Nogger's Blog

Chicago Gains Ahead Of Long Weekend

15/02/13 -- Soycomplex: Soybeans staged a modest comeback on what was probably a bit of book-squaring ahead of a three day weekend with the market closed for President's Day on Monday. Funds were said to have been buyers of around 2-3,000 soybean contracts on the day. Investors are still nervous however ahead of the next looming Washington battle over the budget. Weekend weather in South America may also help decide next week's price direction, with rains of 3/4 to 1 1/2 inches with 85% coverage forecast for Argentina on Sunday. There's some talk of early harvested beans in Mato Grosso being rejected by buyers because they are too wet. Port congestion and shipping delays in Brazil are building. Nevertheless, the USDA announced that "unknown" had cancelled 250 TMT of old crop US beans. The January NOPA crush came in towards the low end of expectations at 158.2 million bushels, but still well ahead of last year's crush of 142.8 million. China return for their week long holiday on Monday. Will they see this week's price declines as a buying opportunity? On the week Mar 13 beans were 28 cents lower, with Mar 13 meal down USD13.00 and Mar 13 oil up 19 points.

On the day Mar 13 Soybeans closed at USD14.24 1/2, up 6 1/2 cents; May 13 Soybeans closed at USD14.14 3/4, up 6 1/4 cents; Mar 13 Soybean Meal closed at USD409.40, up USD2.20; Mar 13 Soybean Oil closed at 51.62, down 8 points.

Corn: Corn managed to avoid setting a record 11 straight declines in a row, but only just. As with soybeans it may have been nothing more than profit-taking and position squaring ahead of a long weekend that saved it. Fund buying was estimated at around 3-5,000 contracts on the day. South American weather has improved with rains seen moving through Argentina and Southern Brazil over the weekend, and a turn to drier conditions in Northern Brazil. Both would be of benefit to corn. The Buenos Aires Grains Exchange said that Brazilian farmers had harvested 3.7% of first crop corn versus 2.5% last year. Drier conditions in Mato Grosso will hopefully help the soybean harvest progress and allow second crop corn to get into the ground and get well established before the dry season comes along. Israel are reported to have bought 100 TMT of optional origin corn (possibly from the Black Sea region or South America) for March/June shipment. For the week Mar 13 corn was 10 1/4 cents lower.

On the day Mar 13 Corn closed at USD6.98 3/4, up 4 cents; May 13 Corn closed at USD6.97, up 4 1/4 cents.

Wheat: Fund buying was estimated at 2-3,000 contracts on the day. Yesterday's better than expected weekly export sales helped wheat. Old crop sales of 576,451 MT were in fact the second best weekly total in the past 19 weeks, providing a little hope that maybe world demand will boost US sales enough in the remainder of the season to hit USDA targets. Confirmation that a Brazilian flour miller had bought 100 TMT of US HRW wheat for Feb/March shipment helped support this notion. So did did talk of a similar volume being done into China. The US and Canada hold most of the aces if it's quality wheat you're after. For the less discerning, or feed wheat, there are other options. It was reported that Glencore and Concordia both bought 100 TMT of Indian wheat for March shipment, said to most likely be shipped to Africa and Middle East. Ethiopia also bought 100 TMT of Indian wheat in it's tender. On the week Mar 13 Chicago wheat was down 14 cents, Kansas wheat down 22 1/4 cents and Minneapolis wheat down 12 3/4 cents.

On the day Mar 13 CBOT Wheat closed at USD7.42 1/4, up 10 1/4 cents; Mar 13 KCBT Wheat closed at USD7.77 1/2, up 2 1/2 cents; Mar 13 MGEX Wheat closed at USD8.23 1/2, up 4 1/4 cents.

EU Wheat Stages Mini Recovery, But Still Lower On The Week

15/02/13 – EU grains closed firmer on the last day of a week when old crop London wheat fell below GBP200/tonne for the first time since mid-October. Despite today's mini recovery Mar 13 London wheat was still GBP3.30/tonne lower on the week, with Nov 13 down GBP0.75/tonne and Mar 13 Paris wheat down EUR1.50/tonne.

On the day Mar 12 London wheat finished up GBP3.00/tonne to GBP204.25/tonne, benchmark May 13 was also GBP3.90/tonne higher at GBP206.75/tonne and new crop Nov 13 GBP2.00/tonne firmer to GBP185.50/tonne. Mar 13 Paris wheat rose EUR1.75/tonne to EUR244.25/tonne.

Heavy fund selling has been the theme of the week across the grain sector, driving US wheat prices to 7 1/2 month lows. Lower prices have drawn out plenty of buyers though, with Algeria, Jordan (twice) and South Korea all issuing new tenders for wheat. Iraq, Syria and Bangladesh also have tenders pending - the Iraqi one closes this weekend.

In addition, newswires are reporting that Brazil and China have both bought US wheat privately this week (yesterday's USDA export sales report did confirm one cargo to China, but more is said to have been done in recent days). On top of that Brussels issued 420,404 MT of soft wheat export licences this past week, as EU exports show absolutely no sign of letting up. This takes the marketing year to date total to 12.1 MMT, which is 44% up on this time a year ago.

That total doesn't yet include the 4-500,000 TMT of most likely French wheat that Algeria bought this week.

Ukraine say that they've shipped 16.9 MMT of grains so far this season, up 46% on year ago levels. That includes their supposed maximum of 6.3 MMT of wheat, and suggests that they will not be active again as a wheat exporter now until new crop comes along. Russia, we know, are out of the export market and are in fact also strongly rumoured to have bought US wheat in the past week.

One country who are extremely active on the export front though are India. They sold a further 200 TMT of their wheat surplus overnight at just over USD310/tonne FOB for loading by the end of next month. With another bumper crop around the corner, and stocks way above the government's minimum levels, they've now begun to start flexing their muscles by selling new crop wheat into Asia too.

That may keep a lid on any potential price rises going forward, although India aren't everybody's cup of tea quality-wise.

Canada are though, albeit at premium money. Their exports in the first 5 months of 2012/13 through to December are near 7.6 MMT, which is up close to 6% versus a year previously. Full season exports could reach 18.75 MMT, according to one Canadian analyst yesterday, which would be the highest since 2006/07.

Rabobank issued new forecasts for Paris wheat price averages this year: Q1 EUR245/tonne; Q2 EUR250/tonne; Q3 EUR204/tonne; Q4 EUR197/tonne.

Note: US markets are closed on Monday for President's Day.

EU Rapemeal Prices

15/02/13 -- Rapemeal prices on the continent are little changed today. Seed prices on the Paris futures market also show little alteration from yesterday. Nearby availability remains tight.

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

The Morning Vibe

15/02/13 -- The overnight grains are showing a modest recovery from recent losses, with wheat around 7 cents firmer, corn up 5-6 cents and soybeans 2-3 cents steadier.

Whilst yesterday's USDA export sales report didn't confirm any of the rumoured wheat sales to Russia, Brazil or the UK it did include sales of 163,900 MT to "unknown" destinations. Agritel this morning are saying that they can confirm 100 TMT of US wheat sold to Brazil. Maybe that is why wheat is a bit firmer on the overnights?

US wheat sales now need to average around 550 TMT/week to hit the USDA's target for the season, so they need to develop a bit more consistency than they have displayed of late.

Coming soon to a not too discerning buyer near you! India, the new Primark of the grain export world, have reportedly sold 200 TMT of wheat overnight at just over USD310/tonne FOB for loading by the end of next month.

Ukraine say that they've shipped 16.9 MMT of grains so far this season, up 46% on year ago levels. That includes their supposed maximum of 6.3 MMT of wheat, along with 8.3 MMT of corn and nearly 2 MMT of barley. Feb 1 grain stocks are reported to be 34% down on this time a year ago.

Brussels confirmed late on yesterday that they'd issued 420,404 MT of soft wheat export licences this past week, as EU exports show absolutely no sign of letting up. This takes the marketing year to date total to 12.1 MMT, which is 44% up on this time a year ago. The USDA currently have the EU down to export 11.5% more wheat in 2012/13 than last season.

Israel are reported to have bought 100 TMT of optional origin corn (possibly from the Black Sea region or South America) for March/June shipment, along with 15 TMT of optional origin feed barley for March/May shipment.

The weather finally seems to be playing ball in South America, according to Martell Crop Projections:

"Argentina and Southern Brazil are expecting very heavy rainfall in the week ahead. Showers have already begun occurring the past couple of nights. Scattered showers, some heavy, have occurred in Argentina's central grain belt -- northern Buenos Aires and adjacent areas of Santa Fe and eastern Cordoba. This made a dent in the drought, though much more rain is still needed to replenish dry fields.

"In Brazil, northern and eastern Parana has received very heavy rainfall. Yet a stubborn pocket of drought remains in the southwestern part of the state a key farm region for both corn and soybeans. Rio Grande do Sul, Brazil's southernmost farm state, also has gotten rain relief in the east, while the northwest has continued dry.

"Where rain is occurring it is highly beneficial for soybeans filling pods. Recall that January was extremely dry in Argentina, in particular. Southern Brazil crops were also stressed by hot and dry weather last month.

"Mato Grosso faces a dry forecast. Last month was extremely wet in the top Brazil soybean state, so drying was needed. However, if it continues for a prolonged period it would be detrimental for late-filling soybeans. Harvesting of soybeans has begun in Mato Grosso for early planted short-cycle varieties."

Chicago Extends Losses On Further Fund Selling

14/02/13 -- Soycomplex: Beans were back on the defensive, although closing well off session lows, with funds dumping an estimated further 3-4,000 lots of their rapidly diminishing length. Weekly export sales of minus 109,200 MT for old crop set the tone. New crop sales were 345 TMT, giving us a combined 235,800 MT - well below trade expectations of 700 TMT-1.1 MMT. The old crop "sales" included decreases for China (230,600 MT) and unknown destinations (146,500 MT). Were these cancellations business being switched to South America, or a result of the sort of thing we frequently see when the market drops sharply in a shory period? Even with these cancellations the US still has 93% of the USDA's target for the year already shipped or on the books. Shipments of 990,651 MT failed by a whisker to extend the unbroken run of 1 MMT+ weeks to twenty as US exports get crammed into the first half of the season. Port congestion in South America is already building. The Buenos Aires Cereals Exchange estimated Argentine soybean crop at 50.0 MMT, versus the USDA's forecast of 53.0 MMT. The January NOPA crush numbers are out tomorrow, with the trade expecting little sign of an ease up in domestic US demand for beans. The December crush was almost 160 million bushels, with a similar number expected again versus the Jan 2012 crush of 142.8 million. Mar 13 Soybeans closed at USD14.18, down 5 cents; May 13 Soybeans closed at USD14.08 1/2, down 5 cents; Mar 13 Soybean Meal closed at USD407.20, down USD0.90; Mar 13 Soybean Oil closed at 51.70, up 4 points.

Corn: Corn was little changed on the day. Weekly export sales of 225,400 MT of old crop and 59,300 MT of new crop were in line with trade expectations of 150-350 TMT. Even so the pace of exports is still behind that needed to meet the USDA's current 2012/13 projections. Sales included 102,600 MT of old crop to China. Fund selling was estimated at around 2-3,000 contracts on the day. The Buenos Aires Cereals Exchange estimated the Argentine corn crop at 25.0 MMT versus the USDA's figure of 27.0 MMT. South Korea NOFI bought 108 TMT of South American corn for July shipment along with 55 TMT of feed wheat of optional origin, possibly Indian, for June shipment. MDA CropCast raised their Brazilian corn production estimated almost 400 TMT from last week to 71.8 MMT versus 72.5 MMT from the USDA. They also increased production in Mexico this year by 300 TMT to 20.8 MMT. Output in Argentina was left unchanged at 23.1 MMT, like the BAGE also well below the USDA's forecast. Mar 13 Corn closed at USD6.94 3/4, down 3/4 cent; May 13 Corn closed at USD6.92 3/4, down 3/4 cent.

Wheat: Fund selling in Chicago wheat was estimated at around 2,000 contracts on the day. As with soybeans, wheat closed lower but well off the lows of the day. Weekly export sales actually topped those of corn and soybeans combined at 651,700 MT of old crop and 54,600 MT of new crop. Trade expectations has been for sales of 275-400 TMT. Weekly sales for old crop now need to average around 550 TMT for the remainder of the season to hit USDA targets. There was no sign of Brazil, Russia or the UK, but we did get the confirmation of one cargo of old crop sold to China. This still doesn't mean that the recently rumoured old crop business to some of these other unusual homes hasn't been done though. Total commitments to date are now 76% of the USDA target for the season versus 89% normally. Interfax said that 10.5% of Russia’s winter grain crop is in poor condition versus 9% on average. Kazakhstan's Ag Ministry said that they have exported 4.4 MMT of grains so far this season versus 6.5 MMT a year ago. Mar 13 CBOT Wheat closed at USD7.32, down 3 1/2 cents; Mar 13 KCBT Wheat closed at USD7.75, down 5 1/4 cents; Mar 13 MGEX Wheat closed at USD8.19 1/4, down 3 3/4 cents.

EU Wheat Dragged Lower In Afternoon Trade

14/02/13 -- EU wheat futures closed mixed but mostly lower with Mar 13 London wheat down GBP0.10/tonne to GBP201.25/tonne, benchmark May 13 falling GBP0.10/tonne to GBP203.75/tonne and new crop Nov 13 GBP0.80/tonne weaker at GBP183.50/tonne. Mar 13 Paris wheat rose EUR0.25/tonne to EUR242.50/tonne.

Morning trade was higher, buoyed by ideas that fund selling might finally be exhausted, but the screens turned red in the afternoon following the release of the USDA's weekly export sales report. Even though the latter was actually friendly for wheat, it was net negative sales on old crop soybeans of -109,200 MT that caught the market's attention the most. That quickly sent soybeans 12-15 cents lower, dragging corn and wheat down with it.

Weekly wheat sales beat trade expectations of 275-400 TMT at a combined 706 TMT, with the vast majority of that old crop business. Even so, there was no sign of Brazil, Russia or the UK - all of whom have supposedly been enquiring after US wheat in the past couple of weeks. There was however a 56 TMT sale to China.

Modest weather improvements on the US Plains have put wheat under a bit of pressure this week, although opinion is divided on how much real good these will do. "Rain and snowmelt from a winter storm in the Southern Great Plains, while beneficial, was less than anticipated. Oklahoma and Texas panhandle wheat received 0.25 - 0.50 inch of moisture, and up to 0.75 inch in widely scattered areas. Kansas received 0.50 to 1 inch rain in a swath across the central part of the state, but virtually nothing near the Oklahoma-Kansas border, where drought is most severe," said Martell Crop Projections.

Strategie Grains cut their EU-28 soft wheat production forecast for 2013/14 by 1.1 MMT from last month to 132.2 MMT. That adds to the 1.7 MMT reduction that they issued in January. Lower production potential from France and the UK was the reason (down 1.4 MMT between them), which was only partially offset by improved prospects in Eastern Europe. Even so, 132.2 MMT is still 6% more than produced in Europe last year.

EU-28 corn production was raised 900 TMT from last month to 65.5 MMT, with barley output also rising from 54.7 MMT to 55.1 MMT. The corn number represents an increase of almost 20% on production in 2012, whilst the barley rise is a more modest 1.3% rise.

Oilseed rape output in the EU-28 was forecast 6.25% higher than last year at 20.4 MMT, with Germany's crop up 12.5% to 5.4 MMT, France's down 5.5% to 5.2 MMT and the UK harvest seen better than last year at 2.8 MMT. Sunflower production in the EU-28 is seen rising 11.4% in 2013 to 7.8 MMT.

FranceAgriMer said that EU-28 soft wheat plantings for this year's harvest will rise 3.5% to 23.8 million hectares. There were increases for France (+2%), Germany (+3%), Spain (+4%), Romania (+9%), Poland (+10%) and Italy (+11%). Only the UK is forecast to show a significant reduction in area, down 11% to 1.78 million ha.

Saudi Arabia are said to have bought 1 MMT of barley this month, mainly from Australia and Canada, but also some from the Black Sea. They are the world's largest importer of the grain, accounting for around 40% of all world barley trade.

Algeria bought 400 TMT of optional origin soft wheat overnight, but said to be highly likely to be French grain. Export data out of France reveals that their leading grain export port of Rouen shipped 228 TMT of grain in the week through to Feb 13 (almost 200 TMT of that was wheat) - an increase of 32% on the week previously. Algeria was the main home, taking 108 TMT, but there was also 7,865 MT destined for the UK in amongst that. Turkey took 30 TMT of French barley.

In other tender news, Jordan is in again for 100 TMT of wheat, having bought 50 TMT earlier in the week. South Korea bought 55 TMT of what is believed to probably be Indian feed wheat for Jun/Jul shipment as the Indians step up their sales of new crop. They reportedly got a best bid of around USD311/tonne FOB for 150 TMT of old crop wheat offered in a tender for shipment by the end of March as they continue to make room for the new harvest.

USDA Weekly Export Sales

14/02/13 -- The USDA's weekly export sales report surprised the market by showing wheat sales exceeding those for soybeans and corn combined. Now that hasn't happened for a long time. Wheat sales of 651,700 MT of old crop and 54,600 MT of new crop comfortably beat trade expectations of 275-400 TMT.

Soybean sales were disappointing, showing net cancellations for old crop of 109,200 MT and sales of 345,000 MT for new crop giving a combined 235,800 MT - well below market expectations of 700 TMT-1.1 MMT.

Corn sales were in line with trade ideas of 150-350 TMT at 225,400 MT of old crop and 59,300 MT of new crop.

EU Rapemeal Prices

14/02/13 -- Rapemeal prices on the continent are mixed today. The nearby market remains tight on a reduced crush, and offers for Feb delivery are still withdrawn. Uncertainty clouds EU rapeseed production prospects for 2013, although it's generally agreed that output in France will decline on lower plantings and unfavourable weather.

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

Chicago Closing Comments

13/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.23, up 2 1/4 cents; May 13 Soybeans closed at USD14.13 1/2, up 4 cents; Mar 13 Soybean Meal closed at USD408.10, down USD2.20; Mar 13 Soybean Oil closed at 51.66, up 56 points. Funds were said to have been modest net buyers of around 1,000 soybean contracts on the day. Reports from the floor suggest that European longs were featured sellers as various banks pull out, or scale back, their agri holdings following a spate of bad press and criticism over the ethics of speculating in food commodities. Celeres said that Mato Grosso’s bean harvest is 19% complete vs. 12% a week ago, and vs. 20% a year ago. Nationally the harvest is 12% complete versus 6% a week ago and 11% a year ago, they added. They said that 59% of new crop beans are sold versus 58% a week ago and 42% for the 5-year average. Brazilian port workers are still threatening to strike next week. Argentina got some rain, and the promise of more to come in the week ahead, easing drought fears there. Cooler temperatures are also said to be on the cards which will be welcomed. Tomorrow's weekly export sales report is expected to show another bumper week, with trade estimates for soybeans anywhere between 700 TMT and 1.1 MMT.

Corn: Mar 13 Corn closed at USD6.95 1/2, down 3/4 cent; May 13 Corn closed at USD6.93 1/2, down 2 cents. Funds sold an estimated 2-3,000 corn contracts on the day. This was the ninth lower close in a row for corn, which is said to be it's longest consecutive losing streak since 1980. Weekly ethanol production data showed a recovery in output to 789,000 barrels/day, up 15,000 bpd from last week. Ethanol margins have improved significantly over the last week and there are strong rumours of several of the currently idle plants re-opening shortly. South Korea NOFI seek 195 TMT of optional origin corn, specifically excluding US corn, for July shipment. Trade estimates for tomorrow's weekly export sales report are a modest 150-350 TMT. Old crop sales need to exceed 300 TMT/week from here on in to hit the USDA's target for the season.

Wheat: Mar 13 CBOT Wheat closed at USD7.35 1/2, up 3 1/2 cents; Mar 13 KCBT Wheat closed at USD7.80 1/4, up 2 1/4 cents; Mar 13 MGEX Wheat closed at USD8.23, up 7 cents. Funds were said to have been net buyers of 1-2,000 Chicago wheat contracts on the day in modest short-covering. Trade estimates for tomorrow's weekly export sales report are 275-400 TMT. Wheat really needs a decent week of sales to stop it sliding further. The question is will any of the recently rumoured sales to non traditional homes show up? Snow and rain is finally seen improving the outlook for US wheat on the Plains, although things could hardly get worse. MDA CropCast are still calling for warmer and drier than normal conditions in their long range 31-60 day outlook.

EU Wheat Rebounds From Early Lows

13/02/13 -- EU wheat futures extended recent declines in early trade, but generally recovered those losses to close marginally higher at the end of a choppy session. By mid-morning Mar 13 London wheat had slipped below GBP200.00/tonne for the first time for a front month since October 17. Mar 13 Paris wheat meanwhile stumbled to levels not seen in a front month since last July.

At the close though Mar 13 London wheat was GBP0.25/tonne higher at GBP201.35/tonne, benchmark May 13 unchanged at GBP203.85/tonne and new crop Nov 13 firmed  GBP2.45/tonne to GBP184.3/tonne. Mar 13 Paris wheat was EUR0.50/tonne higher at EUR242.25/tonne.

The pound was under renewed pressure after Bank of England governor Mervyn King said that he now expects inflation to rise to "at least" 3% by the summer and to remain above the Bank's 2% target for two years. This sterling weakness helped buoy London wheat a little.

Brazil, Argentina and Malaysia returned from a two day holiday, although China remains off the scene for the rest of the week. That seems to be contributing to relatively thin market conditions this week.

Outside influences are also playing a part and encouraging some spec money to exit the arena.  Barclays announced 3,700 job losses yesterday, and said it was exiting speculative trading in softs and agriculture with hedge funds due to "reputational reasons" in a sudden attack of conscience. Leading French bank BNP Paribas also announced yesterday that it was closing a USD214 million agricultural commodities fund after Oxfam criticised them for speculating on food prices. Oxfam are urging other banks to do likewise.

Meanwhile back to the fundamentals, beneficial snow and rain moved across the southwestern plains yesterday, bringing modest drought relief to the region and pressing US wheat prices to 7 1/2 month lows in overnight trade. Rain has also arrived to some of the parched areas of Argentina, with more on the cards this weekend and next week. With those rains come some welcome cooler temperatures too. Reproductive corn and soybeans are desperately in need of cooler and wetter weather to avoid yields taking a hit.

At least these lower prices have flushed out a few buyers, although Jordan only bought half of the 100 TMT of optional origin wheat that they tendered for overnight. Algeria have also issued a new tender for 55 TMT, South Korea is in for 75 TMT of feed wheat and an Iraqi tender is expected to close this weekend.

India however also invited fresh bids for 245 TMT of milling wheat for Mar 15-Apr 30 shipment as it tries to make some room for the impending 92 MMT or more new crop, harvesting of which is likely to start at the end of next month.

Russia sold almost 65 TMT of its latest offering of intervention grain, taking total sales to in excess of 1.8 MMT since they began auctioning off government owned supplies on Oct 23.

The USDA Bureau in Beijing said that wheat production there last year was nowhere near the USDA's official estimate of 120.6 MMT, releasing an forecast of only 108.0 MMT. The quality of last year's crop is also in question, so it is thought that some additional purchases of premium quality wheat from the US and/or Canada could be imminent.

FranceArgriMer reduced their soft wheat export estimate from 17.14 MMT to 16.88 MMT due to a fall in sales within the EU and lower on farm use. Total French exports for the first six months of the marketing year to the end of 2012 were down 12%. They therefore raised their 2012/13 projected ending stocks forecast from 2.29 MMT to 2.42 MMT.

EU Rapemeal Prices

13/02/13 -- Rapemeal prices on the continent are unchanged to a tad weaker, doing their best to ignore the very sharp declines that we've seen on soymeal values since Friday's USDA WASDE report. Seed availability is tight, lowering the EU crush and constricting meal availability.

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

A Quick Glance At The Global Rapeseed S&D Numbers

13/02/13 -- Stats Canada say that the country exported 8.3 MMT of rapeseed in the 2012 calendar year, up 5% on 2011. The top export home was China who took 3.0 MMT, more than double the volume they bought in 2011. Canada's second largest buyer was Mexico taking 1.5 MMT. Dec 31 stocks of 7.4 MMT were 23.6% lower than a year previously.

The Canadian Ministry say that 2012/13 rapeseed ending stocks will more than halve to a very tight 350 TMT on strong export and domestic crush demand.

ABARES yesterday upped their forecast for Australian rapeseed production in 2012 from the 2.64 MMT they estimated in December to 3.09 MMT, citing better than expected yields.

Australian rapeseed is currently banned from entry into the lucrative and expanding Chinese market, and has been since 2009, due to concerns that a fungal disease infecting some of the Australian crop would damage domestic production. There's talk of that ban being overturned in the next few months. If so that would potentially mean reduced Australian exports to Europe.

In Europe, seed availability is tight. Oil World estimate EU rapeseed crushings in the 1st half of 2013 at 9.68 MMT versus 10.55 MMT in the same period in 2012. EU rapeseed stocks as of January 1st were pegged at 9.40 MMT versus 10.24 MMT a year ago. They now estimate EU-27 rapeseed imports in 2012/13 at 3.0 MMT versus a previous estimate of 2.75 MMT.

Oil World also say that 2013 rapeseed production in Ukraine should rebound from a 5-year low of 1.3 MMT last year due to much improved winter crop conditions, without giving a specific figure. Output in 2010/11 and 2011/12 was around 1.4-1.5 MMT.

French rapeseed production in 2013 is seen falling from around 5.5 MMT to 5.1-5.2 MMT on reduced plantings under difficult conditions in the autumn and subsequent excessive wetness issues across the winter.

Germany could regain pole position as Europe's largest rapeseed producer with a crop of 5.4-5.6 MMT in 2013, versus 4.8 MMT last year. Production in Poland is forecast at 2.1-2.2 MMT against 1.9 MMT in 2012, whilst output in the Czech Republic is seen at 1.2 MMT versus 1.1 MMT last year.

Tentative early private estimates on production here in the UK are around 2.5-2.8 MMT, similar to last year's 2.65 MMT, although I'm sure that there are many out there who would question that.

In Canada, early acreage forecasts for spring 2013 plantings are around 8 million ha versus 8.6 million in 2012, as growers shun rapeseed and turn to wheat. Even so, if yields were to return to average (1.9 MT/ha) then we could see production rebound to around 15.0-15.2 MMT this year versus 13.3 MMT in 2012.

The Solvent Extractors Association of India (SEA) say that rapeseed production there this year will rise 20% to 7.1 MMT, which may allow them to step up their exports of rapemeal to more than 1 MMT.

Chicago Demise Continues

12/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.20 3/4, down 10 3/4 cents; May 13 Soybeans closed at USD14.09 1/2, down 7 3/4 cents; Mar 13 Soybean Meal closed at USD410.30, down USD2.70; Mar 13 Soybean Oil closed at 51.10, down 14 points. Fund selling in beans was estimated at a net 5-6,000 contracts. The market is quiet with China closed for the week and Brazil and Argentina also on holiday for a couple of days. That seems to be allowing prices to drift lower, with beans closing in on the USD14/bu mark and meal approaching USD400/tonne. Argentine weather forecasts are hinting at decent rains and cooler temperatures a week from now. Even so, Michael Cordonnier cut his forecast for Argentine soybean production by 1 MMT to 50.0 MMT, and 3 MMT below the USDA. The Brazilian bean crop was estimated at 81.0 MMT, unchanged from previous estimate and 2.5 MMT less than the USDA. Yesterday's weekly export inspections of just over 30 million bushels was a disappointment versus trade expectations of 45-50 million, but US sales and shipments are so well advanced that they only need to average 10.4 million/week from here on in to hit the USDA's target for the season.

Corn: Mar 13 Corn closed at USD6.96 1/4, down 6 cents; May 13 Corn closed at USD6.95 1/2, down 6 cents. This was an eighth successive lower close for corn as prices slid back below USD7/bu for the first time in just over a month. Fund selling was estimated at 9,000 contracts on the day. Michael Cordonnier estimated the Brazilian corn crop at 70.0 MMT and the Argentine crop at 22.5 MMT. Both numbers are unchanged from last week and well below the USDA's 72.5 MMT and 27.0 MMT respectively. The trade will be looking to tomorrow's weekly ethanol production data to see if the recent slump in demand for corn continues from that sector. There are strong rumours of several of the plants currently taking downtime coming back into production soon as margins have increased. Yesterday's weekly export inspections of 14.463 million bushels beat trade expectations of 5-10 million but still fell short of the 19.5 million/week needed to hit USDA targets. Many suggest that last week's revised estimate for US exports this season will have to be lowered further in the months ahead. South Korea bought Indian feed wheat in preference to corn overnight.

Wheat: Mar 13 CBOT Wheat closed at USD7.32, down 9 1/2 cents; Mar 13 KCBT Wheat closed at USD7.78, down 10 3/4 cents; Mar 13 MGEX Wheat closed at USD8.16, down 10 cents. Fund selling in Chicago wheat was estimated at a net 4-5,000 contracts, further increasing the size of their short. We haven't seen front month price in Chicago this low since last June. Yesterday's weekly export inspections of 22.452 million bushels were below the 26.3 million/week needed to hit USDA targets. For all the talk of US wheat being amongst the cheapest around exports continue to lag. Thursday's weekly export sales report could be crucial, if none of the recently rumoured business shows up. The US weather outlook is also showing a turn for the better with snow across north central and northwestern portions of the Midwest as well as the far northern Plains this past weekend, and additional snow is expected there this week, according to MDA CropCast. However "precipitation is expected to remain limited in the central and southwestern Plains," they add. Kazakhstan forecast that they will sell around 1 MMT of grains, mostly wheat, to Russia this season. Exports in February and over the coming months are likely to be in the region of 200 TMT/month, according to the Kazakh Grain Lobby group.

EU Wheat Posts Multi-Month Lows

12/02/13 – EU grains closed sharply lower with Mar 12 London wheat down GBP3.90/tonne to GBP201.10/tonne, benchmark May 13 also GBP3.90/tonne lower at GBP203.85/tonne and new crop Nov 13 down GBP2.55/tonne to GBP181.85/tonne. Mar 13 Paris wheat fell EUR4.50/tonne to EUR241.75/tonne.

For London wheat this was the lowest close for a front month since October, and for Paris wheat it was the worst since the early days of last July.

The market continues to decline as funds exit corn and soybean longs, and build shorts in wheat. The latter leaves the market vulnerable to an upside spike at some point as and when they get spooked by something, or bank enough profit, but when?

US weather is looking slightly more favourable. "The subtropical jet stream is producing hopes for rain and snowfall in United States hard red winter wheat this week. Waves of snow showers are predicted in the Texas panhandle and Oklahoma over the next few days, though the new forecast is distinctly drier than the one issued yesterday. The morning satellite view shows thick clouds developing over the Southern Great Plains," say Martell Crop Projections.

How much difference this will make for wheat that went into winter in the worst state on record, and has declined in condition appreciably since, only time will tell. "I remain negative on the chances for hard red winter wheat to recover fully from drought. Conditions were so dry to begin with last fall that soil profiles have become dry through a deep layer. It would take drenching rains to make a positive difference in hard red winter wheat yields," according to Martell Crop Projections.

US wheat exports have picked up a bit of late, but still by not enough to hit USDA targeted levels for the season. Yesterday's export inspections of 22.45 million bushels beat trade forecasts of 15-20 million, but still fell short of the required 26.3 million needed to match USDA forecasts for 2012/13.

The trade will be looking anxiously to see if Thursday's export sales report confirms any of the recently rumoured business with Russia, China, Brazil or the UK.

Algeria announced a new tender for 50 TMT of optional origin milling wheat for May shipment. France is their usual regualr supplier, although Europe is hardly scouring the market looking for new business with exports already 40% up on last season. The Ethiopian, Syrian, Iraqi and Jordanian wheat tenders are all still pending. South Korea was said to have bought 50 TMT of Indian feed wheat overnight for June shipment.

ABARES edged up their Australian 2012/13 wheat production estimate from 22.04 MMT to 22.08 MMT, reiterating a previous forecast for exports of 20.9 MMT (down 15% on the previous season's record 24.7 MMT). Rapeseed production was increased from 2.64 MMT in December to 3.09 MMT this time round. Barley output was also tweaked higher to 7.1 MMT from 6.9 MMT.

They won't release production forecasts for 2013/14 until next month, but placed the wheat planted area at 13.3 million ha, broadly unchanged from last year.

The French Farm Ministry estimated winter wheat plantings for the 2013 harvest at 4.98 million ha, an increase of 3.1% on 2012.

The USDA released baseline acreage and production estimates for 2013/14 yesterday, and pegged the US all wheat planted acreage at 57.5 million acres, up 3.2% versus 55.7 million in 2012. This would be the highest planted acreage since 2009/10.

Although all the popular newswires are carrying this story, these estimates are already old news as they were originally formulated in October/November for budget purposes. The USDA will update these numbers again at the Outlook Forum on February 21st and 22nd.

EU Rapemeal Prices

12/02/13 -- Rapemeal prices on the continent are mostly lower today, playing catch-up with the recent slump in soymeal values in Chicago. Nearby availability remains tight, with offers for Feb delivery now withdrawn.

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

Chicago Slump Continues

11/02/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.31 1/2, down 21 cents; May 13 Soybeans closed at USD14.17 1/4, down 19 1/2 cents; Mar 13 Soybean Meal closed at USD413.00, down USD9.40; Mar 13 Soybean Oil closed at 51.24, down 19 points. Fund selling in beans was estimated at 7,000 contracts on the day. Weekly export inspections of 30.153 million bushels were below the 45-50 million anticipated. China is closed for the week, and Brazil, Argentina and Malaysia for today/tomorrow. Argentina’s Ag Ministry said that soybean planting there is now 99% done, up one point from a week ago. The country is in urgent need of rain, they added. "Light, scattered showers are expected across northern and eastern areas this week, including northern Cordoba, Santa Fe, Entre Rios, and northeastern Buenos Aires. However, the light, scattered rains continue to result in only slight improvements in moisture, and more notable rains are needed to significantly improve conditions. Indeed, much more notable improvements are expected in the 6-10 day period," said MDA CropCast. Goldman Sachs forecast the 3-month soybean price at USD14.00/bu versus a previous forecast of USD15.25/bu; the 6-month bean price was forecast at USD13.00/bu versus a previous forecast of USD14.00/bu; the 12-month bean price was forecast at USD13.00/bu versus a previous forecast of USD13.50/bu.

Corn: Mar 13 Corn closed at USD7.02 1/4, down 6 3/4 cents; May 13 Corn closed at USD7.01 1/2, down 7 1/4 cents. Corn export inspections beat the modest trade forecast of 5-10 million bushels, coming in at 14.463 million. Even so, that's still less than the 19.77 million needed to reach the USDA's newly lowered export total for the season. Fund selling was estimated at 6-10,000 contracts on the day. Argentina's Ag Ministry said that 97% of the corn crop has been planted versus 96% a week ago. Israel are shopping for 105,000 MT of corn,45,000 MT of wheat and 25,000 MT of barley of optional origin for March-June shipment. The Russian Ministry said that they exported only 113 TMT of grains in the first week of February, of which 56 TMT was corn. In Brazil: "Rains remained abundant across central and northwestern areas this past weekend, including Mato Grosso, Goias, eastern Mato Grosso do Sul, Sao Paulo, and southwestern Minas Gerais. The rains continue to slow first crop corn and early soybean harvesting," said MDA CropCast. Goldman Sachs price forecasts: 3-month corn price forecast at USD7.50/bu versus their previous forecast of USD8.25/bu; 6-month corn price forecast at USD6.00/bu versus their previous forecast of USD8.25/bu; 12-month corn price forecast at USD6.00/bu versus a previous forecast of USD6.50/bu.

Wheat: Mar 13 CBOT Wheat closed at USD7.41 1/2, down 14 3/4 cents; Mar 13 KCBT Wheat closed at USD7.88 3/4, down 11 cents; Mar 13 MGEX Wheat closed at USD8.26, down 10 1/4 cents. Fund selling in Chicago wheat was estimated at 3-4,000 lots on the day. Export inspections of 22.452 million bushels beat trade forecasts of 15-20 million. However, things are still around 10% down on last season's pace. Bangladesh bought 50 TMT of optional origin wheat for March shipment, India is probably the most likely source. India’s STC are tendering to sell 30 TMT of wheat for March shipment. Some news services are reporting that Russia and Brazil are negotiating over possible Brazilian imports of Russian wheat later in the year. Given the perilous state of Russian stocks currently, if true this will have to be new crop business. There's talk of Russia removing the 5% import duty on grains this quarter, sooner than originally mooted. There's continued talk that they've already bought 100 TMT of US SRW wheat and are looking for more. Goldman Sachs price forecasts: 3-month wheat price forecast at USD7.80/bu versus a previous forecast of USD9.50/bu; 6-month wheat price forecast at USD7.80/bu versus a previous forecast of USD9.50/bu; 12-month wheat price forecast at USD7.80/bu versus a previous forecast of USD8.00/bu.

EU Wheat Down Again

11/02/13 -- EU wheat futures closed mixed but mostly lower with Mar 13 London wheat down GBP2.55/tonne to GBP205.00/tonne, benchmark May 13 falling GBP1.30/tonne to GBP207.75/tonne and new crop Nov 13 GBP1.85/tonne weaker at GBP184.40/tonne. Mar 13 Paris wheat rose EUR0.50/tonne to EUR246.25/tonne.

Having spent all week waiting for Friday's USDA numbers the trade now seems undecided whether to take them at face value or shoot them full of holes. Not raising US soybean exports this season was perhaps the most questionable number.

Of a more plausible nature was the decision to raise EU-27 wheat exports by 0.5 MMT to 18.5 MMT. That's an increase of 11.65% on last year despite a cut of 4% in production. A corresponding decrease of 0.5 MMT in domestic EU-27 usage kept ending stocks unchanged from last month at 10 MMT, but still down 18.5% on 2011/12. EU-27 corn imports and usage were both raised 2 MMT.

In South America, Brazil's wheat crop was cut by 0.5 MMT, with exports reduced 0.3 MMT and imports raised 0.2 MMT to 7.7 MMT. Less believable was leaving Argentine wheat production unchanged at 11.0 MMT. Brazil said last week that they will allow 1 MMT of wheat to be imported duty free in Apr/Jun from outside the Mercosur trade bloc.

Meanwhile, Russia's grain exports have slowed right up to a trickle. They shipped just 113 TMT in the first week of the month, and only 36 TMT of that was wheat. There's now talk of the government lowering their grain export estimate to around 14 MMT from the existing 15.5 MMT, of which 13.6 MMT has been shipped already.

Which brings us on to the widely circulating, but still unconfirmed, rumours that Russia has bought 100 TMT of US SRW wheat in the past week for shipment into St Petersburg. Given that the Baltic seems now to be more of less sold out, and that French wheat is around USD15/tonne more expensive than US SRW wheat into that region then it is certainly possible that some business has been done.

The USDA lowered their estimate on Kazakhstan's 2012 wheat crop from 10.5 MMT to 9.84 MMT, cutting exports from 7.0 MMT to 6.5 MMT. Kazakh wheat is also a long old way from St Petersburg in north west Russia, and prohibitive over land transport costs probably make it more expensive into that area even than French wheat. Kazakh wheat will still be wanted in Russia, but to nearer by homes.

The Ukraine Ministry said that they may raise their 2012/13 wheat export estimate to 6.3 MMT, with 6.1 MMT of that shipped already, as they try to wring out a little more revenue from the tight old crop situation. Winter grains are rated 91.3% good/satisfactory and winter losses vary between 1-8% depending upon region, they added. That's rather modest, particularly compared to last year.

Bangladesh bought 50 TMT of optional origin wheat, probably Indian, and are tendering for more of the same. Jordan and Ethiopia are also in the market with tenders due tomorrow, followed by Iraq (Feb 17th) and Syria (Mar 4th).

On the weather front in Europe: "Colder temperatures have resulted in a notable increase in snow cover across central and northeastern Europe, especially central and eastern France, Germany, and much of eastern Europe. Meanwhile, heavy rains in southwestern France and northern Spain have resulted in some wetness there. Additional snow is expected across central and northeastern areas this week, especially northern Italy into southwestern Poland," say MDA CropCast.

On the US Plains: "Weekend precipitation was near expectations. Amounts were 0.10" to 0.50” with 20% coverage. The 6-10 day outlook is drier in western crop areas and warmer overall versus Friday’s outlook. The 11-15 day outlook is slightly is slightly wetter overall," they add.

In Argentina: "Weekend rainfall was near expectations. A few showers occurred in southwest Cordoba, western Buenos Aires, and western La Pampa. Amounts were 0.25 to 1.0” locally up to 1.5” with 15% coverage. Light shower activity will provide only minor relief from dryness. Temperatures are forecast to cool across western and central areas in the 6-10 day period. The 6-10 day outlook is wetter and cooler overall." Whist in Brazil it was much wetter: "Weekend rainfall was near expectations. Amounts were 0.25 to 1.5”, locally up to 3.25” with coverage of 70% for corn and soybeans. Somewhat drier weather across northern crop areas will improve harvesting of first corn crop and soybeans. The 6-10 day outlook is drier in central crop areas and cooler in southern areas versus Friday’s outlook," they conclude.

EU Rapemeal Prices

11/02/13 -- Rapemeal prices on the continent are a tad weaker, but reflecting nothing like the declines we've seen on soymeal since Friday's USDA WASDE report came out.

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

The Morning Vibe

11/02/13 -- A glance at the overnight markets shows follow through selling in all the grains/oilseeds, but the soycomplex in particular. This could possibly be attributed to stop-loss selling amongst the weaker longs baulking at stumping up the margin calls on trades that have suddenly gone pear-shaped. China is also on holiday of course.

Will these prices still be available for Chinese buyers when they return from their New Year celebrations? If they are, then they will surely fancy increasing their ownership a bit more? I know I would. And I wouldn't be looking at South America.

In Brazilian ports on Friday there were 141 ships waiting to load corn, soybeans, animal feed or cooking oil - up from 85 a week earlier - say Bloomberg. They are also reporting on a possible port strike beginning next week, quoting the Brazilian National Federation of Ports website.

Meanwhile, the USDA chose to leave US soybean exports unchanged at 36.6 MMT in Friday night's report. The US had already shipped 27.3 MMT of that, with a further 6.9 MMT on the books waiting to go, by the end of January - seven months before the marketing year ends. Those shipments are 42% ahead of year ago levels, and the US eventually shipped 37 MMT then.

Friday's revised US ending stocks number of 125 million bushels (3.4 MMT) for soybeans now represents a stocks to use ratio of only 4.1%. That's incredibly tight, little more than 2 weeks worth of usage. And remember this is dependant on the US NOT exporting any more than 36.6 MMT of soybeans this season, even though they've got 93.4% of that committed already.

Yet here we are with soybean prices currently 50c lower than they were on Thursday night and meal down USD20 since then.

Although that of course is only on paper, I doubt very much whether the cash market will be showing declines of that magnitude today.