 TMT of grains in their weekly intervention sale, bringing the marketing year-to-date total to 1.624 MMT so far. They expect that to reach 3 MMT by the end of the season.

Sales thus far have largely been confined to Siberia and the Urals, but these will apparently be extended into the European part of Russia next week to attempt to keep a lid on surging domestic food prices. It seems highly likely that at the very least Russia will have only minimal carryover stocks going into the 2013 harvest, although for the time being they say that they are confident of a rebound in production to around the 95.0 MMT mark, up 34% versus 70.7 MMT in 2012/13. Even so, some of that extra production will be wanted to replenish minimal domestic stockpiles.

Meanwhile, Stats Canada released their Dec 31 stocks numbers today, pegging all wheat inventories at 20.7 MMT, down slightly from 20.83 MMT a year previously and some 1 MMT below the average trade estimate. Also coming in lower than anticipated were barley stocks of 5.1 MMT (versus the 5.3 MMT expected and 5.5 MMT at the end of 2011) and canola stocks at a 6-year low of 7.4 MMT (versus 7.5 MMT expected and 9.7 MMT at the end of 2011).

On a more negative note, Ukraine announced that they'd exported 16 MMT of grains in the July/January period, up 46% on a year previously. That total included 7.8 MMT of corn, 6.0 MMT of wheat and 2.0 MMT of barley. They are also confident of a sharp recovery in grain and oilseed production in 2013/14 and would normally be expected to "hit the ground running" with regards to exports as early in the season as possible.

"Fairly widespread rain and snow last week further improved soil moisture in most (Middle Eastern) areas, which will favour the wheat crop," said MDA CropCast. In North Africa "heavy rains are expected in far northern Algeria and far northwestern Tunisia this week, which will likely lead to some areas of wetness. Dryness will remain a concern across southwestern Morocco, but some minor improvement is expected in central Tunisia," they add.

EU Rapemeal Prices

05/02/13 -- Rapemeal prices on the continent are firmer across the board again today, mirroring gains in soymeal values in Chicago last night and again this morning.

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

Chicago Beans Up On Strong Demand, Not So For Corn And Wheat

04/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.88 3/4, up 14 1/2 cents; May 13 Soybeans closed at USD14.80 1/4, up 14 3/4 cents; Mar 13 Soybean Meal closed at USD434.30, up USD6.10; Mar 13 Soybean Oil closed at 53.11, up 12 points. Large weekly export inspections of almost 54 million bushels (nearly 1.5 MMT) along with the USDA announcing 116 TMT of US beans sold to China - split half and half between old crop and new crop - set the bullish tone. Weekend rains that disappointed, in Argentina at least, and a drier outlook for there also added support. Fund buying in beans was estimated at a net 4,000 contracts on the day. Argentina's Ag Ministry said that 98% of the Argentine bean crop has been planted versus 97% a year ago. A Bloomberg survey estimated Argentina's soybean crop at 52.9 MMT versus 54.0 MMT from the USDA. Ag Rural estimated Brazil’s soybean crop at 81.2 MMT, down from their previous estimate of 82.2 MMT. They said that Brazil’s bean harvest is 6% complete versus 5% a year ago. The USDA issue revised world crop production estimates on Friday.

Corn: Mar 13 Corn closed at USD7.34 1/4, down 1 3/4 cents; May 13 Corn closed at USD7.36 1/4, down 1 1/2 cents. Corn export inspections of only 5.348 million bushels were truly pathetic and only a tenth of those for soybeans. That takes the marketing year-to-date inspections to only 311 million bushels, less than 44% of the same time a year ago. Weekly export inspections now need to exceed 21 million bushels/week to hit USDA targets for 2012/13. Funds were said to have ended up as net sellers of around 4,000 corn contracts on the day. Argentina Ag Ministry said that 96% of the Argentine corn crop has now been planted versus 94% a week ago and 98% a year ago. They said that 25% of the corn crop is at the pollination stage and said that 83% of the crop is rated good to excellent. A Bloomberg survey pegged the Argentine corn crop at 26.4 MMT versus the USDA's 28 MMT. News broke Friday of another US ethanol plant closure, bring the total currently idle to 37.

Wheat: Mar 13 CBOT Wheat closed at USD7.63, down 2 cents; Mar 13 KCBT Wheat closed at USD8.17, down 5 cents; Mar 13 MGEX Wheat closed at USD8.47, down 4 3/4 cents. Wheat gave in to spillover weakness from corn, having traded higher for much of the overnight session. Weekly export inspections of only 15.206 million bushels were poor, even if they were almost three times those of corn. They need to be around 27 million to hit the current USDA target for the season. Egypt bought one 60 TMT cargo of US wheat over the weekend, the trade would have liked more. Intriguingly, the winning bid from Venus was at least USD10/tonne cheaper than anything else on the table (including other US offers). India continues to make a nuisance of itself on the international wheat export stage with 710,000 MT of wheat up for export to start the week - and they are already selling new crop too. Stats Canada's year end stocks report comes out tomorrow, with the trade expecting all wheat inventories at 21.7 MMT from within a range of estimates of 19.8-23.5 MMT. In 2011 all wheat stocks were 20.831 MMT.

EU Wheat Falls - Friday's Gains Seen Overdone

04/02/13 – EU grains closed mostly lower with Mar 12 London wheat down GBP1.90/tonne to GBP212.50/tonne, benchmark May 13 also GBP1.90/tonne lower at GBP214.50/tonne and new crop Nov 13 down GBP3.00/tonne to GBP190.00/tonne. Mar 13 Paris wheat fell EUR1.00/tonne to EUR247.50/tonne.

Friday's relatively strong EU wheat closes could maybe be considered a bit false. EU wheat therefore seemed to spend most of the day re-adjusting to a US market that closed around 14-15 cents lower on Friday night, and even allowing for this morning's gains of 4-5 cents, still means a net decline of 10 cents over the two sessions.

Weekend rains in Argentina were not as good as was hoped for. MDA CropCast said "the rains resulted in only slight improvements in moisture in these areas, and drier weather across all of the region this week will allow moisture shortages to quickly increase once again. Temperatures will also begin to warm again in southwestern areas."

The market seems relatively content to worry about the miserable state of US winter wheat a bit closer to harvest time, at least for now. Exports, or rather the lack of them are the problem for the bulls looking for higher prices.

Egypt bought one cargo of US wheat in their weekend tender, which doesn't amount to much of a game-changer. India has a whopping 710,000 MT of wheat up for export to start the week and is already selling new crop too. Egypt won't buy it but there are plenty who will, which may limit the upside in wheat for now.

At least the outlook for mild temperatures across the Plains and Delta this week will keep winterkill threats low for wheat. "Wheat will likely begin to green up again across the central and southern Delta as well as the far southeastern Plains. Showers in the Delta and far southeastern Plains will improve moisture slightly, while dryness will remain extensive in the central and western Plains. Additional improvements in moisture are expected in the southern Midwest, Delta, and southeastern Plains in the 6-10 day period," MDA CropCast forecast.

This outlook for warmer weather ahead is echoed by Martell Crop Projections. "The Great Plains forecast calls for strong warming in the week ahead. Tropical air from Mexico would stream up into the Great Plains raising temperatures into the 60s F Wednesday-Thursday, and 10-15 degrees above average. Strong drying would occur on the High Plains with gusty winds and no important rainfall," they say.

After taking a battering last week, the pound consolidated against a euro itself under renewed pressure on heightened concerns over Spain and their worsening employment crisis. That probably led to London wheat coming off worse than Paris today.

IKAR said Russia has exported 14 MMT of grains so far this season, including 10 MMT of wheat. The Ukraine Ministry say that they have exported 16.25 MMT of grains so far this season, including 7.95 MMT of corn and 6.04 MMT of wheat.

Russia are said to be reviewing whether they will waive the existing 5% import duty on grains until the 2013 harvest with an answer expected this week. If they do that could add a bit of support to the market, although it may be that Kazakhstan is likely to be the main beneficiary.

EU Rapemeal Prices

04/02/13 -- Rapemeal prices on the continent are firmer, following steadier Chicago soymeal after weekend rains in Argentina disappointed.

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

The Morning Vibe

04/02/13 -- A glance at the overnight markets will tell you what you need to know. Weekend rains in Argentina were a bit of a let down, and the further forward forecast, which promised decent rains last week, has now turned drier.

"Scattered showers occurred in Entre Rios, northern Cordoba, northern Santa Fe, far eastern Buenos Aires, southern Santiago Del Estero and Chaco. Amounts were 0.25 to 1.0” locally up to 2.25” with 45% coverage. A few showers will push into La Pampa this week. Amounts through Friday should be 0.25 to 1.25”, locally 2”, with less than 10% coverage. Drier conditions this week will allow soybean conditions to decline once again. Temperatures are forecast to warm across northeastern areas in the 6-10 day period," say MDA CropCast this morning.

In contrast, in Brazil: "Weekend rainfall was above expectations. Rains favored Rio Grande do Sul, Goias, Santa Catarina, Sao Paulo, central and southern Minas Gerais, Mato Grosso do Sul, Bahia, Parana, and Mato Grosso. Amounts were 0.25 to 1.5”, locally up to 3.25” with coverage of 90% for corn and soybeans," they say. It seems that the outlook for southern Brazil is now wetter than it was on Friday, although the positive effect of those beneficial rains may be balanced by the negative further unwanted rain further north where they are keen to get on with the soybean harvest and get the second crop corn into the ground.

Things haven't improved on the US Plains. "Weekend precipitation was near expectations. Mostly dry weather prevailed. Scattered rain showers will favour eastern OK, eastern TX and eastern KS today and Monday. Amounts through Friday will be 0.10 to 0.50 locally up to 1.0” with 25% coverage. Mostly dry weather will maintain moisture shortages in central and western crop areas. The 6-10 day outlook is drier in western crop areas and colder overall versus Friday’s outlook. The 11-15 day outlook is slightly drier overall," they add.

Egypt's GASC bought just the one cargo of US soft red winter wheat over the weekend for March 1-10 shipment at USD306.80/tonne FOB, plus freight (said to be USD25.64/tonne). Intriguingly, the winning bid from Venus was at least USD10/tonne cheaper than anything else on the table.

Russia are said to be considering whether to remove the existing 5% import duty on grains until Aug 1, despite some politicians earlier denying that this was on the agenda. A decision could come as early as today, but we should certainly know either way within the next few days.

On the calendar this week are US weekly export inspections due this afternoon. Stats Canada are out with their Dec 31 stocks numbers tomorrow. Wednesday brings the latest weekly ethanol production and stocks numbers from the US Energy Dept (remember that last week's production was the lowest since weekly reports began in 2010). Thursday see the usual weekly export sales report from the USDA, before the Feb WASDE comes out on Friday.