Chicago Closing Comments - Friday
05/04/13 -- Soycomplex: Now that the post-USDA panic has died down the market is looking for something else to worry about. News that the death toll from bird flu in China has now risen to six people is providing it, for the soybean market at least, with funds selling an estimated net 5,000 bean contracts on the day. Rising tensions in North Korea is another external factor encouraging a bit more "risk off" mentality. Today's Commitment of Traders report shows managed money cutting 31% off their net long position in soybeans on the week through to Tuesday. The Buenos Aires Grains Exchange estimate this year's soybean harvest in Argentina at 9.1% complete, and have the crop at 48.5 MMT, unchanged from their previous estimate, but up 21% on last year. Even as the Argentine soybean harvest starts to get going in earnest, growers there are reluctant sellers due to government taxes, inflation and the declining peso vs US dollar exchange rate (in real terms). The Rosario’s Grains Exchange say Argentine farmers have sold only 10.1 MMT of new crop soybeans versus 15.3 MMT a year ago. On the day May 13 Soybeans closed at USD13.61 3/4, down 10 1/4 cents; Jul 13 Soybeans closed at USD13.43 3/4, down 8 cents; May 13 Soybean Meal closed at USD391.80, down USD5.30; May 13 Soybean Oil closed at 48.83, up 28 points. For the week May 13 beans fell 43 cents, with May 13 meal down USD12.80 and May 13 oil down 128 points.
Corn: Private exporters reported the sale of 120,000 MT of new crop corn to unknown, the USDA said. Malaysia seeks 120 TMT of optional origin corn for June shipment. The Buenos Aires Grains Exchange said that the Argentine corn harvest is 24.3% complete, up from 17.3% a week ago. They estimated the crop at 25.0 MMT, unchanged from their previous estimate but up 16% on last season. Argentina's Ag Ministry said that the corn harvest is 31% complete versus 28% a year ago. There appear to be problems with aflatoxin in Ukraine corn, with the Dutch feed industry advising members not to use it in dairy rations. A Ukraine agriculture inspector predictably said that all 2013 corn is free from aflatoxin. The Commitment of Traders report confirmed managed money having liquidated 100,000 corn contracts in the week through to Tuesday. That's more than half of their original length and they are estimated as having been further sellers of 15-20,000 since, including around 3,000 today. There are reports of early corn planting going on in central Illinois. If the weather plays ball there will no doubt be more going in over the weekend. Legendary investor Dennis Gartman apparently said in today’s Gartman letter that given reasonable weather and near normal yields/levels of abandonment then this year's US corn price could fall "well into the $4 range, if not eventually lower." On the day May 13 Corn closed at USD6.29, down 1 cent; Jul 13 Corn closed at USD6.17 3/4, down 3/4 cent. For the week May 13 corn was down 66 1/4 cents, with Jul 13 falling 58 1/4 cents.
Wheat: The wheat marked fared better than corn or soybeans once more, on crop concerns in the US and Europe and talk of increased demand for US wheat from China. There's unconfirmed talk that the Chinese may have bought 10-20 cargoes of US SRW wheat in the past week. Jordan are back in the market again tendering for 100 TMT of optional origin wheat for June/July shipment, although they've rejected all offers on their last two similar recent tenders. Bangladesh are tendering for 50 TMT of optional origin wheat for Apr/May shipment. India will be the favourites to pick up that business, they are said to be considering taking lower prices for up to 5 MMT of wheat to clear some room for new crop. India's MMTC are tendering to sell 50 TMT of wheat from government stocks for May/June shipment. The Taiwan Flour Millers' Association are tendering to purchase 82,330 MT of US milling wheat. The Commitment of Traders report show managed money increasing their net short in wheat for the week through to Tuesday night. On the day funds were estimated to have been net buyers of around 2,000 CBOT wheat contracts. Russia exported 331,000 MT of wheat in January–February versus 1.82 MMT a year previously. The Argentine Ag Ministry estimated their 2012/13 wheat crop at only 9.0 MMT versus the USDA's 11.0 MMT. On the day May 13 CBOT Wheat closed at USD6.99, up 5 cents; May 13 KCBT Wheat closed at USD7.26, up 4 1/4 cents; May 13 MGEX Wheat closed at USD7.87 1/2, up 1 cent. Chicago wheat was up 11 1/4 cents on the week, with Kansas down a cent and Minneapolis up 7 1/4 cents.
EU Wheat A Tad Lower, Although Export Pace Supports
05/04/13 -– EU grains closed mostly a little lower, although mounting concerns over new crop prospects and the relentless pace of wheat exports underpinned the market.
London wheat closed with front month May 13 down GBP0.90/tonne at GBP198.60/tonne and new crop Nov 13 GBP0.75/tonne easier at GBP184.25/tonne. May 13 Paris wheat was EUR0.50/tonne lower at EUR243.75/tonne.
For the week May 13 London wheat lost GBP0.65/tonne and Nov 13 fell GBP1.55/tonne whilst May 13 Paris wheat rose EUR5.00/tonne.
Continued euro weakness is boosting wheat exports which now stand at 16.56 MMT versus 11.81 MMT twelve months ago. In 2011/12 Europe finished up exporting 16.6 MMT, or 4.8 MMT more than where we currently stand. Simply matching last season's performance (we are currently 40% up on year ago levels) for the remaining 3 months of the season would give us exports of 21.36 MMT for the 2012/13 campaign - almost 2 MMT more than the USDA currently estimate.
The USDA have an opportunity to revise that estimate in next week's WASDE report, due on Wednesday, and could also likely cut EU-27 ending stocks again this month (they were trimmed by almost half a million tonnes in March) from the existing estimate of 9.5 MMT.
It's no wonder then that the trade is getting edgy over the outlook for European crops for the 2013 harvest. FranceAgriMer say that the proportion of the French winter wheat crop at the headed stage is only 22% versus 86% a year ago. For winter barley it's also only 22% of the crop versus 89% a year ago. They also cut two percentage points off their good/excellent ratings for winter barley to 65% this week.
Both winter wheat and winter barley are only currently 34% emerged versus 84% a year go, although a long overdue break in the weather this week has seen spring barley plantings advance to 97% complete from only 75% a week ago.
Only in the very South of France will you find some soft wheat and winter barley at 2 nodes. This time last year wheat around Paris and barley in Burgundy was already at that stage, say Bloomberg.
A shortage, and the consequent high price of wheat has seen a surge in corn imports usage in the EU this season. It is interesting then that it is now being reported that the Dutch animal feed industry body is advising it's members against using Ukrainian corn in dairy feed due to high levels of aflatoxin found in one shipment last month.
The Ukraine Ag Ministry said that the country has exported 19.7 MMT of grains so far in the 2012/13 season, 25% more than a year ago. They estimate total grain exports at 24.4 MMT versus 22.8 MMT a year ago. Corn has recently overtaken wheat as the country's principal source of grain export revenue.
Meanwhile at home, it seems that the popular media have finally heard that last year's UK wheat crop wasn't too good and that prospects for 2013 aren't overly rosy either. "Exclusive: Britain running out of wheat" says the Independent, it's even made it onto TalkSport this morning, so it must be a good time to get out!
Chicago Slump Continues As Fund Money Exits
04/04/13 -- Soycomplex: Weekly export sales of 392,700 MT of old crop and 355,100 MT of new crop soybeans beat expectations for a combined 300-625 TMT. China bought 138,400 MT of the old crop and almost all (354,000 MT) of the new crop. That takes net 2012/13 soybean export commitments to 99% of USDA projections. Weekly shipments of 473,569 MT take the total volume exported so far this season to 32.94 MMT, which is 90% of the USDA estimate for a season with five months still left to run. Even so the market closed lower on nervousness over the current outbreak of bird flu in China which has now killed 5 people. In Brazil, DERAL (the Department of Rural Economics), said that the Parana soybean harvest is 82% complete. They estimate production in the state at 15.2 MMT, up 41% from a year ago. Funds were estimated as net sellers of around 5,000 soybean contracts on the day. May 13 Soybeans closed at USD13.72, down 8 1/4 cents; Jul 13 Soybeans closed at USD13.51 3/4, down 6 cents; May 13 Soybean Meal closed at USD397.10, down USD0.90; May 13 Soybean Oil closed at 48.55, down 60 points.
Corn: Weekly export sales for corn were 354,300 MT of old crop and 33,000 MT of new crop versus expectations of a combined 175-400 TMT. Total commitments now stand at 74% of USDA projections. DERAL said that 70% of the full season corn harvest is completed in Parana and estimated the crop there at 6.84 MMT, up 4% from a year ago. They said that Parana’s safrinha corn crop will come in at 11.3 MMT and said that 96% of it has already been planted. The Rosario Exchange lowered their Argentine corn production estimate from 25.5 MMT to 25.3 MMT, versus 26.5 MMT from the USDA. They said that 23% of the Argentine corn crop has been harvested so far. Japan’s 3rd quarter US corn imports may jump 41%, according to Continental Rice Corp in Tokyo. The USDA attaché in China forecasts their 2013 corn production rising to a record 210 MMT, estimating 2013/14 imports at a fairly modest 4 MMT. Imports may not even reach that level if China produces the 213 MMT currently forecast by Informa Economics or the 216 MMT suggested from Lanworth Inc. Funds remain heavily out of love with corn, selling an estimated 12-15,000 contracts on the day. That puts them in the ballpark of selling an estimated 100,000 lots since the damning USDA stocks report came out last Thursday. May 13 Corn closed at USD6.30, down 11 1/2 cents; Jul 13 Corn closed at USD6.18 1/2, down 11 3/4 cents.
Wheat: Old crop weekly export sales of just 141,200 MT were a marketing-year low and a big disappointment, being down 76% from the previous week and down 78% versus the prior 4-week average. New crop sales of 174,800 MT took the combined total to 316,000 MT, below trade expectations of 4-700 TMT. Exports of 508,300 MT were however quite respectable. Total season to date shipments are now 20.4 MMT, with a further 5 MMT on the books and waiting to go. That takes 2012/13 total commitments to 89% of the USDA projection for the season. There's lots of talk of China buying US wheat due to problems with existing purchases from Canada, but there's been no official confirmation of this yet. India are said to be considering lowering the bar on the price that they are prepared to take to shift some of their very large wheat surplus with new crop harvesting now starting to pressurise the already overburdened domestic storage system. The ongoing cold spell across much of Europe is holding back winter wheat development and slowing spring plantings. The Commonwealth Bank said that the French winter wheat crop is currently around 2 weeks behind schedule. Fund selling in CBOT wheat was estimated at around 4,000 contracts on the day. May 13 CBOT Wheat closed at USD6.94, down 2 1/2 cents; May 13 KCBT Wheat closed at USD7.21 3/4, down 13 1/2 cents; May 13 MGEX Wheat closed at USD7.86 1/2, down 5 cents.
EU Wheat Ends Higher On Production Concerns
04/04/13 -- EU wheat managed a bit more consolidation, with front month May 13 London wheat clawing it's way back above GBP200/tonne at one stage, although finishing just below that level at the close.
London wheat closed with May 13 up GBP0.20/tonne to GBP199.50/tonne and with new crop Nov 13 GBP0.65/tonne firmer to GBP185.00/tonne. May 13 Paris wheat settled EUR3.75/tonne higher at EUR244.25/tonne.
Concerns that the prolonged very cold weather across much of Europe is keeping winter crop development at minimal levels, and also seriously hampering spring plantings support the market.
The French National Institute for Agriculture Research said that French wheat yields could fall by 6% if the current cold snap lasts through to the middle of the month.
MDA CropCast left their EU winter wheat production estimate unchanged for now at 130.47 MMT, but noted that "cold temperatures across central and northern areas are maintaining very slow early spring growth of the wheat. Meanwhile abundant showers across southern and east central areas are maintaining wetness, especially across Spain and Italy."
They cut 1.0 MMT off their US winter wheat production estimate "due to increasing dryness in western and northern Plains wheat areas."
UkrAgroConsult cut their forecast for grain production in Ukraine this year to 52.4 MMT, citing spring planting problems. The Ukraine Ministry said that adverse weather conditions mean that they will not yet be allowing any further wheat exports in the current marketing year. There had been suggestions that they may be prepared to release a bit more wheat for export this month, providing that confidence was high for a bumper harvest in 2013.
Spring grain plantings in Ukraine are currently 24% complete. Things are only just getting going in Russia, with the Ministry saying that 634,600 hectares of the planned 30.3 million have been sown so far. Russian growers will also need to reseed failed winter grains on around a further 2.7 million ha, they added.
Meanwhile EU exports show no sign of easing up. Brussels granted export licenses for 468,000 MT of soft wheat this week, taking the total since the beginning of the marketing year to 15.6 MMT, up 46% on year ago levels. Including durum wheat, exports now stand at 16.56 MMT, less than 3 MMT away from the USDA's projected total for the entire season.
Tunisia bought 42 TMT of durum wheat and 25 TMT of feed barley in a tender yesterday. Morocco were said to have received no offers in tender to buy 160 TMT of US durum wheat for May shipment today. Jordan were said to have rejected all offers in it's tender to buy wheat due to high prices. That's the second time that they've done that in a week. India are said to be planning to tender to sell 5 MMT of wheat next week and are considering now accepting lower bids than they have been prepared to take in recent few weeks.
Chicago Closing Comments - Wednesday
03/04/13 -- Soycomplex: Soybeans fell as reports of a third death from bird flu in China circulated, sparking fears of reduced demand from the world's largest buyer. Private estimates already suggest that Chinese soybean imports may fall short of the USDA's estimated 63 MMT by some 3-4 MMT. For the week March 23–29 total crush capacity utilisation in China was only 48 percent. Informa increased their estimate for Argentine soybean production this year from 51 MMT to 52 MMT, although they cut Brazil from 84.5 MMT to 83.25 MMT. Most analysts have Brazilian production shrinking a little due to rain at harvest time. The USDA's Foreign Agricultural Service estimated Argentina's crop at only 48.5 MMT (the USDA themselves say 51.5 MMT) and Brazil's at 82.0 MMT versus the USDA estimate of 83.5 MMT. Whichever way you look at it all of these estimates for Brazil will be record highs. The FAS even threw in a forecast for Brazil's '13/14 production of a new record 85 MMT. The FAS estimated the Paraguay '12/13 soybean crop at 8.35 MMT versus the USDA estimate of 7.75 MMT, adding that harvesting there was 95% complete. Vietnam bought 10 TMT of Argentine meal for May shipment. Trade estimates for tomorrow's weekly export sales report for soybeans are 300-625 TMT. China are on holiday Thursday/Friday. May 13 Soybeans closed at USD13.80 1/4, down 13 3/4 cents; Jul 13 Soybeans closed at USD13.57 3/4, down 16 3/4 cents; May 13 Soybean Meal closed at USD398.00, down USD4.10; May 13 Soybean Oil closed at 49.15, down 44 points.
Corn: The corn market got support from surging wheat which is now priced at more than 50 cents over corn on front month May 13 and USD1.80 over on new crop Dec 13. Informa upped their Argentine corn production estimate from 25 MMT to 25.3 MMT and increased Brazilian output from 71.6 MMT to 71.95 MMT. Both will be aggressive exporters and provide stiff competition for American corn in 2013. Informa estimate that 27% of the Argentine corn crop has been harvested. South Korea seeks 140 TMT of optional origin corn for August shipment, South America will likely be the favourite for that. Black Sea corn will also offer stiff competition going forward. Optional origin corn is said to now be priced USD15/tonne under feed wheat into East Asian ports. China's corn stocks at northern ports are estimated at 3.15 MMT versus 2.0 MMT a year ago. Taiwan bought 23,000 MT of US corn. Data from the Energy Dept showed the weekly ethanol grind up only marginally, by 2,000 barrels/day to 807,000 bpd, less than the level required to meet USDA targets yet again. The daily grind needs to average nearly 840,000 bpd to do that. Cold/wet weather in the US is seen continuing to delay early planting ambitions, although getting the corn in early isn't always a benefit as last year showed. Trade estimates for tomorrow's weekly export sales report are around 175-400 TMT. Funds were estimated to have been light further sellers on the day of around 1-2,000 lots. May 13 Corn closed at USD6.41 1/2, up 1 cent; Jul 13 Corn closed at USD6.30 1/4, up 3 cents.
Wheat: The wheat market rebounded sharply from recent losses on concerns over US production potential and increased demand. There's talk of China enquiring for US wheat due to problems with the gluten content of Canadian wheat. The market may also have seen some short-covering today, along with rolling out of long corn, short wheat positions. Monday's strong weekly export inspections underpin hopes that demand for US wheat is there, trade estimates for tomorrow's weekly export sales report are 400-700,000 MT. Last week's sales of a combined 828,600 MT beat trade forecasts of 3-600 TMT. Old crop sales need to average 321 TMT/week to hit the USDA projection for the 2012/13 season. Last week's old crop sales of 580,300 MT easily beat that. The market should be supported by the notion that US wheat is cheap. As of mid afternoon Chicago wheat prices had fallen by 12.7% since the turn of the year. European wheat has fallen considerably less, with Paris wheat down by 4.3% since Dec 31 and London wheat prices falling by only 3% during this period. Whilst India still have plenty of wheat to sell, they didn't fancy selling it at last week's prices, so they aren't going to fancy this week's levels much. The "usual suspects" around the Black Sea when it comes to discounting the wheat market are sold out, for the time being, which does seem to provide the US with a little window of opportunity. Funds were said to have been net buyers in CBOT wheat of around 7,000 contracts. May 13 CBOT Wheat closed at USD6.96 1/2, up 25 3/4 cents; May 13 KCBT Wheat closed at USD7.35 1/4, up 18 1/2 cents; May 13 MGEX Wheat closed at USD7.91 1/2, up 15 1/4 cents.
EU Wheat Recovers, But Remains Still Well Below Pre-USDA Levels
03/04/13 -- The volatility continues. Today it was the turn of EU wheat futures post decent gains, even if they did finish well off the intra-day highs.
On the day, London wheat closed with front month May 13 up GBP1.40/tonne to GBP199.30/tonne and new crop Nov 13 up GBP2.95/tonne at GBP184.35/tonne. May 13 Paris wheat was EUR3.75/tonne firmer at EUR240.5W/tonne.
Even so we still haven't yet recovered to the pre-USDA report levels of last Wednesday night when May 13 London wheat closed at GBP204.00/tonne, Nov 13 at GBP189.25/tonne and May 13 Paris wheat at EUR246.75/tonne.
US wheat futures led the market higher on concerns over winter crops there, and European grains were happy to follow given our own worries over output in France and the UK in particular. The Met Office today confirmed that March was the UK's joint second coldest since records began more than 100 years ago.
Russia has a few problems too, particularly in the leading winter wheat areas to the south. The Ag Ministry today cut their 2013/14 grain production estimate from 90-95 MMT to 90-92 MMT, similar to IKAR's forecast, although still a little more optimistic than SovEcon's latest forecast of 83-89 MMT.
The Russian government sold a further 53,635 MT of grains at their latest twice weekly intervention auction today, bringing the total volume sold so far to 2.67 MMT.
Things look better in Ukraine though, where the Ministry today said that field work had resumed in some areas following the recent heavy snow. They say that spring planting has now been completed on 701,000 ha, which is around 24% of the planned area. Winter grains are said to be 91.8% good/satisfactory, and only 500,000 ha will need replanting versus 2.3 million ha a year ago. Yields should obviously benefit come harvest time.
Tunisia were today said to have bought 42 TMT of durum wheat and 25 TMT of feed barley in a tender that they passed on last week due to price. Japan bought 32,320 MT of feed wheat in a tender and is also in the market for a further 120 TMT of feed wheat and 200 TMT of feed barley for July shipment.
Concerns over US winter wheat prospects are what really fuelled today's fire though. Crop conditions have barely changed across a winter in which the crop entered dormancy in its worst ever state. Essentially, though they've had some moisture lately in the main wheat growing areas of the Plains, it's been nowhere near enough.
"Showers in the southern Plains are improving moisture a bit for wheat, but much more rainfall is needed across much of the belt to significantly reduce long term dryness. Warmer temperatures across the Plains later this week and over the weekend will allow soil temperatures to increase, and wheat to continue to break dormancy," said MDA CropCast.
The problems for US winter wheat began before the crop was even in the ground, due to a hangover from the summer drought that cut corn and soybean production across the country. "Extremely low field moisture was confirmed on a September vegetation image showing widespread drought in the 5 top hard red wheat states. Wheat germination and emergence was seriously retarded in the October planting period. Consequently wheat entered dormancy with a shallow root system and reduced plant populations," say Martell Crop Projections.
"Extremely dry fall planting conditions were the beginning of trouble for winter wheat. When fields are dry through a deep layer, it is very difficult for wheat to recoup yield potential," they say.
There are parallels with the situation in Russia. "Russia’s southern winter wheat faces similar challenges, and is not expected to make a profitable yield because of poor growth in the fall. August-September planting conditions were extremely dry, leading to weak root establishment and stunted growth. All 4 key winter wheat districts were affected by drought - Stavropol, Krasnodar, Rostov and Volgograd - placing 60% of Russia winter wheat in jeopardy. The October-December 2012 precipitation was severely deficient leading to very dry soil conditions as wheat slipped into dormancy. "
Although March was particularly wet in southern Russia, "stunted wheat damaged by fall drought may not recover. The struggle against drought continues despite March wetness, due to deep-soil dryness," they add.
EU Rapemeal Prices
03/04/13 -- Rapemeal prices on the continent continue to give up some of their recent very strong gains in light of the sharp decline in soymeal values in Chicago over the last few sessions. Some of the protection that had been built into prices due to thin trade and market closures over Easter also seems to now be being taken back out.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Apr13 | 284.00 |
-1.00 |
| May13 | 273.00 |
-5.00 |
| May/Jul13 | 268.00 |
-6.00 |
| Aug/Oct13 | 209.00 |
-3.00 |
| Nov13/Jan14 | 212.00 |
-4.00 |
| Feb/Apr14 | 212.00 |
-5.00 |
| May/Jul14 | 210.00 |
-5.00 |
Chicago Attempts Mini Recovery With Mixed Results
02/04/13 -- Soycomplex: The soybean and meal market managed a bit of consolidation after two days of sharp losses, although at the end of the day gains were relatively minimal and for beans confined to old crop. Oil World were quoted as saying "Brazil exports have started to pick up and it can be expected that the worst of the Brazilian export delay is over." They also said that Argentina’s soybean export program is underway, and that they are expected to ship 1-2 cargoes of beans to China this month. Michael Cordonnier said that the Brazilian bean harvest is about 70% complete - in line with average. He estimated Brazil’s 2012/13 bean crop at 81.5 MMT, down 0.5 MMT from his previous estimate. He pegged the Argentine bean crop at 50.0 MMT, unchanged from his previous estimate, although he said that yields have been better than expected so far. He said that around 7% of the Argentine bean crop had been harvested as of late last week. The USDA attache's office in Canada pegged rapeseed plantings there down half a million hectares to 8.1 million this year. Even so a sharp recovery in yields will see production rise 12% from 13.3 MMT to 14.9 MMT. Exports will increase by 0.6 MMT to 7.8 MMT in 2013/14, they added. Funds may have been light soybean buyers on the day it is thought. May 13 Soybeans closed at USD13.94, up 3 1/4 cents; Jul 13 Soybeans closed at USD13.74 1/2, up 2 1/4 cents; May 13 Soybean Meal closed at USD402.10, up USD3.60; May 13 Soybean Oil closed at 49.59, down 47 points.
Corn: The corn market tried to rally, but was ultimately dragged lower in the May 13 by the weight of last week's USDA stocks numbers. May 13 closed at the lowest levels for a front month since last June. Michael Cordonnier estimated Brazil’s 2012/13 corn crop at 74.0 MMT, unchanged from his previous estimate. He also left his estimate for Argentine corn production unchanged at 24.0 MMT, saying that about 20% of the Argentine corn harvest is complete, although other analysts suggest it might be higher than that. Argentina return from holiday tomorrow. The Brazilian corn harvest has progressed to the south, with Emater saying that 60% of Rio Grande do Sul corn crop has been harvested. South Korea bought 120 TMT of optional origin feed corn from Noble for May shipment, along with 65 TMT of optional origin corn for August shipment as the recent price tumble stimulates a bit of demand. The Energy Dept will be out with their weekly ethanol production figures tomorrow. Last week's weekly ethanol grind was down 4,000 barrels/day from the previous week to 805,000 bpd, the tenth week in a row that it's failed to reach the USDA goal for demand of 4.5 billion bushels from the sector. The shell-shocked bulls will be hoping for an improved performance tomorrow, but they may be disappointed. Fund selling in corn was estimated at around 3-5,000 contracts on the day. May 13 Corn closed at USD6.40 1/2, down 1 3/4 cents; Jul 13 Corn closed at USD6.27 1/4, up 1/2 cent.
Wheat: The wheat market managed a fairly decent rebound, although weakness in corn held it back. Having just about got used to wheat trading at a discount to corn it is now a 30 cent or so premium nearby and over a dollar and a half premium on the Dec 13 position. News after the close last night that for all the talk of beneficial rain/snow over the last couple of months good/excellent US winter wheat ratings have only improved by one percentage point since late November, and that poor/very poor was up by 4 percentage points. Monday's strong export inspections also hint at renewed demand for US wheat and that maybe the USDA target for the season could be reached, or even surpassed. Egypt’s Ag Ministry said that 2013 wheat imports will fall 8-10% from 2012. They appear to be pinning their hopes on a forecast 9-10 MMT domestic wheat crop this year, although many think this estimate to be unrealistic. An acute lack of cash is the problem, they hope to strike a deal with the IMF at the end of the current financial year which ends in June. They say that they have enough wheat stocks to last until then. Bangladesh bought 50 TMT of optional origin wheat, most likely Indian, for April shipment. Jordan re-tendered for the 100 TMT of milling wheat and 100 TMT of feed barley of optional origin that they passed on due to price last week. Tunisia also re-tendered for 42 TMT of durum wheat. Fund buying in CBOT wheat was estimated at 2-3,000 lots on the day. May 13 CBOT Wheat closed at USD6.70 3/4, up 6 3/4 cents; May 13 KCBT Wheat closed at USD7.16 3/4, up 7 cents; May 13 MGEX Wheat closed at USD7.76 1/4, up 10 1/2 cents.
EU Wheat Lower, But Faring Much Better Than CBOT Market
02/04/13 -– EU grains closed a volatile session lower, although old crop months were well off the lows of the day set in early trade. The market is clearly struggling to come to terms with the US market collapse that took place largely whilst European markets were shut on the evenings of Thursday and Monday, combined with attempts at a mini recovery today.
London wheat closed with front month May 13 down GBP1.35/tonne at GBP197.90/tonne and new crop Nov 13 GBP4.40/tonne easier at GBP181.40/tonne. May 13 Paris wheat was EUR2.00/tonne lower at EUR236.75/tonne.
Heading into the close of European markets May 13 Chicago wheat was trading around USD6.70/bu, a fall of 9% versus last Wednesday evening, pre-USDA. Based on tonight's close May 13 London wheat is "only" 3% down versus it's last Wednesday finish, with May 13 Paris wheat down 4% in the same period, so clearly EU grains have managed to weather the storm kicked up across the Atlantic on Thursday night relatively well under the circumstances.
There are still plenty of question marks over wheat production potential both sides of the Pond to completely throw the towel in just yet. In the States the USDA reported after the close last night that nationally only 34% of the winter wheat crop is rated good/excellent, that's the lowest proportion since 31% in 2002, and 28% of the crop was abandoned and never saw a combine that year. This was the USDA's first weekly update since the end of November, as they don't issue weekly reports in the depths of the winter. You may recall that in their final report of 2012 US wheat was heading into winter in the worst condition since they started publishing weekly figures in the mid-1980’s.
Last November's data had winter wheat rated good/excellent at 33%, so we've only seen an improvement of just one percentage point in fully four months. In fact the proportion of US winter wheat rated poor/very poor was 26% at the end of November, last night it was 30%, so although there has been a slight shift from fair to good/excellent, there's been an even larger one from fair into poor/very poor.
In Europe, the recent cold snap and widespread snow cover has certainly put crop development and fieldwork back at the very least, how much damage may have been done it's too early to say. FranceAgriMer report that spring barley plantings are only 75% done versus 97% in 2012, with only 20% of the crop emerged against 50% last year. Both winter wheat and winter barley ratings held steady at 66% and 67% respectively good/excellent versus last week. However, note that soft wheat development, judged by the percentage of the crop with an ear of 1cm or more, is only 11% versus 63% last year. Winter barley at the same stage of development is only 9% versus 64% twelve months ago.
Concerns meanwhile abound over the state of crops in the UK after one of the coldest March's for years went out with a record breaking cold over Easter. Temperatures are set to remain low until around mid-April although at least no more significant snowfall is in the forecast. Whilst the cold weather has reduced cereal disease development and weed germination, pigeons have caused some severe damage in oilseed rape crops, the HGCA note.
The demand side of the coin also has uncertainties of it's own however. Ensus, Europe's largest fully-operational wheat ethanol plant, has confirmed recent rumours that it is to close again due to "adverse market conditions" - according to Agrimoney.com. That's less than eight months after re-opening following a shutdown in May 2011 that lasted until August 2012, they add.
Further afield, the Russian Ag Ministry said that winter grains have been planted on 15.85 million hectares, down 2.8% from 16.3 million a year previously. Overall crops are rated 88% good/satisfactory and 12% weak/thinned, they said. Generally it seems that crop conditions are poorest in the south of the country, the main winter wheat production areas.
Russia sold 58,558 MT of intervention grains today in it's now regular twice weekly auction. That brings the total volume sold to date since sales began last October to 2.6 MMT. The boards will be bare come harvest 2013.
Things still look promising in Ukraine, although recent heavy snow still remains on the ground and will delay fieldwork by 2-3 weeks. The Ukrainian Agrarian Confederation said that this year's grain crop may reach 54-56 MMT, an increase of 8-10 MMT compared with last year.
The Ukraine Ministry said that the country exported 1.6 MMT of grains in March. Almost all of this was corn, at 1.5 MMT, as wheat exports have now ground to a halt. There is some suggestion though that the Ministry may authorise a bit more wheat for export in the three months of the 2012/13 campaign that remain.
EU Rapemeal Prices - Post USDA
02/04/13 -- Rapemeal prices on the continent are lower folowing the sharp sell-off witnessed in Chicago soymeal on Thursday and Monday as Europe returns to work following the Easter break. Losses are greatest in new crop months, with tightness in availability due to poor crush margins and strong off-take widening the differential between old and new crop.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:
| Apr13 | 285.00 |
-4.00 |
| May13 | 278.00 |
-4.00 |
| May/Jul13 | 274.00 |
-4.00 |
| Aug/Oct13 | 212.00 |
-6.00 |
| Nov13/Jan14 | 216.00 |
-8.00 |
| Feb/Apr14 | 217.00 |
-7.00 |
| May/Jul14 | 215.00 |
-7.00 |
Chicago Corn Car Crash Continues
01/04/13 -- Soycomplex: Soybeans did their best to divorce themselves from crashing corn but still posted double digit losses on the day as the fallout from Thursday's USDA report continues. May 13 beans are now down 63 cents, or 4.3%, since Wednesday's night's close, finishing below USD14/bu for the first time since mid-January. Brazil's Trade Ministry said Brazil exported 3.54 MMT of beans in March, substantially more than the 959,600 MT exported in February, although down on 4.24 MMT in March 2012. The Parana soybean harvest is 74% complete as of versus 67% a week ago. AgRural estimated the Brazilian soybean crop at 81.2 MMT, down slightly from a previous estimate of 82.1 MMT. Safras e Mercado said that nationally 72% of the Brazilian soybean crop has been harvested versus 64% a week ago, 72% a year ago, and compared with 62% for the 5-year average. Weekly US soybean export inspections of 16.3 million bushels were down on 18.458 million the previous week. Shipping delays in Brazil (over 56 days in Paranagua and almost 42 days in Santos) continue to disrupt availability from Brazil. China were rumoured to have bought 1-2 cargoes of US beans off the PNW for immediate shipment. Fund selling on Thursday was estimated at around 20,000 contracts in beans and a further 6-9,000 lots today. May 13 Soybeans closed at USD13.90 3/4, down 14 cents; Jul 13 Soybeans closed at USD13.72 1/4, down 13 1/4 cents; May 13 Soybean Meal closed at USD398.50, down USD6.10; May 13 Soybean Oil closed at 50.06, down 5 points.
Corn: The demise of corn continues. Heavy fund selling of around 40,000 lots on Thursday and a further similar volume today mean that prices can only go one way. May 13 tonight stands 93 cents lower than Wednesday night's close for a loss of almost 12.7% in two trading sessions. The Brazilian Trade Ministry said Brazil exported 1.6 MMT of corn in March versus 2.29 MMT in February and 278,300 MT in March 2012. Safras e Mercado said that 54% of the Brazilian 1st corn crop has been harvested versus 59% a year ago and that planting of Brazil’s 2nd corn crop is virtually complete. The Parana corn harvest is 59% complete versus 51% a week ago. Japan are said to be looking for 700 TMT of corn for April/June shipment and South Korea for 1.1 MMT of corn for August/Sept shipment as lower prices flush out some buyers. Recent price declines don't necessarily mean that the US will pick up the business though, with offers out of South America and the Black Sea also likely to be competitive. US weekly export inspections of 19.139 million bushels were slightly better than trade expectations, although cumulative exports are less than half of year ago levels. The Mosaic CEO estimated 2013 US corn plantings at below 96.0 million acres versus the USDA estimate of 97.3 million and 97.2 million a year ago. May 13 Corn closed at USD6.42 1/4, down 53 cents; Jul 13 Corn closed at USD6.26 3/4, down 49 1/4 cents.
Wheat: Wheat got stung once again by spillover weakness in corn, with funds estimated as selling an estimated 10,000 contracts on the day, to add to the 12,000 sold on Thursday. May 13 CBOT wheat is now almost 10% lower than in was on Wednesday night. South Korea are said to be looking for 450 TMT of feed wheat for August/Sept shipment. Tunisia were said to have cancelled a tender to buy durum wheat due to high prices. Morocco were said to have bought 178 TMT of of local soft wheat. Ukraine's Ag Ministry said that Ukraine had exported 19.4 MMT of grain so far this season, up 24.7% from a year ago. Weekly US export inspections of 25.736 million bushels were very respectable and up on 20.788 million a week ago. The USDA is back to giving us regular weekly crop condition reports now that we are into April. For winter wheat they said that nationally 34% of the crop is rated good/excellent compared to 58% a year ago. Poor/very poor is 30% compared to only 12% last year. Poor/very poor in Colorado (42%), Nebraska (49%) and South Dakota (76%) are all said to be record low ratings for the first week after the winter. California, Ohio and Oregon are the only states that have better winter wheat conditions than this time last year. May 13 CBOT Wheat closed at USD6.64, down 23 3/4 cents; May 13 KCBT Wheat closed at USD7.09 3/4, down 17 cents; May 13 MGEX Wheat closed at USD7.65 3/4, down 14 1/2 cents.
