Nogger's Blog

Chicago Closing Comments - Post USDA

08/03/13 -- Soycomplex: Soybeans ended mixed with strong nearby demand and shipping delays in Brazil supporting the nears and prospects for bumper availability later in the year weighing on the deferred positions. The USDA completely ignored the fact that strong US sales, the vast majority of which have already been shipped, surely mean that their export projection for 2012/13 is too low and left it unchanged at 1.345 billion bushels. That allowed them to also leave ending stocks unchanged at 125 million bushels. They would appear to have decided that 125 million is their minimum comfort zone, being little more than 2 weeks worth of supply. They left Brazilian soybean production unchanged at 83.5 MMT, the trade was expecting a modest reduction. They cut Argentine output by 1.5 MMT to 51.5 MMT, the trade was forecasting a 3 MMT cut to 50 MMT. That enabled them to raise world ending stocks slightly to 60.2 MMT versus the trade expecting a small cut to 59.58 MMT. FAPRI (The Food and Agricultural Policy Research Institute) estimated US 2013 soybean plantings at 78.5 million acres versus the USDA projection of 77.5 million. They see the average yield at yield at 43.5 bu/acre versus the USDA projection of 44.5 bu/acre. They see US output in 2013 at 3.367 billion bushels versus the USDA projection of 3.405 billion, but up 11.7% on 3.015 billion in 2012. They don't see US 2013/14 ending stocks rebounding as much from this season's 125 million as the USDA's 250 million bushels, releasing an estimate of 191 million. Chinese customs data shows that the country imported 7.68 MMT of soybeans in Jan/Feb 2013, down 9% from the same period in 2012. Funds were estimated to have been net sellers of around 2-4,000 soybean contracts on the day. Mar 13 Soybeans closed at USD15.08 1/2, up 5 cents; Aug 13 Soybeans closed at USD14.04, down 10 1/2 cents; Mar 13 Soybean Meal closed at USD436.10, up USD0.10; Mar 13 Soybean Oil closed at 50.16, down 24 points. For the week that puts the front months up 65 cents, meal up USD8.80 and oil up 69 points.

Corn: The USDA report was neutral to slightly friendly. Exports were cut 75 million bushels from 900 million to 825 million, few would argue with that. What surprised though was an increase of 100 million bushels in domestic feed usage. Demand from the ethanol sector was also left unchanged at 4.5 billion bushels despite the weekly grind consistently failing to match the level required hit this target and talk of at least one major producer looking to partially switch to wheat. That meant US ending stocks being left unchanged at 632 million bushels when the trade was anticipating a rise to 649 million. Brazilian production this year was also unchanged at 72.5 MMT, Argentine output wasn't cut by as much as expected - from 27.0 MMT to 26.5 MT versus the 25.6 MMT forecast by the trade. World ending stocks were trimmed from 118 MMT to 117.5 MMT versus the 117.87 MMT expected. FAPRI estimated 2013 US corn plantings at 96.9 million acres versus the USDA projection of 96.5 million and 97.2 million last year. Harvested area was seen at 88.8 million, the same as the USDA projection and up from 87.4 million in 2012 due to the high level of abandonment last year. Yields are seen rising to 161.8 bu/acre versus the USDA projection of 163.6 bu/acre, up 31% on 2012. That gives production of 14.37 billion bushels versus the USDA's projection of 14.53 billion and output of 10.780 billion in 2012. US ending stocks next year were forecast at 1.638 billion bushels versus the USDA projection of 2.177 billion, but still up 160% on this season's 632 million from the USDA. Fund buying in corn was estimated at around 10,000 contracts on the day. Mar 13 Corn closed at USD7.25 1/4, up 13 3/4 cents; May 13 Corn closed at USD7.03 1/2, up 12 1/4 cents. For the week Mar 13 was 1 cent higher and May 13 fell 5 cents.

Wheat: The USDA report looked bearish, but strength in corn added support for nearby months. World 2012/13 wheat production was raised from 653.6 MMT to 655.5 MMT, including a near 1 MMT increase for India to a record 94.88 MMT. That helped raise world ending stocks from 176.73 MMT to 178.2 MMT versus the small reduction to 176.69 MMT that the trade was expecting. US export potential was cut from 1.05 billion bushels to 1.025 billion, increasing US carryout from 691 million bushels to 716 million, which was 3 million more than anticipated. Despite talk of increased demand for wheat due to expensive corn, the USDA didn't increase their domestic usage estimate. FAPRI estimated US wheat plantings for this year's harvest at 57.5 million acres versus the USDA's projection of 56.0 million and up 3.2% versus 55.7 million in 2012/13. Interestingly they have wheat harvested acres at 49.7 million, far higher than the USDA's projected 46.5 million. Whilst they have yields slightly lower than the USDA at 44.9 bu/acre versus 45.2 bu/acre from Washington, the sharp difference in harvested area means that FAPRI are predicting a US all wheat crop of 2.233 billion bushels and 133 million higher than the USDA's projection of 2.100 billion. That would equate to adding a further 3.6 MMT of output to the US this year than the USDA currently predict. Production in 2012/13 was 2.269 billion. FAPRI estimated 2013/14 US wheat ending stocks at 727 million bushels versus the USDA projection of 639 million and today's forecast of 716 million in 2012/13. Funds were thought to have maybe been net buyers in CBOT wheat to the tune of around 1,000 contracts. On the day Mar 13 CBOT Wheat closed at USD6.90, up 3 1/4 cents; Mar 13 KCBT Wheat closed at USD7.38 1/4, down 1 3/4 cents; Mar 13 MGEX Wheat closed at USD8.06 1/4, unchanged. For the week that puts CBOT wheat down 23 1/4 cents, with Kansas falling 17 3/4 cents and Minneapolis shedding 13 1/2 cents. For CBOT wheat this was the lowest close for a front month since June 2012 on the weekly chart despite today's modest gain.

EU Wheat Slumps To Multi-Month Lows

08/03/13 -– EU grains closed mixed, with news from the release of the 17.00 London time USDA report coming through too late in the day to influence European markets. It's been a difficult week for wheat, with ABARES and the FAO forecasting upcoming world production at a second highest in history, and the USDA's chief economist alluding to the possibility of all time high record output for 2013/14.

On the day, London wheat closed with Mar 13 down GBP0.75/tonne at GBP196.25/tonne and new crop Nov 13 GBP1.15/tonne higher at GBP182.75/tonne. Mar 13 Paris wheat was EUR4.25/tonne lower at EUR234.00/tonne, May 13 was EUR0.75/tonne easier at EUR230.25/tonne.

On the week, Mar 13 London wheat fell GBP7.25/tonne to the lowest level for a front month since August. New crop Nov 13 fared somewhat better, losing just under a fiver. Mar 13 Paris wheat slumped a hefty EUR16.00/tonne, an eight month low for a front month across the Channel.

Yet amazingly there is bullish news around. Brussels releasing almost 607 TMT of soft wheat export licenses this past week means that EU exports are now running 46% ahead of year ago levels at 13.7 MMT this season.

In addition the HGCA now place the English & Welsh wheat planted area as of Dec 1 at 1.394M ha, down 25% on Dec 2011 which is less that the 20% decline that most official estimates have suggested up until now. "However, some freezing conditions through the winter and drier weather in late February may have allowed further plantings – though in less than ideal conditions," they add.

In contrast they now suggest that winter OSR plantings in England and Wales were only down 1% although "crop abandonment will be higher than usual so the year-on-year decline in harvest area is likely to be noticeable," they note. Many would suggest that crop abandonment will be very high this year, particularly in the north.

The winter barley area is seen down 19% in England & Wales "a noticeable increase in the spring barley area is expected due to the wet autumn diverting land towards spring cropping," they add.

As the HGCA themselves noted though, just because UK production prospects look dim it doesn't necessarily mean that prices can only go up. The UK wheat crop accounted for less than 2% of global production last year, whilst we weighed in with 4.3% of global rapeseed output. Even if the UK wheat crop was to slump to disastrous 8 MMT this year it would be compensated for by the extra volume anticipated from Ukraine alone.

In other news, FranceAgriMer said that spring barley plantings there are 20% complete, up from only 7% a week ago, although still trailing last year's pace of 35%. French wheat crop conditions are unchanged from a week ago at 66% good/excellent, versus 68% this time last year. Winter barley rated good/excellent is up one point on last week to 67%, versus 61% a year ago.

The forecast very cold spell coming next week, with a hard freeze expected across the whole of northern Europe Tuesday through to Friday, could offer a threat to unprotected crops.

Trade Thoughts Ahead Of The USDA Report

08/03/13 -- Here's a little resumé of what the trade is expecting from the USDA tonight:

SOYBEANS

US ending stocks to be cut to 122 million bushels, from within a range of estimates of 107–131 million. The USDA's February estimate was 125 million, and 2011/12 ending stocks were 169 million.

The Argentine soybean crop average estimate is 51.0 MMT, from within a range of estimates of 48.5–53.0 MMT. The USDA's February estimate was 53.0 MMT, and the 2011/12 crop was 40.1 MMT.

The Brazilian soybean crop average estimate is 83.4 MMT, from within a range of estimates of 82.0–84.5 MMT. The USDA's February estimate was 83.5 MMT, and the 2011/12 crop was 66.5 MMT.

The world soybean ending stocks average estimate is 59.58 MMT, from within a range of estimates of 58.0–60.6 MMT. The USDA's February estimate was 60.12 MMT, and the 2011/12 carryout was 55.25 MMT.

CORN

US ending stocks to be raised to 649 million bushels, from within a range of estimates of 627–750 million. The USDA's February estimate was 632 million, and 2011/12 ending stocks were 989 million.

The Argentine corn crop average estimate is 25.6 MMT, from within a range of estimates of 24.0–27.0 MMT. The USDA's February estimate was 27.0 MMT, and the 2011/12 crop was 21.0 MMT.

The Brazilian corn crop average estimate is 72.6 MMT, from within a range of estimates of 71.6-73.5 MMT. The USDA's February estimate was 72.5 MMT, and the 2011/12 crop was 73.0 MMT.

The world corn ending stocks average estimate is 117.87 MMT, from within a range of estimates of 116.0–120.0 MMT. The USDA's February estimate was 118.04 MMT, and the 2011/12 carryout was 131.01 MMT.

WHEAT

US ending stocks to be raised to 713 million bushels, from within a range of estimates of 671–754 million. The USDA's February estimate was 691 million, and 2011/12 ending stocks were 743 million.

The world wheat ending stocks average estimate is 176.69 MMT, from within a range of estimates of 174.5-179.0 MMT. The USDA's February estimate was 176.73 MMT, and 2011/12 carryout was 196.54 MMT.

EU Rapemeal Prices

08/03/13 -- Rapemeal prices on the continent are unchanged to a little weaker today as buying interest remains light. A very tight nearby physical soymeal market is keeping spot material steady with crushers well sold. Little trade is expected with today's USDA report now resheduled for release as European markets close.

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

HJMEWLOH

08/03/13 -- Cheshire feed manufacturers M E Waterhouse and H J Lea Oakes have joined foreces I hear. The new business is going to be called H J M E WaterLeaOakesHouse, or HJMEWLOH for short. Nah, it isn't, I made that bit up. Which got me thinking that would be a bugger of a hand in scrabble wouldn't it?

H J Lea Oakes date back to 1675, which they say makes them "perhaps the longest established independent animal feed manufacturer in Britain." There can't be many that could beat that. There is I am assured no truth in the rumour that they've had the same mill buyer all this time.

Watherhouse Feeds are mere whippersnappers by comparison, having only got going at this milling malarkey in 1883.

Chicago Market Positions Itself For USDA Report

07/03/13 -- Soycomplex: The choppy theme continues as we head into tomorrow's all important USDA report. Nearby beans remain well supported by heavy rains forecast for Southern Brazil in the week ahead which will delay harvesting, and possibly add to logistical problems too. Michael Cordonnier reports a 60km line of trucks waiting to unload soybeans at one of the three rail terminals in Mato Grosso. There are also reports that dock workers in Brazil will hold a one day strike on Mar 19, although negotiations between the unions and the government are still ongoing. Weekly export sales of 392,000 MT of old crop and 990,600 MT of new crop beat trade expectations. With more than 5 months of the season left to go that takes US commitments on soybeans to over 95% of USDA targets. The USDA attaché in Argentina estimated the soybean crop there at 50.0 MMT versus the USDA's February estimate of 53.0 MMT. CONAB cut their estimate on production in Brazil by 1.3 MMT to 82.1 MMT, although that's still a record. They also cut their soybean export estimate to 36.78 MMT from a previous estimate of 37.78 MMT. Macquarie estimated Brazil’s bean crop at 81.0 MMT and Argentina's at 48.9 MMT. The ongoing strong pace of US exports means the trade is expecting a cut in US ending stocks tomorrow, with the average trade guess at 122 million bushels, from within a range of estimates of 107–131 million, versus the USDA February estimate of 125 million. Fund buying was estimated at a net 3,000 soybean contracts on the day. Mar 13 Soybeans closed at USD15.03 1/2, up 19 cents; May 13 Soybeans closed at USD14.73 1/2, up 7 1/2 cents; Mar 13 Soybean Meal closed at USD436.00, up USD1.80; Mar 13 Soybean Oil closed at 50.40, up 34 points.

Corn: Weekly export sales were poor at net cancellations of 49,800 MT of old crop and sales of only 206,400 MT for new crop against expectations of a combined 500-700 TMT. South Korea cancelled a tender to import 55 TMT of optional origin corn for July shipment due to high prices. CONAB left their Brazilian corn production estimate unchanged at 76.1 MMT. Macquarie disagree, coming in at 68.0 MMT, saying that they expect lower "safrinha" - or second crop corn - yields. They have the Argentine corn crop at 24.5 MMT versus the USDA's 27.0 MMT. The FAO said that "prospects for the first 2013 maize crops in South America remain generally favourable." In Brazil they said "Planting progress for the second season crop is also satisfactory under the good moisture conditions and the area is expected to increase from last year’s level." Yesterday's Energy Dept numbers show 84.5 million bushels of corn used for ethanol production last week versus the 87.8 million required to hit the USDA's target of 4.5 billion bushels of demand from that sector this season. POET are said to be actively looking to buy US wheat due to the high corn price to use in the grist to make ethanol but they are limited on inclusion levels. MDA CropCast said that the world would produce 894 MMT of corn in 2013/14, an increase of 9.3%, led by a near 82 MMT (22.7%) recovery in US production to a record 341.4 MMT. None of that is even in the ground yet of course. The slow US export pace sees total commitments to date at only 63.4% of USDA projections. That has the trade anticipating a rise in US ending stocks in tomorrow's report to 649 million bushels, from within a range of estimates of 627–750 million, and the USDA February estimate of 632 million. Funds were said to have been modest net buyers of around 2,000 contracts on the day. Mar 13 Corn closed at USD7.11 1/2, up 3 1/2 cents; May 13 Corn closed at USD6.91 1/4, up 2 3/4 cents.

Wheat: Weekly export sales of 618,100 MT of old crop and 210,000 MT of new crop comfortably beat trade forecasts for sales of a combined 300-600 TMT. China was a featured buyer of 60,400 MT of the old crop. Net commitments are now 81.7% of the USDA target for a season that ends in May. Old crop sales now need to average 403 TMT/week to hit that target. The FAO forecast a 4.3% rebound in world wheat production for 2013/14 to 690 MMT, that would be the second highest crop on record. Taiwan bought 93,680 MT of US wheat for April/May shipment. Japan bought 133,057 MT of wheat for April/June shipment, of which US wheat accounted for 47,658 MT, with the rest going to Canada and Australia. Oman seeks 20 TMT of optional origin milling wheat for April shipment. Argentina’s Ag Ministry estimated the 2012/13 wheat crop at 10.1 MMT, down 28% from 14.1 MMT a year ago. The USDA currently estimate 11.0 MMT, so may revise that lower tomorrow. India announced their intention to release an additional 5 MMT of wheat for export over the next three months, although their price aspirations seem ambitious. India’s 2013 wheat crop is estimated at a near record 92.3 MMT. Russia’s Grain Union estimated their 2013 grain crop at 95.0 MMT up 34% from a year ago, producing a 2013/14 wheat exportable surplus of 20.0 MMT. POET potentially buying US wheat for ethanol production is supportive. That, and the high price of corn, could see the USDA raise domestic wheat consumption tomorrow. For now though the trade is anticipating an increase in US ending stocks to 713 million bushels, from within a range of estimates of 671–754 million, and the USDA February estimate of 691 million. Mar 13 CBOT Wheat closed at USD6.86 3/4, up 10 1/2 cents; Mar 13 KCBT Wheat closed at USD7.40, up 10 1/2 cents; Mar 13 MGEX Wheat closed at USD8.06 1/4, up 4 1/4 cents.

Paris Wheat Settles At 8-Month Low As 2013 Production Estimates Rise

07/03/13 -- EU wheat futures closed mixed, but mostly lower, as the BoE and ECB both left interest rates on hold and decided against any further QE measures just yet. Once again we had a major body, this time the UN's Food and Agriculture Organisation, suggest a strong rebound in world wheat production this year.

They came up with a 4.3% increase to 690 MMT, only 2 MMT away from ABARES forecast of 688 MMT earlier in the week, and the second highest on record. Both the FAO and the Australians have EU wheat production at 138 MMT this year, which the FAO say is "driven by an expansion in area in response to high prices" saying, despite developments here, that "weather conditions have been generally favourable so far."

Much improved prospects are noted for Russia and Ukraine where output is seen up around 40% and 26% respectively.

MDA CropCast were a little more guarded with their 2013/14 production estimates, but still forecast a global wheat crop of 680.3 MMT, up 45 MMT on last year. With the IGC recently issuing an estimate of 682 MMT, it seems that we have a general figure of 680-690 MMT to pencil in at this early stage for the coming season, if we chose to ignore yesterday's throw away comment for the USDA's chief economist, Joe Glauber, that world wheat output "could climb to record highs" in 2013/14. Record highs mean in excess of 2011's crop of 696.6 MMT which prompted Paris wheat to fall below EUR180/tonne, Chicago wheat to around USD5.75/bu London wheat to GBP140/tonne.

MDA CropCast forecast world barley production this year at 134.2 MMT, an increase of 5.7%, with the EU contributing 52.5 MMT of that which is broadly similar to last season's total. Ukraine, Russia and Canada will see large jumps in output with production there up 11.6%, 16.2% and 28.4% respectively, they said. The latter analyst was interestingly far less bullish on rapeseed production potential in the EU, forecasting a drop in output to 17.84 MMT, which is well below demand which is typically around 22-23 MMT and ABARES suggestion of a crop of 19.6 MMT on Tuesday.

News that grain shipments out of the leading French export hub of Rouen slumped 63% this week to 91,272 MT was a blow, although it has to be noted that last week's total was the highest in more than two years. Morocco was the largest destination taking 59,802 MT of that, with a tiddler of 1,800 MT heading for the UK.

The decline shouldn't be seen as the start of a trend however. Late news coming in suggests that Brussels issued a further 606,691 MT of soft wheat export licenses this past week, an increase of almost 57% on last week and which Bloomberg say is the largest weekly total since December, taking the marketing year total to 13.7 MMT.

India announced it's intention to ship an extra 5 MMT of wheat spread over the next three months, although that news was accompanied by them confusingly setting a minimum price of USD320/tonne FOB, which is around USD20-25/tonne over where current bids are lining up. They are said to currently have grain stocks (including rice) of 66 MMT and a 90-95 MMT wheat harvest on the way imminently.

Syria announced that it's wheat tender that closed on Monday had gone the way of the Black Sea. Jordan's wheat purchase of yesterday was said to be of Romanian origin.

Taiwan bought 93,680 MT of US wheat overnight, said to be it's first such purchase in 5 weeks.

US weekly export sales beat expectations at 618,100 MT of old crop and 210,000 MT of new crop. Unknown destinations (128,400 MT) and Egypt (116,500 MT) were the two largest old crop buyers. China also showed up taking 60,400 MT of the old crop too.

One large US ethanol producer is said to be looking to procure wheat as a feedstock due to tight corn availability and the unusual discount situation for wheat vs corn prices that has developed in recent days.

On the day London wheat closed with front month Mar 13 down GBP0.80/tonne to GBP197.00/tonne and with new crop Nov 13 up GBP0.90/tonne to GBP181.60/tonne. Mar 13 Paris wheat was down EUR3.00/tonne at EUR238.25/tonne, a lowest close for a front contract in 8 months.

Twitter

07/03/13 -- If you still haven't got into the whole Twitter thing yet, can't see the point of it, or just plain don't understand what all the fuss is about and what use it could be to you then think again.

It's not all about kids talking about Justin Bieber's haircut, what Stephen Fry had for breakfast or rumours about which Premiership footballer is about to be "outed" as a chutney ferret you know. There are some serious business applications to it as well, many of which are highlighted in this collection of slides from a recent presentation about getting to grips with online marketing using social media:

What have you got to lose?

How did I find out about this presentation? I saw it on Twitter of course. Some of it is presented from the assumption that maybe you are a bit of a muppet and don't know what you are doing when it comes to computers, so that when sat down in front of a PC you look at it with wide-eyed bewilderment like someone just chucked a Neanderthal man an iPad.

"What is this internet thing of which you speak? I'm a simple Neanderthal man. Twitter, I know nothing of such wizardry."

I would never make such an assumption of course about you my dear, discerning reader. I KNOW that you are a bit of a muppet who doesn't know what he's doing when it comes to computers!

USDA Exports Sales: Wheat And Soybeans Shine

07/03/13 -- What seems like the first bit of good news for wheat in weeks came with the release of today's USDA weekly export sales report showing that a slump to 8-month price lows may finally be stimulating some buying interest.

Sales of 618,100 MT of old crop and 210,000 MT of new crop comfortably beat trade forecasts for sales of a combined 300-600 TMT. Unknown destinations (128,400 MT) and Egypt (116,500 MT) were the two largest old crop buyers. China also showed up taking 60,400 MT of the old crop too.

Not to be outdone, soybean sales of 392,000 MT of old crop and 990,600 MT of new crop were also well ahead of expectations of a combined 700 TMT to 1.1 MMT. Catching the eye were sales of 130,100 MT of old crop to the Netherlands along with 114,900 MT for Mexico and 91,900 MT to China. That latter took almost all of the new crop sales at 934,000 MT.

Corn sales disapppointed at net cancellations of 49,800 MT of old crop and sales of only 206,400 MT for new crop against expectations of a combined 500-700 TMT.

The numbers also showed no sign of a let up in physical shipments of soybeans out of the US, with 1,094,900 MT going out of the door, mostly to China (666,600 MT). That brings the total volume shipped so far in 2012/13 to just over 31 MMT. Outsanding sales are down to 3.9 MMT, bringing total commitments to 34.9 MMT, or almost 95.4% of the USDA target for the entire season with over 5 months of it still left to run. Corn commitments are only 63.4% by comparison.

Wheat commitments are 81.7% of the USDA target for a season that ends in May. Old crop sales now need to average 403 TMT/week to hit that target.

EU Rapemeal Prices

07/03/13 -- Rapemeal prices on the continent are mixed today, new crop looks a little firmer on worries that the EU rapeseed crop might not hit ABARES forecast of 19.6 MMT from earlier in the week with a severe cold snap expected across much of Europe next week.

MDA CropCast see EU rapeseed production falling to 17.84 MMT in 2013/14, which is well below demand of typically 22-23 MMT.

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

Chicago Wheat Ends At Lowest Since June 2012

06/03/13 -- Soycomplex: Nearby beans closed lower with deferred months higher in positioning and book squaring ahead of Friday's USDA report. That is expected to show old crop US soybean ending stocks tightening further from last month's 125 million bushels on continued strong demand from China and shipping delays in Brazil. These are now said to be at around 50 days in Paranagua port. The USDA attaché to Brazil cut his soybean production estimate there to 82.5 MMT, half a million down from previously and 1 MMT below the February USDA forecast. Exports were left unchanged at 39 MMT. Lanworth trimmed their Brazilian estimate slightly also, from 81.0 MMT to 80.8 MMT. They reduced prospects in Argentina a little too, from 49.6 MMT to 49.4 MMT. CONAB come out tomorrow with their Brazilian crop estimates. Rumour circulates that China will release 1.1 MMT of beans from state-owned reserves by the end of March. Lanworth estimated the 2013/14 US soybean crop at 3.45 billion bushels, unchanged from their previous estimate and 14% more than last year. Friday could bring fireworks. Note that despite tightening US ending stocks to 125 million bushels last month, on the day the trade responded in a "buy the rumour, sell the fact" manner as heavy fund selling drove soybean prices to close around 35 cents lower. Estimates for tomorrow's weekly export sales report for beans are a hefty 700 TMT - 1.1 MMT. Fund selling in beans was estimated at around 1-2,000 contracts on the day. Mar 13 Soybeans closed at USD14.84 1/2, down 12 cents; May 13 Soybeans closed at USD14.66 down 1/2 cent; Mar 13 Soybean Meal closed at USD434.20, down USD0.70; Mar 13 Soybean Oil closed at 50.06, up 14 points.

Corn: Heavy fund selling, estimated at as much as 20,000 lots on the day pushed corn prices sharply lower. Weekly ethanol production came in at 805k barrels/day, down 7k from last week and below the level required to meet USDA projections for corn usage for the eighth week in a row. Lanworth increased their Brazilian corn crop estimate to 76.9 MMT from a previous estimate of 75.8 MMT, and well above the USDA's 72.5 MMT forecast. CONAB release their forecast tomorrow, last month they estimated Brazil's crop at 76.0 MMT. Output in Argentina was estimated by Lanworth at 24.9 MMT versus a previous estimate of 25.0 MMT and the USDA's 27.0 MMT. They also pegged the US corn crop for 2013/14 at 13.7 billion bushels, unchanged from their previous estimate and 27% more than the 10.78 billion bushels produced in 2012. South Korea's largest feed group NOFI bought 69 TMT of South American corn for July shipment. Israel are in for 70 TMT of optional origin corn for Apr/Jun shipment. The Black Sea might be the favourite for that business. Japan bought 80,130 MT of feed wheat and 100,500 MT of feed barley for July shipment. They are also looking for a further 120 TMT of feed wheat and 200 TMT of feed barley for June shipment as they continue to replace corn in the feed ration. The USDA is seen raising US corn ending stocks in Friday's report given the lacklustre performance on the export front so far this marketing year. The average trade estimate is 649 million bushels versus 632 million last month. Trade estimates for tomorrow's weekly export sales report are 500-700 TMT. On the day Mar 13 Corn closed at USD7.08, down 24 cents; May 13 Corn closed at USD6.88 1/2, down 20 1/2 cents.

Wheat: It was a bad day at the office for wheat, with prices falling to their lowest levels since last June. A much improved outlook for US wheat on the Plains following recent major storm precipitation has had the market under pressure for a few weeks now. Comments from a leading USDA official that world wheat production could hit record highs this year didn't help. Lanworth increased their forecast for US wheat production for 2013/14 from 1.91 billion bushels to 2.026 billion. They have the Russian wheat crop estimated at 49.8 MMT, up 32% on last year. In Ukraine they predict a crop of 23.3 MMT, up nearly 48% on last year. Beneficial moisture is forecast for Russia and Ukraine in the coming week. Lebanon bought 50 TMT of European origin wheat for March/April shipment. Jordan bought 50 TMT of optional origin wheat for April/May shipment in a tender for 100 TMT. Bids for Indian wheat in an assortment of tenders floating around are starting to slip below the USD300/tonne mark, a level which they have so far refused to take. They are however said to be looking to shift 5 MMT more of their surplus stocks over the next couple of months to make room for new crop, so this may not be the time to get picky over a few dollars a tonne. Trade estimates for tomorrow's weekly export sales report are 300-600 TMT. Fund selling was estimated at around 3-5,000 Chicago contracts on the day. Mar 13 CBOT Wheat closed at USD6.76 1/4, down 20 cents; May 13 KCBT Wheat closed at USD7.24 1/2, down 20 1/2; May 13 MGEX Wheat closed at USD7.83 1/2, down 12 1/4 cents.

London Wheat Crashes To Near 5-Month Low

06/03/13 -- EU wheat futures closed sharply lower, dragged down by Chicago wheat collapsing to new 8-month lows in overnight trade on the outlook for bumper world production in 2013. Origin Enterprises said that around 20% of the planned UK winter wheat area never got sown, along with 10% of winter OSR, according to Agrimoney.com. That's in line with other estimates around. The big unknown at the moment is what percentage of the crops that did get planted will/have been written off to be resown with spring crops. Whilst that is clearly of extreme local importance the bigger picture appears to be pointing to increased output of grains and oilseeds elsewhere around the world this year.

On the day London wheat closed with front month Mar 13 down GBP3.95/tonne to GBP197.80/tonne for the lowest close for a front month since mid-October, and with new crop Nov 13 also GBP3.95/tonne easier at GBP180.70/tonne. Mar 13 Paris wheat was down EUR5.00/tonne at EUR241.25/tonne.

Yesterday's bearish production estimates for 2013/14 from ABARES, in their first glimpse into prospects for the season ahead, hang over the market. With those numbers still ringing in traders' ears the USDA's chief economist, Joe Glauber, picked a bad time (or a good one, depending on your viewpoint) to say that world wheat output "could climb to record highs" in 2013/14 due to improved crop prospects for several key producers that were hit by severe drought in 2012.

India's state-run PEC only picked up a best bid in a tender to sell 175 TMT of wheat ex the west coast port of Kandla for Mar 15-Apr 30 shipment of just under USD297/tonne. Up until now they've been rejecting bids around the USD300/tonne mark and holding out for closer to USD305/tonne. It remains to be seen what they do this time as they are said to be looking to allow an extra 5 MMT of wheat to be exported over the next couple of months as they attempt to clear old crop stocks for harvest. Government stocks are nearly 4 times the official target set by the Ministry and harvesting of new crop begins at the end of the month.

Jordan only bought half of the 100 TMT of optional origin wheat that it tendered for today. There's been no official confirmation of how a Syrian tender that expired on Monday went yet.

Russia sold 61,063 MT of intervention grain in it's second sale of the week, bringing the total sold so far to 2.19 MMT. They exported only 308 TMT of grains in February, of which 117 TMT was wheat and 147 TMT corn, bringing their 2012/13 marketing year shipments so far to 13.85 MMT, which is 30% down on last year. There's talk now that there may be very little left to go and that the Ministry may revise their full season forecast down to 14 MMT from the existing 15.5 MMT.

Ukraine on the other hand seem to keep finding a little bit more. Grain exports there are currently 39% up on last year and comfortably outstrip Russia's at 18 MMT. That total includes 6.2 MMT of wheat and there is now talk of the Ministry possibly authorising a further 500 TMT of wheat for export this season as confidence is high for a bumper crop in 2013.

There's also a growing feeling that the worst might be over for US wheat too. Satellite imagery firm Lanworth Inc were said to have increased their forecast for US wheat production this year from 1.91 billion bushels to 2.026 billion (from 52 MMT to 55.14 MMT), presumably on the back of recent weather improvements.

Whilst recent snow storms have calmed trade fears over US winter wheat production, North Dakota, the top spring wheat state, reports snow depth between 12 and 20 inches. If this moisture all soaks in it would go a long way toward resolving drought in the region too ahead of planting which typically begins next month, say Martell Crop Projections.

Reports suggest that wheat crops in Tunisia and Algeria are beginning to head, with harvesting in the Middle East/North Africa set to start in April. Weekend rains "maintained abundant moisture across northern Morocco, northern Algeria, and northern Tunisia. Some dryness lingers in west central Morocco, but active rains there over the next two days will help to ease dryness and improve crop conditions," according to MDA CropCast yesterday.

The Spanish Ministry said that the winter wheat area there (excluding durum) is up 2.2% to 1.8 million hectares this year. Both the durum and winter barley area is virtually unchanged on a year ago. Spain has had an unusually wet February and is forecast to get plenty more in the next 14 days.

The USDA are due to release their March world supply and demand numbers on Friday night London time. Few seem to want to be long of wheat heading into that. In the mood that the market is currently in, a bearish slant to that would probably be viewed as very bearish, whereas a bullish one might only be viewed as mildly supportive.

We're not entirely out of the woods yet though. US winter wheat on the SW Plains could be abruptly dragged out of dormancy by temperatures forecast to get into the 70's on Thursday, that might not be too beneficial for wheat in areas that didn't get last week's snows, say DTN. Meanwhile temperatures are forecast to plunge across northern and western Europe this weekend and last for at least fourteen days afterwards, according to the latest weather models. Germany and Poland could see temperatures fall 8-10 degrees below normal into the 20-25 °F range, with widespread frosts also on the cards for the UK and much of France too.

EU Rapemeal Prices

06/03/13 -- Rapemeal prices on the continent are weaker today amidst a distinct lack of buying interest. Crushers are well sold but resellers are finding orders unusually hard to come by for March. Maybe the forecast cold snap a week from now might stimulate some interest? To view a temperature departure from normal map for Europe for Mar 13-21 courtesy of World Ag Weather click here.

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

The Morning Vibe

06/03/13 -- The market is starting to look a bit sloppy. Beans couldn't hold above USD15/bu last night despite their best efforts, and bullish (at least for US beans) S&D fundamentals.

Wheat meanwhile couldn't buy a rally at the moment.

India's PEC have picked up a best bid of just under USD297/tonne in a tender to sell 175 TMT of wheat out of the west coast port of Kandla for Mar15-Apr30 shipment, I read this morning. They've been turning bids away at around the USD300/tonne mark, but with harvesting of new crop less than a month away now will they continue to do so?

Yesterday's numbers from ABARES concerning production prospects for 2013/14 were almost universally bearish. If you're hoping for better prices to come for new crop grain then I think that back to back droughts in the US is what you need to pray for. And Mother Nature hasn't been on your side on that one this last few weeks either.

That and a rejuvenated fund appetite for commodities is what the bulls need, and they've been deserting the markets in their droves lately. Stocks appear to be offering them a better alternative, at least for the moment - the DJIA closed at an all time 116-year high last night.

You may have noticed I mentioned the other day that Bloomberg said that Friday's Commitment of Traders Report from the CFTC shows funds pulling a record USD4.23 billion out of commodities in the week through to Feb 26. Speculative long holdings, including positions in a selected basket of 11 agri-commodities from wheat to coffee, currently stand at the lowest level since March 2009.

I don't believe that they've taken their bat and ball away forever, but what (and when) might persuade them to come back out and play is far from easy to predict ahead of the event. Although in the case of Chicago wheat they are still playing a little, but playing from the short side.

Ukraine are looking increasingly confident of a big grain crop this year. Agrimoney said yesterday that it could be "on course for its biggest harvest since gaining independence 22 years ago" quoting UkrAgroConsult, although the 53 MMT figure quoted is a bit less than their record 2011 crop according to my records. Nevertheless, 53 MMT is a bit of a monster and one which they will not waste any time in dumping onto the market in the second half of the year.

If ABARES are right about production prospects in Kazakhstan and Russia too (although the vibes I am picking up re the latter are far less bullish on output than the ones coming out of Ukraine) then things could look a whole lot sloppier for wheat than they do now come August/September time.

Much as the rainfall cavalry appear to have showed up just in time for US winter wheat, they may be about to rescue Russia looking at this map from my chum Richard at World Ag Weather.

US farmers will plant big as far as corn and soybeans are concerned this spring, we can be pretty sure of that. What we don't know at this stage is whether Mother Nature will continue to play ball. If she doesn't throw her toys completely out of the pram then we can expect a record corn crop from the US this autumn, at a time when Brazil and Argentina will most likely still be fairly aggressively marketing their own record or near record corn harvest. Ditto soybeans.

Let's hope China stays hungry then.

Chicago Close - Tuesday

05/03/13 -- Soycomplex: Beans rose, but finished well off the highs, and maybe crucially failed to hold above the USD15/bu mark. Early strong gains were linked to news that private exporters had sold 330 TMT of old crop soybeans to unknown and 345 TMT of new crop sold to China under daily reporting system. Abiove estimated Brazil’s 2012/13 soybean crop at 82.3 MMT, unchanged from previous their estimate. Michael Cordonnier placed it at 82.0 MMT, also unchanged from his previous estimate. The USDA said 83.5 MMT last month. Cordonnier pegged the Argentine crop at 50.0 MMT, unchanged from his previous estimate and 3 MMT less than the USDA. Several analysts are now lining up around this 49-50 MMT mark. ABARES estimated that world soybean production for 2013/14 would come in at a record 279 MMT, with the US crop up 8% to 88.7 MMT, Brazil's crop at a record 84.5 MMT, +2% and Argentina's also at a record 55 MMT, +5%. Note in the case of the latter two these are next year's production estimates, not this year's. Fund buying in beans was estimated at around 3,000 contracts on the day. Mar 13 Soybeans closed at USD14.96 1/2, up 6 1/4 cents; May 13 Soybeans closed at USD14.66 1/2, up 4 1/2 cents; Mar 13 Soybean Meal closed at USD434.90, up USD2.70; Mar 13 Soybean Oil closed at 49.92, down 13 points.

Corn: A very tight old crop cash market was supportive. South Korea canceled a tender to import 140 TMT of optional origin corn for July/August shipment due to high prices. The best offer was said to be USD313.40/tonne C&F. Israel are looking for 70 TMT of optional origin corn for April/June shipment. Michael Cordonnier estimated the Brazilian corn crop at 72.0 MMT versus a previous estimate of 70.0 MMT. He put production in Argentina at 24.0 MMT unchanged from his previous estimate. The USDA currently go 72.5 MMT and 27.0 MMT respectively. ABARES estimated a rebound in world corn production in 2013/14 of almost 100 MMT to 944 MMT, mainly due to a return to "normal" yields in the US, where they have output up 30% to 352 MMT this year. Ukraine will see production rise 4% to 21 MMT, with next year's output in Brazil up 5% to 75 MMT and Argentina's up 6% to 28 MMT. The trade will be looking to see if ethanol production in the US continues to rise for a fifth week in succession tomorrow from last week's 812,000 barrels/day, the largest since the first week of the year. Fund buying was estimate at around 5-7,000 contracts on the day. Mar 13 Corn closed at USD7.32, up 9 cents; May 13 Corn closed at USD7.09, up 5 3/4 cents.

Wheat: Once again wheat was a follower of corn, supported by the notion that it is cheap with the latter trading at a 30 cent plus premium. Even so wheat was a reluctant follower with another winter storm across the Plains and Midwest this week set to improve moisture shortages further. Oklahoma winter wheat rated poor/very poor was cut by 8 percentage points in the past week, with good/excellent rising 7 points. ABARES estimated the 2013/14 US wheat crop at 57 MMT, down 7% on last year due to higher than normal abandonment and lower yields. The US was the only major exporting nation to see a production downgrade, with output in Russia forecast 41% higher, with strong rebounds in output also from Ukraine (+27%) and Kazakhstan (+64%). World wheat production will rise 32 MMT in the year ahead to 688 MMT, they said. Consumption will also increase, although by a more modest 8 MMT to 686 MMT, they added. Jordan bought 50 TMT of optional origin barley for May shipment. They are also tendering for wheat with a deadline of tomorrow. Funds were said to have been modest buyers of around 1,000 CBOT wheat on the day. Mar 13 CBOT Wheat closed at USD6.96 1/4, up 1/4 cent; Mar 13 KCBT Wheat closed at USD7.36 1/4, down 3/4 cent; Mar 13 MGEX Wheat closed at USD8.08, up 1/2 cent.

EU Wheat MIxed, Production Prospects For 2013/14 Generally Promising

05/03/13 -– EU grains closed mixed, weighed down by a lethargic US wheat market amidst improving crop conditions there. Recent widespread moisture events on the Plains have seen Oklahoma wheat conditions rise 7 points in a week to 16% good/excellent. Although 47% of the state's winter wheat is rated poor/very poor, that's 8 points better than a week ago. Kansas wheat was up one point in the good/excellent category to 24% and down one in the poor/very poor ratings to 35%.

On the day, London wheat closed with front month Mar 13 downGBP0.25/tonne at GBP201.75/tonne and new crop Nov 13 GBP0.50/tonne lower at GBP184.65/tonne. Mar 13 Paris wheat was EUR1.00/tonne lower at EUR246.25/tonne, May 13 was EUR1.50/tonne firmer at EUR236.25/tonne.

Reuters are reporting that Saudi Arabia's weekend purchase of 575 TMT of hard and soft wheat for Jun/Aug shipment consisted of EU, US and Australian origin grain, which should be supportive.

Russia sold a further 61,629 MT of it's grain intervention stocks today, bringing the total volume sold since sales began in October to 2.13 MMT.

Australia's ABARES released their first estimates on crop production for 2013/14, pegging the world wheat crop 32 MMT higher at 688 MMT, an increase of 4.9% on 2012/13. Consumption is seen rising 2.1% to 686 MMT and ending stocks increasing 1.1% to 176 MMT.

One potential problem looming is a rebound in production from "the usual suspects" when it comes to discount sellers. They estimated output in Russia at 55 MMT, up 41%; Ukraine at 20 MMT, up 27% and Kazakhstan at 16 MMT, up 64%. They also forecast an all wheat crop in the EU of 138 MMT, up 5%; Canada at 28 MMT, up 3% and Argentina at 14 MMT, up 35%. Of all the world's major exporting nations only the US is seen having lower wheat production this year, at 57 MMT that will be a decrease of 7% on 2012/13.

World corn production is forecast to increase by 11% to 944 MMT, predominantly reflecting a forecast recovery in US production, they said. World barley output is forecast up 6% to 138 MMT, led by Ukraine (up 31% to 9 MMT) and Russia (up 17% to 16 MMT). Canada too will see a sharp increase in production - up 14% to 9 MMT. The crop in Europe was forecast to rise by a modest 1% to 55 MMT.

World rapeseed production will rise 5% to 62 MMT this year, they predict. They said that whilst "unfavourable autumn weather caused a decline in the area planted to rapeseed in France and the United Kingdom, this is estimated to be more than offset by an increase in the area planted in Germany, Poland, Denmark, Bulgaria and Romania." EU output was pegged at 19.6 MMT, up 3%, with production in Canada rising 13% to a record 15.2 MMT.

China is forecast to play an increasingly important role in international grains and oilseeds markets in the coming years, they said. They noted that they now account for 28% of world soybean consumption versus only 15% ten years ago. Chinese soybean imports could rise to 76 MMT (currently around 60-63 MMT) and corn imports to 12 MMT (from 2-3 MMT at the moment) by 2017/18, they suggest.

India sold 30 TMT of wheat for March shipment at a reported USD305/tonne FOB. They were said to have only picked up bids around the USD300/tonne mark for a further 75 TMT up for tender for shipment March 15-April 5. They recently scrapped three tenders that only received bids in the USD300-302/tonne range as being too low. They have a week to decide whether to accept or hold out hoping for higher prices. US SRW wheat is said to be offered at USD292/tonne FOB the Gulf of Mexico.

Informa have cut their forecast for wheat production in Morocco this year to 3.75 MMT from an earlier estimate of 5.25 MMT.

There's more talk of Egypt being in financial trouble and looking for a USD4.5 billion loan from the IMF to plug a hole in it's budget deficit. Subsidised bread is said to cost the government USD2.6 billion annually, according to the Finance Ministry, in a country where they consume around 10 MMT more wheat each year than they produce. Their public wheat tenders have slowed to a trickle in 2013.

"What Time Shall We Open The Shop, Mavis?"

05/03/13 -- "Oh, I don't really know Rita." CME Group, the self-acclaimed world's leading and most diverse derivatives marketplace, are at it AGAIN you will be staggered to hear. I kid you not. If further evidence was needed that this lot are about as much use as tits on a snake then here it is.

Starting Apr 8th (they really should think about bringing it forward a week, for maximum comic value, I'd suggest), they are buggering about with the trading hours yet again. Seriously.

The new trading times are these (based on UK times): Electronic trading takes place Mon-Fri midnight to 12.45pm. After that we can all go for a cup of tea and an Eccles cake, or five pints of lager and a pork pie, depending on your personal preference and internal capacity. Both the electronic and the open outcry session will then start at 13.30pm and trade until 18.15pm, then both markets will shut. That's a 17 1/2 hour trading day as opposed to the current 21 hours.

There's no word yet whether the USDA will now rethink their recently ammended strategy of issuing important reports such as Friday's upcoming WASDE during trading hours, or maybe switch to something like a 13.00pm release time to give the trade half an hour to digest the numbers first.

I bet their staff Christmas parties must be shite. A quarter bottle of Lambrini and a 70's disco, wooohooo, oops upside your head, I said oops upside your head. Do you think me bum looks big in these flares? And they called it Puppy Loooohuhuhuve....oh I guess they'll never know....

EU Rapemeal Prices

05/03/13 -- Rapemeal prices on the continent are mostly a little firmer today, following decent gains in Chicago soymeal last night which have been added to in overnight trade, although demand remains sluggish.

ABARES released their first estimates on Australian crop production for 2013/14 today, pegging the rapeseed crop there at 2.945 MMT, a drop of 4.7% with plantings seen falling 11%.

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

Chicago Soybeans Sharply Higher Despite Wheat Crash

04/03/13 -- Soycomplex: Beans closed near session highs with support coming from a Safras e Mercado cut of 2.4 MMT in Brazilian soybean production this year to 82.24 MMT. That's 1.26 MMT lower than the USDA and 2.26 MMT beneath Informa's estimate released on Friday. Harvesting is ahead of schedule at 37% versus 28% a week ago, 33% a year ago and 23% for the 5-year average. The average bean yield is 2.973 MT/ha versus their previous estimate of 3.075 MT/ha, they added. In a separate forecast AgRural estimated the Brazilian soybean crop at 82.1 MMT. Oil World cut their Argentine soybean production estimate to 49 MMT versus the USDA's 53 MMT. The Agripac consultancy estimated Argentina’s bean crop at 50.0 MMT. Strong demand for old crop US soybeans remains. The USDA reported weekly export inspections of 40.274 million bushels, up sharply from the 27.764 million of the previous week and above trade expectations of 30-35 million. The USDA are expected to lower slightly their US 2012/13 ending stocks estimate in Friday's WASDE report. Funds were said to have been net buyers of around 3-5,000 soybean contracts on the day. Mar 13 Soybeans closed at USD14.90 1/4, up 25 3/4 cents; May 13 Soybeans closed at USD14.62, up 18 1/2 cents; Mar 13 Soybean Meal closed at USD432.20, up USD4.90; Mar 13 Soybean Oil closed at 50.05, up 58 points.

Corn: The corn market was dragged lower by sharply weaker wheat, although old crop remains well supported by lack of physical availability. To further tighten that noose, the USDA announced 100 TMT of US old crop corn sold to unknown. Safras e Mercado said as of March 1st 29% of the Brazilian main corn crop has been harvested versus 24% a year ago. They also said that as of March 1st 66% of the Brazilian second corn crop has been planted versus 67% a year ago. AgroConsult estimated Brazil’s 2012/13 corn crop at 75.0 MMT versus a previous estimate of 74.7 MMT and 72.5 MMT from the USDA. One survey of 19 analysts released today puts US 2012/13 ending stocks at 649 million bushels from within a range of estimates of 627–750 million and the USDA February estimate of 632 million. Weekly export inspections of 15.740 million bushels was up from the 11.745 million reported last week and beat trade expectations of 8-13 million. Funds were estimated to have been net sellers of around 7,000 corn contracts on the day. Mar 13 Corn closed at USD7.23, down 1 1/4 cents; May 13 Corn closed at USD7.03 1/4, down 5 1/4 cents.

Wheat: The wheat market crashed on forecasts for another wave of moisture for winter wheat on the Plains and across the Midwest this week. Export inspections of 23.980 million bushels were in line with trade expectations of 23-28 million. The slow start to the season that US wheat exports had means that the 2012/13 marketing year to date total is now only 692.280 million versus 743.741 million this time a year ago. That has the trade forecasting a rise in US 2012/13 carryout on Friday to 713 million bushels, from within a range of estimates of 671–754 million, and versus the USDA February estimate of 691 million. There were 353 deliveries made against the KCBT March contract, indicating that unlike corn there is no shortage of physical wheat availability in the US. IKAR said that Russia had imported 891 TMT of grain between July 1st and Feb 28th, with 530 TMT of that coming from Kazakhstan. UkrAgroConsult said 91.5% of Ukraine’s winter grain crop is in good to satisfactory condition. Fund selling in CBOT wheat was estimated at a net 4,000 contracts on the day, further extending their short position. Mar 13 CBOT Wheat closed at USD6.96, down 17 1/4 cents; Mar 13 KCBT Wheat closed at USD7.37, down 19 cents; Mar 13 MGEX Wheat closed at USD8.07 1/2, down 12 1/4 cents.

EU Wheat Declines, Fund Money Continues To Desert Commodities

04/03/13 -- EU wheat futures closed sharply lower, dragged down by a sluggish US market under pressure from recently much improved weather on the Great Plains heartland of US winter wheat production. More storm systems due this week could bring a further moisture boost of up to 0.7 inches, forecasters say.

As seems to unfortunately be the case these days, money flows are more important than ever in deciding price direction in commodities. A report on Bloomberg today says that Friday's Commitment of Traders Report from the CFTC shows funds pulling a record USD4.23 billion out of commodities in the week through to Feb 26. Speculative long holdings, including positions in a selected set of 11 agri-commodities from wheat to coffee, currently stand at the lowest level since March 2009, they note.

On the day London wheat closed with front month Mar 13 down GBP1.50/tonne at GBP202.00/tonne, May 13 falling GBP2.75/tonne to GBP204.25/tonne and with new crop Nov 13 down GBP2.50/tonne to  GBP185.15/tonne. Mar 13 Paris wheat was EUR2.75/tonne lower at EUR247.25/tonne, whilst May 13 slumped EUR5.00/tonne to EUR234.75/tonne.

Weakness in the pound, which hit 1.50 against the dollar again today, helped London wheat a little even though the large volume of imports into the UK that we have already seen mean that merchants appear to still have plenty of wheat about them to sell. Consumers seem largely well-covered and are sitting on their hands however.

There are signs of an international pick up in demand for wheat though, Saudi Arabia bought 575 TMT of mostly 12.5% protein hard wheat (the purchase also included 110 TMT of 11% soft wheat) for Jun/Aug delivery in a weekend tender. Lebanon issued a fresh tender for 50 TMT of milling wheat and Tunisia are also said to be tendering for soft wheat. A Syrian tender for wheat closes today and a Jordanian one on Wednesday, the results of both are expected to be made public within a day or two of their deadlines.

Meanwhile US corn prices are now running at a premium to wheat, versus an average discount of over USD1.50/bushel over the past ten years, according to Bloomberg. This should stimulate both domestic and international demand for US wheat - Japan bought Chicago milling wheat to use as feed in preference to corn in a recent purchase.

That said, a Bloomberg survey still forecasts 2012/13 US wheat ending stocks to be raised from 691 million bushels last month to 702 million this time round in Friday's upcoming USDA report. Ahead of that we have Australia's ABARES first forecast for 2013/14 grain production Down Under due tomorrow, along with Stats Canada's quarterly stocks report.

It could be another rocky week for sterling. Thursday is the conclusion of the March meeting of the Bank of England's Monetary Policy Committee, with a possibility that recent economic news may encourage an increase in QE. BoE governor Mervyn King voted in favour of more stimulus at last month's meeting, but was out-voted 6-3 as you may recall. Apparently the last time King was out-voted enough committee members subsequently changed their minds and sided with him to push an increase through the following month.

The vibe coming out of the Black Sea is that prospects for cereal output in Ukraine this year are very promising. UkrAgroConsult today increased their forecast for 2013 grain production from 51.85 MMT to 53.0 MMT, a rise of nearly 15% on last year. The President of the Ukrainian Grain Association is forecasting grain exports of 32 MMT in 2013/14, an increase of 39% on the current season.

The Ukraine Ministry reported today that the country shipped 1.67 MMT of grains in February, up from just under 1.5 MMT in January. Only 184 TMT of that was wheat though, with corn (1.4 MMT) accounting for by far the lion's share. Grain exports for the full 2012/13 season to date are 17.85 MMT, up 32% versus 13.5 MMT this time last year. The local Farmer's Confederation said last week that they expect wheat exports to resume next month.

Winter grains that have failed and will need to be replanted account for only 3-5% of the planted area, according to the Ukraine Ministry. Last year it was estimated that 25% of the crops sown in winter 2011 had to be resown again in spring 2012.

FranceAgriMer reported on Friday that good/very good crop conditions in winter wheat and barley were unchanged from a week ago at 66%. They also said that spring barley plantings were running at 7% complete, considerably less than 19% this time last year.

The benign weekend weather will have spurred plenty of drilling activity and fieldwork both at home and on the continent in the past few days. "Drier conditions were noted across much of the region this past weekend, but showers are expected to build back into Spain, southern France, and Italy this week. The showers will help to further improve moisture for early wheat growth in Spain and far southern France, but the rains in central Italy will maintain some wetness there," said MDA CropCast. Rains are also set to return for much of the UK starting Wednesday the forecasts say.

EU Rapemeal Prices

04/03/13 -- Rapemeal prices on the continent are flat nearby, and a little bit weaker further forward today. Trading activity is light.

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

The Morning News

04/03/13 -- The overnight grains are mixed with wheat generally around 3-5 cents lower, corn up 2-3 cents nearby and soybeans 2-3 cents steadier to 2-3 cents weaker.

One thing that strikes this morning is that Mar 13 corn is now 15 cents dearer than Mar 13 wheat. Mar 13 corn was an 80 cent discount to Mar 13 wheat at the turn of the year. According to Bloomberg the average premium for what over corn has been over USD1.50 during the past decade.

Another thing worth noting is the increasing differential between old and new crop, Mar 13 corn and Dec 13 corn, currently up to 170 cents, versus just under a dollar on Dec 31. In addition, the cash basis remains very strong.

All this points to a very tight old crop physical supply situation in the US, regardless of what the futures market is doing.

Wheat, at these kind of discounts to corn, should find good end-user demand.

Saudi Arabia bought 110 TMT of soft wheat and 465 TMT of hard wheat for Jun/Aug shipment over the weekend. Origin was unspecified.

The pound is under pressure again, falling to 1.50 against the dollar this morning.

In Argentina, MDA CropCast say that: "Weekend rainfall was near expectations. Scattered showers occurred in southern Chaco, Cordoba, Entre Rios, Santa Fe, Buenos Aires, and La Pampa. Amounts were 0.25 to 1.0” locally up to 2.75” with 85% coverage."

In Brazil: "Weekend rainfall was slightly below expectations. Showers favored central Rio Grande do Sul, Goias, far northern Sao Paulo, southern Minas Gerais, central Mato Grosso do Sul, and eastern Mato Grosso. Amounts were 0.25 to 1.0”, locally up to 4.0” with coverage of 35% for corn and soybeans," they add.

London wheat has opened with new crop Nov 13 GBP1.50/tonne lower at GBP186.15/tonne. Paris wheat is EUR0.50-1.00/tonne lower in early trade.