Nogger's Blog

Chicago Slumps Following USDA Data, Nears Remain Tight Though

28/06/13 -- Soycomplex: The USDA's capacity to spring a surprise knows no bounds. The market has done something dramatic in each of the last five years on the day of the June plantings and quarterly stocks report, and today didn't break that trend. This time it was corn where the curveball came from. For soybeans the USDA came out with a planted area estimate roughly in line with trade forecasts of 77.9 million acres at 77.7 million. June 1st stocks of 434 million bushels were below trade expectations of 442 million. These are the tightest June 1 stocks number since 2004. We knew that US stocks were already tight, now they look even tighter. That supported front month Jul 13, which rose to it's highest level since September, and close to the lifetime contract high of USD15.94/bu. The forward months however gave way to spillover weakness from corn. At the end of the day 77.7 million acres of soybeans is a record area, after all, and one that could still throw up a 3.4 billion bushel crop given normal yields. It should be noted however that the acreage number is based on a Jun 1st survey, so that there could still be some acres in there which have subsequently gone the way of "prevent plant" insurance. Weather forecasts are non-threatening for the next 2 weeks. Jul 13 Soybeans closed at USD15.64 1/2, up 16 cents; Nov 13 Soybeans closed at USD12.52, down 23 1/4 cents; Jul 13 Soybean Meal closed at USD490.30, up USD10.70; Jul 13 Soybean Oil closed at 46.42, up 2 points.

Corn: The USDA surprised the trade by increasing the US corn planted area estimate from 97.3 million acres to 97.4 million, where the market was expecting a 2 million acre cut. That caught everyone unawares and sent new crop prices lower for an eighth session in row, the longest losing streak in more than 3 years. June 1st US corn ending stocks came in below expectations of 2.845 billion bushels as 2.764 billion, supporting front month Jul 13. As with soybeans, it would appear that old crop stocks are even tighter than the trade thought. This tightness is particularly acute in a year when the new crop harvest is likely to be delayed. In other news, the Buenos Aires Grains Exchange estimated that the Argentine corn harvest is 76.9% complete, up from 71.8% a week ago. They estimated the Argentine corn crop at 24.8 MMT, unchanged from last week, but said that they may raise their corn crop estimate in due course due to better than expected yields being noted. FranceAgriMer said that 55% of the French corn crop was rated good/excellent, down 3 points on a week ago. Only 96% of the French crop has been planted. Some analysts are forecasting 50-60,000 ha of French corn may go unplanted this year due to persistent wetness and cold temperatures. There are similar problems in Italy and Germany too. Jul 13 Corn closed at USD6.79 1/4, up 12 cents; Dec 13 Corn closed at USD5.11, down 27 1/2 cents.

Wheat: The USDA forecast the US 2013 all wheat area significantly higher than the 55.9 million acres that the trade was expecting at 56.5 million. June 1st stocks were however lower than the 745 million bushels anticipated at 718 million. Spillover weakness from corn didn't see wheat put up much of a fight though, with CBOT prices falling to their lowest levels for a front month in more than a year. Iraq passed on a tender to import 50 TMT of wheat due to high prices and immediately re-issued another similar tender. South Korea bought 30 TMT of Canadian milling wheat for Sept shipment. Another South Korean buyer is looking for 15 TMT of milling wheat from Australia for October shipment. Indonesia are said to have bought 200 TMT of Russian milling wheat this week for August shipment. Argentina has blocked wheat exports as domestic supplies run out. The Argentine government is also said to have ordered 350 TMT of wheat already scheduled for export to be sold on the domestic market instead. Argentina may have to import wheat for the first time in 60 years before their own harvest kicks off in November it is now thought. Brazil may also have to look elsewhere for supplies. APK Inform estimated Ukraine wheat crop at 20.5 MMT vs. 15.7 MMT a year ago. They see exports at 9.2 MMT, up 37% from a year ago and 1.2 MMT higher than the USDA's estimate of 8.0 MMT. Jul 13 CBOT Wheat closed at USD6.48 1/2, down 15 cents; Jul 13 KCBT Wheat closed at USD6.76 1/4, down 10 1/4 cents; Jul 13 MGEX Wheat closed at USD7.85, down 1 1/2 cents.

EU Grains Down Again, Is The Glass Half Full Or Half Empty?

28/06/13 -- EU grains closed lower across the board, with rapeseed on the receiving end of a particularly bad thrashing again today.

On the day London wheat closed with the Jul 13 future down GBP2.30/tonne to GBP155.70/tonne and new crop Nov 13 was also GBP2.30/tonne weaker at GBP164.60/tonne. Front month Nov 13 Paris wheat fell EUR3.00/tonne to finish the day at EUR193.75/tonne. Aug 13 Paris rapeseed ended EUR6.50/tonne weaker at EUR393.50/tonne, other months slumped as much as EUR9.00/tonne.

For the week as a whole that puts Jul 13 London wheat down GBP11.80/tonne, or down 7% versus last Friday's close. Nov 13 London wheat fell GBP5.65/tonne on the week, or 3.3%. Nov 13 Paris wheat slipped EUR6.75/tonne, or 3.4%. Aug 13 Paris rapeseed slumped EUR17.25/tonne, or 4.2%.

London wheat is now at the lowest levels for a front month since January 2012, for Paris wheat these prices are the lowest since December 2011, and we haven't seen French rapeseed futures prices this low on a front month since October 2010.

So where has it all gone wrong? Some of the answer might lie outside of the normal supply and demand fundamentals, with a finger of suspicion pointing at our old chums the funds. These gentlemen have taken their bat and ball home and gone to find their amusement elsewhere it would seem. Whilst tonight's closing levels might look like a catastrophe from a growers perspective, they only look bad in relation to the dizzy heights to which city whizz kids Tarquin and Peregrine drove them up to. We are actually still above the 5-year averages for both London and Paris wheat (GBP150.13/tonne and EUR191.46/tonne - yes, I really have worked them out to the penny).

The reason that the "smart money" wants out is down to last week's suggestion from the US Federal Reserve chairman Ben Bernanke that the cheap money era might be about to come to an abrupt end. That shouldn't be such an enormous surprise, as has been noted before they simply cannot keep throwing USD85 billion into the US economy every single month forever. The patient has to be weaned off the morphine at some point.

The patient just doesn't like what it sees once the drugs wear off, it would seem. It doesn't see a golden glow that's for sure. The yellow metal has just had it's worst quarter in at least 45 years, according to Reuters. It could be worse than that, they're not sure, as their quarterly records only go back to 1966.

Gold has lost 25% in the April/June period, London wheat has shed 22% during the same period, Paris wheat 19% and Paris rapeseed a "mere" 17%. The grains are onto a winner relative to poor old gold!

Tarquin and his chinless buddies will be back, you can be sure of that. We just don't know when that will be, so for now it looks like we are back to trading the fundamentals. Effectively these include generally average crops in Western Europe, and a strong rebound in production from "cheap as chips" Eastern Europe and the FSU nations.

The HGCA report that 15% of the UK wheat crop is in poor/very poor condition, with 57% rated as good/excellent. Crop development remains 10-14 days behind normal, with only 14% of the national crop expected to have completed flowering by the end of June versus 60% this time last year and an average of 90% between 2009-2011. Winter barley is rated 73% good/excellent and for spring barley it's 78%.

Winter rapeseed is only rated 31% good/excellent, and for spring rape it's 52%. Winter rapeseed development is "well behind" normal say they HGCA. Only 12% of the crop is at seeds full size and green stage. In the last four years crops at the end of June were 60-100% at seeds full size and green, they note.

FranceAgriMer said that 69% of the French soft wheat crop is rated good/excellent, unchanged from a week ago. Winter barley good/excellent is down one point versus last week to 67%, spring barley is unchanged at 72% and durum wheat is down five points in the top two categories to 57%.

There's more concern over the French corn crop. Sowing of that only advanced from 95% complete to 96% done during the past week, suggesting that some of the intended acreage isn't going to be sown at all The rain and low temperatures that are hindering sowing in some parts of Europe (Germany and Italy have also been hit) may also ultimately end up clipping yields too.

FranceAgriMer pegged only 55% of what corn has been sown as being in good/excellent condition, down three points on last week and versus 74% this time last year. Only 67% of the crop was at the stage of six to eight leaves visible compared to 95% at the same point last year.

US company Weather Services International said earlier in the week that they expect most of Europe (with the exception of the Nordic region) to experience a cooler than normal Jul/Sep period. They didn't make a prognosis on rainfall.

Chicago Mixed Heading Into Stocks And Aceage Reports

27/06/13 -- Soycomplex: Once more it was the nearby months that put in the biggest gains in beans, with new crop modestly lower. Meal too finished sharply higher in front month Jul 13, but even the deferred positions manged to post modest gains. Oil was lower across the board. Weekly soybean export sales of 14,500 MT of old crop and 451,100 MT of new crop beat trade expectations of a combined 1-400 TMT. Meal sales were however a disappointment at 9,200 MT of old crop and just 100 MT of new crop. Soybean oil slumped to new 32-month lows with world palm oil stocks projected to hit record highs in 2013 - the 7th consecutive year of record stocks. MDA CropCast raised their 2013/14 US soybean production estimate by 1.18 MMT from a week ago to 86.34 MMT, a 13.6% increase on last year. That ups global production by a similar amount, a 7.6% rise on 2012/13. They increased EU and Canadian rapeseed production by a combined 250 TMT. Output in Europe is forecast up 3.4% this year, with Canadian production rising 10.6% on last year. World OSR output is forecast 5.3% higher this year. APK Inform estimated the Ukraine sunseed crop to rise 13% to 9.7 MMT in 2013, with soybean production up a similar percentage to 2.7 MMT and rapeseed output rising 50% to 1.8 MMT. The trade now waits on tomorrow's USDA reports. The trade estimate for US Jun 1st soybean stocks is anywhere from 413 million to 500 million bushels, with an average guess of 442 million. The US soybean planted area is seen falling within a range of 77.1-79.2 million acres, with an average guess of 77.9 million, up from the current estimate of 77.1 million. Jul 13 Soybeans closed at USD15.48 1/2, up 14 1/4 cents; Nov 13 Soybeans closed at USD12.75 1/4, down 3/4 of a cent; Jul 13 Soybean Meal closed at USD479.60, up USD16.30; Jul 13 Soybean Oil closed at 46.40, down 23 points.

Corn: The corn market also closed higher nearby and weaker further forward. Weekly export sales of were towards the top end of expectations at 336,700 MT of old crop and 153,600 MT, with the higher proportion of old crop sales supporting the nearby Jul 13 future. MDA CropCast raised their world 2013/14 corn crop estimate by 2.4 MMT from last week (taking production 12% up on last year) courtesy of a 1.1 MMT hike in Europe (where output is now forecast 11.3% up on last year) and a 1.3 MMT rise in the US (now seen up 30.5% vs. 2012). South Korea bought 55 TMT of Brazilian corn for October shipment in a tender. Another South Korean buyer is seeking 140,000 tonnes of optional origin corn for November arrival, that will probably also go the way of South America, or maybe to the Black Sea. Below average temperatures are called for over the weekend and for much of next week for most of the US Corn Belt. Corn used in last week’s US ethanol production report that came out yesterday is estimated at 92.90 million bushels. Usage needs to average 95.5 million bushels per week to meet this crop year’s USDA estimate of 4.6 billion bushels. Trade estimates for tomorrow's USDA acreage report see the planted area coming in at an average of 95.3 million acres, down 2 million from current forecast. The range of estimates is 96.9-94.2 million. As far as June 1st stocks are concerned the range of estimates is 2.725 billion to 2.952 billion bushels, with an average guess of around 2.845 billion. Jul 13 Corn closed at USD6.67 1/4, up 2 3/4 cents; Dec 13 Corn closed at USD5.38 1/2, down 5 1/2 cents.

Wheat: The wheat market continues to slide even though weekly wheat export sales beat trade expectations of 3-600 TMT at 731,800 MT. Brazil was the main buyer. There's talk of some excellent 100-120 bu/acre US winter wheat yields coming out of Indiana, adding to the notion that this year's US crop may be a bit larger than expected. MDA CropCast cut their world wheat production estimate 200 TMT from last week due to acreage reductions in Canada, that still puts global output up 5.7% on last year though. That, combined with a 12% hike in world corn production in 2013/14, is weighing on the market. Also of course is the fact that the FSU is looking at a sharp rebound in wheat production this year, along with cheap Eastern European sellers like Romania, Hungary and even Serbia looking to undercut the market. That could depress things further, at least during the first quarter of 2013/14. Ukraine has harvested 3.5 MMT of new crop grains so far, with yields up 48% on last year. Russia has harvested a similar volume, 3.7 MMT, with overall yields said to be up 41%. It may well be that things won't look so great once the harvest progresses into Siberia later in the year though, dragging the overall yield figure lower. The trade is expecting the June 1st stocks number to come in at 745 million bushels, from within a range of estimates of 720-780 million. The all wheat area is forecast at 55.9 million acres, down from 56.44 in the March report. Jul 13 CBOT Wheat closed at USD6.63 1/2, down 3 1/2 cents; Jul 13 KCBT Wheat closed at USD6.85 1/2, down 8 3/4 cents; Jul 13 MGEX Wheat closed at USD7.86 1/2, down 12 1/2 cents.

EU Wheat Extends Recent Losses

27/06/13 -- EU grains were mostly lower once more, extending recent losses with Jul 13 London wheat setting a fresh near 18 month closing low for a front month. Other London wheat months gained a bit of support from a sharply weaker pound which fell to a more than 3-week low against the dollar on ideas that the Bank of England will raise QE before too long, but still closed lower on the day.

Jul 13 London wheat finished GBP1.50/tonne lower at GBP158.00/tonne, and with Nov 13 ending down GBP0.25/tonne at GBP166.90/tonne. Nov 13 Paris wheat settled EUR0.50/tonne easier at EUR196.75/tonne.

The FSU grain harvest is picking up pace. Russia has now harvested 3.7 MMT of grains, including over 1.9 MMT of wheat with early yields up 26% at 3.88 MT/ha, say the Ag Ministry. More than 1.0 MMT of barley is also in the bin, with yields up 38% at 5.30 MT/ha, they add.

Ukraine has harvested 3.5 MMT of grains so far, mainly in the southern districts of Odessa (1 MMT) and Nikolayev (740 TMT), say the Ag Ministry there. That total includes 1.81 MMT of barley and 1.52 MMT of wheat. Yields are said to be up 48% on last season. Traders in Ukraine say that they expect to begin exporting new crop wheat my the middle of July.

MDA CropCast cut their world wheat crop projection by 200 TMT from last week due to acreage reductions in Canada. Even so they still see global output up 5.7% this year.

The EU will harvest 131.36 MMT of soft wheat they said, up 700 TMT from last week and a rise of 3.8% versus last year. The EU corn crop meanwhile will rise 11.3% compared with 2012, barley production here will increase 4.2%, and OSR output by 3.4%, they added.

Good winter rains are seen boosting Spain's 2013 cereal crop very significantly. The Spanish Ag Ministry forecast the soft wheat crop there at 5.8 MMT, up 23.4% on last year's 4.7 MMT. Durum production will jump 83% to 810 TMT and barley production increase 32% to 7.9 MMT, they added.

Tunisia's Ag Ministry said that their grain crop in 2013 would fall to only 1.36 MMT, versus 2.2 MMT last year, including 820 TMT of durum wheat, 200 TMT of soft wheat and 320 TMT of barley. Production amongst the other major North African nations is expected to rise however. The HGCA today said that grain output between Algeria, Egypt, Libya, Morocco and Tunisia will rise 17% this year, led by an 80% increase in production from Morocco.

Pakistan are rumoured to be buying Black Sea wheat. Jordan has issued a tender to buy 150 TMT of wheat and 100 TMT of barley.

New crop Ukraine feed wheat is said to be offered at around USD245/tonne FOB the Black Sea (the equivalent of GBP161/tonne). French milling wheat is at EUR194/tonne deld Rouen for July (GBP166/tonne). French feed barley is offered at EUR181/tonne deld for July (GBP155/tonne), with French malting barley quoted at EUR206/tonne FOB Creil (GBP176/tonne). French corn is offered in the market at EUR225/tonne FOB Bordeaux (GBP192/tonne) and French OSR is quoted at EUR401/tonne (GBP343/tonne) FOB Moselle for harvest delivery.

Tomorrow's USDA planting estimates and June 1st stocks report may provide some direction, but failing that, harvest pressure looks like weighing on the market a little while longer yet.

EU Rapemeal Prices

27/06/13 -- Rapemeal prices on the continent are mostly a little weaker today. Rapeseed futures in Paris have dipped below EUR400/tonne across the board this afternoon, with front month Aug 13 down more than 9% since the beginning of the month.

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

USDA Weekly Export Sales

27/06/13 -- The USDA weekly export sales report is just out, here's the highlights:

SOYBEANS

Sales of 14,500 MT of old crop and 451,100 MT of new crop beat trade expectations of a combined 1-400 TMT. China took 360,000 MT of the new crop. Exports of 223,000 MT were up noticeably from the recent weeks.

CORN

Corn sales came in at 336,700 MT of old crop and 153,600 MT of new crop versus expectations of a net 2-500 TMT combined. Interesting to see sales skewed in favour of old crop which may continue to support the Jul 13 future. Shipments this week were only 151,200 MT though, less than half last week and the 4-week average.

WHEAT

Wheat sales beat trade expectations of 3-600 TMT at 731,800 MT. Brazil was the main buyer. Exports came in at 479,000 MT.

SOYMEAL

Meal sales of 9,200 MT of old crop and just 100 MT came in well below the 50-150 TMT expected.

Argentina Halts Wheat Exports As Bread Prices Double

27/06/13 -- The Argentina government have halted wheat exports as domestic supplies run low following a poor 2012/13 harvest.

Farmers cut plantings last year in protest to the government’s regular interference in the market, and now it would seem they are at it again.

The USDA’s suggestion that Argentina produced 11 MMT* of wheat last year is widely regarded as being pie in the sky, with 9 MMT thought likely to have been nearer the mark. (Interestingly, and for reasons I can’t really explain, the USDA seem to have a bit of a track record in being wildly optimistic versus local estimates with regards to Argentine wheat production in recent years).

With domestic consumption of around 6.0-6.2 MMT, and almost 3 MMT of Argentine wheat having already been shipped abroad in 2012/13, the problem is there for all to see.

Bread prices in Argentina are said to have doubled in the last month, according to a report by Associated Press yesterday.

Meanwhile spot wheat on the Buenos Aires Grain Exchange is commanding USD480/tonne, according to Reuters. That’s way above world prices.

Argentina may end up having to import wheat this season for the first time in 60 years, Oil World said recently.

So why don’t they just get on with it? One of the problems with importing wheat is that you need dollars to pay for it, and whilst the “official” exchange rate for the peso versus the US dollar is around 5.37, the “real” or black market exchange rate is some 50% higher at around 8.05 pesos.

Planting of the Argentine 2013/14 wheat crop meanwhile is about halfway through, and harvesting of that won’t begin until November. The government say that they are confident that various recently introduced incentives will encourage a sharp rebound in plantings of as much as 40% this year, producing a crop of around 16 MMT. The Buenos Aires Grain Exchange are more guarded, forecasting an increase in plantings of only around 8%, without giving a production estimate.

Whilst you could view all this as mildly supportive for the wheat market, the bottom line is probably that if Argentina don't ship it somebody else will, probably one of the many Eastern European/FSU sellers that are currently scrambling around and dropping their kecks looking for business.

*The USDA's forecast for Argentine wheat exports of 7.5 MMT in 2012/13 looks even more ludicrous.

Changes Afoot For Paris Milling Wheat Contract

27/06/13 -- NYSE Liffe has announced a few changes to the Paris milling wheat contract.

As things currently stand there is only one delivery point for the Paris milling wheat contract, the port of Rouen, which currently has an approved grain storage capacity of “only” around one million tonnes.

The popularity of the Paris milling wheat contract has increased dramatically in recent years, the current open interest in front month Nov 13 is the equivalent of almost 6.8 MMT. Clearly this presents a potential problem should enough traders decide that they wish to make delivery against the contract.

NYSE Liffe have therefore announced that they are to increase the storage capacity at Rouen, effective from November 2014. In addition they are to add the port of Dunkirk as a delivery point from September 2015.

As well as those changes they have also announced that also effective from September 2015 the new contract months will be September, December, March and May as opposed to the current delivery months are November, January, March and May.

I hate changes I do. It's usually the locks that get changed whilst I'm out of the house in my case. I came home a bit worse for wear one night and MrsN#2 said "why don't you just go out and have a couple of pints?" To which I said "what a great idea" as I put my coat back on and went out again. It's amazing how much of your stuff they can fit into one bin bag you know. Ah, happy days...

Chicago Closing Comments - Wednesday

26/06/13 -- Soycomplex: The recent theme of steady nearby and a little bit weaker further forward continues. Oil World forecast global production of the 10 main oilseeds at 484.5 MMT in 2013/14, up 4.5% from 463.5 MMT a year ago. They estimated world oilmeal production in 2013/14 up 3% from 291 MMT to 300.3 MMT, of which soymeal production will rise 4.2% from 179.4 MMT to 186.9 MMT. They said that they therefore expect soymeal prices to fall in the second half of the year. Michael Cordonnier forecast the 2013 US soybean crop at 3.26 billion bushels versus a previous estimate of 3.22 billion. Lanworth Inc estimated the 2013 US soybean planted area at 78.0 million acres versus a previous estimate of 78.25 million. Trade estimates for tomorrow's weekly export sales for beans are between 100-400 TMT, with meal sales expected to come in at 50-150 TMT. Jul 13 Soybeans closed at USD15.34 1/4, up 9 cents; Nov 13 Soybeans closed at USD12.76, down 2 1/2 cents; Jul 13 Soybean Meal closed at USD463.30, up USD4.50; Jul 13 Soybean Oil closed at 46.63, down 51 points to the lowest level for a front month since October 2010.

Corn: The corn market was also firmer nearby and lower further forward. Tight deliverable stocks are supporting the nearby Jul 13 future ahead of first notice day. Weekly ethanol production data was supportive, up 12,000 barrels/day to 885,000 bpd - matching the high for the year so far. Michael Cordonnier estimated US corn yields this year at 153.0 bu/acre, with production at a record 13.26 billion bushels, both are unchanged from his previous estimates. Lanworth Inc forecast the 2013 US corn planted area at 95.7 million acres, up slightly from a previous estimate of 95.3 million. Argentina approved 16 MMT of new crop corn exports. China approved another 2 strains of GMO corn for import. Based on a Bloomberg survey China's 2013/14 corn imports will total 7 MMT, more than double those of a year ago. Reports of at least 10 MMT of this year's Chinese wheat crop being downgraded to only suitable for feed usage may have a negative impact on demand for corn however. CEC estimated South Africa 2013 corn crop at 11.375 MMT, down slightly on their previous forecast. Trade estimates for tomorrow's weekly export sales are 200-500 TMT. Jul 13 Corn closed at USD6.64 1/2, up 7 3/4 cents; Dec 13 Corn closed at USD5.44, down 1/2 cent.

Wheat: Unlike the other two main markets wheat was simply lower across the board on all three exchanges. Taiwan bought 120 TMT of Black Sea origin feed wheat for Aug/Sep shipment at USD274/tonne including freight. CNGOIC said that 10 MMT of wheat recently harvested in Henan province, the largest wheat producing area of China, may only be suitable for feed use due to rain damage. That's around a third of the total output of Henan and around 8% of the national crop. That could boost China's wheat imports in 2013/14, although that doesn't necessarily mean that the US will be picking up the business, especially in light of the recent GMO issues. US FOB wheat prices are currently around USD275-280/tonne. French wheat is around USD265/tonne FOB and Black Sea wheat is even cheaper. The Russian Grain Union said that this season's grain crop would come in lower than the official Ministry estimate of 95 MMT, without giving a specific figure. Rusagrotrans said production would be "not less than 97 MMT" - so take your pick. The latter have 2013/14 grain exports forecast very close to the USDA estimates at 17 MMT for wheat (the same as the USDA), 3.0 MMT for barley (versus 3.8 MMT from the USDA) and 2.5 MMT for corn (also the same as the USDA). Trade estimates for tomorrow's weekly export sales are 300-600 TMT. Jul 13 CBOT Wheat closed at USD6.67, down 8 3/4 cents; Jul 13 KCBT Wheat closed at USD6.94 1/4, down 10 cents; Jul 13 MGEX Wheat closed at USD7.99, down 10 1/4 cents.

EU Wheat Mixed But Downwards Trend Remains

26/06/13 -- EU grains closed mixed with Jul 13 London wheat finishing the day GBP1.00/tonne firmer at GBP159.50/tonne, and with the more active new crop Nov 13 ending GBP0.35/tonne lower at GBP167.15/tonne. Nov 13 Paris wheat rose EUR0.50/tonne to close at EUR197.25/tonne.

The market is all over the place, but the downwards trend remains undeniably intact, pressured lower by the outlook for a sharply higher Black Sea wheat crop in 2013.

Russia exported just under 250 TMT of grains in the 1-20 June period, including 116 TMT of wheat and almost 100 TMT of corn, say the local Ag Ministry. That will rise to 1.8-2.0 MMT in July (versus 2.06 MMT in July 2012), according to Rusagrotrans, due to lower than normal carry-in stocks from 2012/13 and the absence of Egypt from the export market.

The 2013 grain harvest will be "not less than 97 MMT" they say, up 37% on the 70.9 MMT produced in 2012, they add. Russian 2013/14 grain exports "will exceed 23 MMT" versus 16.2 MMT in 2012/13 including 17 MMT of wheat (versus 11 MMT in 2012/13), 3.0 MMT of barley (2.3 MMT) and 2.5 MMT (1.9 MMT) of corn, they add.

They suggest that Russian wheat exports will be spread out more evenly over 2013/14 due to Egypt's lack of participation in the international markets, having a maximum potential of 3 MMT/month versus the record 3.8 MMT shipped abroad in September 2011.

The Ukraine Ministry say that early grain yields there are up 41% on last year. Winter barley yields of 2.48 MT/ha are up 39% versus this time a year ago.

Toepfer forecast the German wheat crop up 8.3% from 2012 at 24.18 MMT (and versus the 23.35 MMT that they predicted previously). They also placed the 2013 OSR crop up 19.3% at 5.75 MMT (versus 5.46 MMT previously).

French analysts Arvalis say that the winter wheat harvest in Aquitaine will begin around Jul 15-17, according to a report on Bloomberg. Crop development is 10-15 days late this year, they add.

Oil World forecast the world rapeseed crop up from 62.7 MMT in 2012 to a record 63.5 MMT in 2013. They have global sunflower production up sharply from 35.9 MMT to 38.9 MMT this year also.

The Australian Oilseeds Federation estimated the 2013/14 rapeseed crop Down Under at 3.3 MMT versus 3.9 MMT in 2012/13. Plantings are seen falling from 3.0 million ha to 2.3 million this year.

Nevertheless French rapeseed futures fell to lifetime contract lows for both the 2013 and 2014 crop years, with Aug 13 dipping to the lowest levels for a front month since October 2010.

EU Rapemeal Prices

26/06/13 -- Rapemeal prices on the continent are mostly steadier today, in line with last night's gains in Chicago soymeal. Rapeseed prices however are completely on their arse, around EUR5/tonne lower on the French market again this morning, with Paris futures now threatening to break below EUR400/tonne for the first time since October 2010.

Topefer say that Germany's rapeseed crop will jump more than 19% this year to a second-highest on record 5.75 MMT.

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

Morning News

26/06/13 -- The overnight Globex grains are mixed, with beans down 6-9 cents, wheat up 2-3 cents and corn flat to up 4 cents on front month Jul 13.

Friday's upcoming USDA reports are what everyone is now waiting on. Unfortunately for us in Europe they won't be out until our markets are getting ready to close at 5pm London time, or 6pm if you have the misfortune to be French.

That means of course that we will have to wait until Monday morning to do much about it.

So, what else is fresh as we sit here twiddling our thumbs?

News out overnight from China suggests that 10 MMT of the wheat crop in Henan province, the largest wheat producer in the country responsible for around a quarter of the national crop, may have suffered rain damage during harvesting rendering it only suitable for feed usage.

That's around 8% of the Chinese wheat crop, suggesting that more imports of milling wheat may be required than the USDA's current projection of 3.5 MMT in 2013/14. The Chinese have been quite actively buying both French and US wheat of late as we know.

That might not be too bullish for Chinese corn demand however.

South Korea are tendering for 65 TMT of optional origin feed wheat for Oct/Nov shipment, excluding US and South American material. Presumably for GMO reasons on the former, and maybe shipping reliability (or lack of) in the case of the latter?

Toepfer estimate the German wheat crop up 8.3% on last year to 24.18 MMT, and up from an estimate of 23.35 MMT last month. They say that the German OSR crop will leap gazelle-like by 19.3% this year to 5.75 MMT, versus the 5.46 MMT that they forecast in May. That would be their second largest crop ever.

French analysts Arvalis say that the winter wheat harvest in Aquitaine will begin around Jul 15-17, according to a report on Bloomberg. Crop development is 10-15 days late this year, they add.

Oil World forecast the world rapeseed crop up from 62.7 MMT in 2012 to a record 63.5 MMT in 2013. They have global sunflower production up sharply from 35.9 MMT to 38.9 MMT this year also.

As the 2012/13 marketing year draws to a close Ukraine have exported 13.4 MMT of corn, 6.8 MMT of wheat and 2.12 MMT of barley this season, according to the Ukraine Ag Ministry.

US analysts Weather Services International say that most of Europe, with the exception of the Nordic region, will have a cooler than normal Jul/Sep period. I'm going to the Maldives so I don't give a shit.

Chicago Ends Mixed, Trade Eyes Friday's USDA Data

25/06/13 -- Soycomplex: Last night's planting progress report showed 8% of this year's planned US soybean area was still not sown as of Sunday night. Time is running out to get the last of these beans into the ground. Talk that a delayed winter wheat harvest (Kansas is only 8% done versus 39% normally) will thwart some farmers double cropping plans is being seen as supportive to new crop. Very tight old crop supplies and the prospect of a late harvest meanwhile support the nears. Underlying the strong demand for nearby beans was China’s Ministry of Commerce estimating the country's June imports at a record 8.32 MMT, up 63% from May. Stats Canada estimated 2013 canola plantings there at 19.74 million acres, slightly higher than the average trade forecast of 19.635 million, although down on 21.531 million in 2012. All eyes are now on Friday's upcoming acreage and stocks reports from the USDA. The 8% of beans that remain unplanted as of Sunday equates to around 5.7 million acres. The trade has been predicting a rise in plantings from the USDA's March number of 77.1 million acres to 77.9 million. Some are now wondering if we might in fact get a reduction in area not an increase. That may happen further down the line, but it would be pretty radical for the usually optimistic USDA to spring that surprise in June. Jul 13 Soybeans closed at USD15.25 1/4, up 13 1/4 cents; Nov 13 Soybeans closed at USD12.78 1/2, up 5 cents; Jul 13 Soybean Meal closed at USD458.80, up USD7.80; Jul 13 Soybean Oil closed at 47.14, down 41 points. The latter was within 10 points of being the lowest close for a front month in soybean oil since October 2010.

Corn: Strong physical demand for old crop supported the nears once more. Reports suggest that processors in Illinois are paying more than 60 cents over the July 13 futures price for corn, taking the cash price to well over USD7/bushel. Around 570,000 acres of corn remains unplanted in Iowa, along with significant areas of northern states line Minnesota (360k ha), Wisconsin (350k ha) and North Dakota (160k ha). Stats Canada estimated corn plantings there this year at 3.645 million acres (a record) versus an average trade guess of 3.743 million and the 3.544 million planted in 2012. The average trade forecast for Friday's plantings report is for the USDA to reduce their March forecast of 97.3 million acres by around 2 million to 95.313 million, from within a range of 94.2-97.2 million. Linn Group today forecast the 2013 US corn planted area at 95.282 million acres. Tomorrow brings the usual latest weekly US ethanol production data, output last week averaged 873,000 barrels/day, down 11,000 bpd from the previous week. The US weather forecast is non-threatening. Reports suggest that Brazilian and Ukraine corn is around USD25/tonne cheaper than US origin material. Brazil's safrinha corn harvest has reached Parana in the south where a record crop is anticipated. Deutsche Bank forecast new crop corn hitting USD4.60/bushel by the end of the year. Jul 13 Corn closed at USD6.56 3/4, up 3 1/2 cents; Dec 13 Corn closed at USD5.44 1/2, down 2 cents.

Wheat: The wheat market tried to rally but failed, held back by a pick up in pace of the Black Sea harvest and reports of a sharp increase in yields. Wheat harvesting in the south of Russia is reporting early yields up 39% versus last year, with barley yields up 39%. It's a similar story across the border in Ukraine where early grain yields are said to be 43% higher than a year ago. Russia’s Ag Ministry said that northern Russia will start harvesting later this week. Stats Canada announced a 12.6% increase in spring wheat plantings to 19.1 million acres. The durum wheat area is seen increasing 4.3% to 4.9 million acres. The all wheat area is 26.18 million acres versus 23.798 million in 2012. The Canadian barley area was forecast at 7.17 million acres versus 7.405 million in 2012. Toepfer forecast the 2013 German wheat crop up 8.3% on last year to 24.18 MMT and versus the 23.35 MMT that they forecast in May. Deutsche Bank forecast Q4 wheat prices in Chicago at USD6.35/bushel. The trade is expecting the US all wheat planted area to fall around half a million acres from the USDA's March forecast to around 55.9 million acres in Friday's report. Jul 13 CBOT Wheat closed at USD6.75 3/4, down 3 1/4 cents; Jul 13 KCBT Wheat closed at USD7.04 1/4, down 11 cents; Jul 13 MGEX Wheat closed at USD8.09 1/4, down 2 cents.

London Wheat Ends At Lowest Levels Since Noah Was In Short Trousers

25/06/13 -- EU grains closed mixed with a very thin and choppy Jul 13 London wheat finishing the day GBP5.00/tonne easier at GBP158.50/tonne, and with Nov 13 ending unchanged at GBP167.50/tonne. Nov 13 Paris wheat settled EUR0.25/tonne steadier at EUR196.75/tonne.

This was the lowest close for a front month in London wheat since Noah was in short trousers - well as far back as I can remember to early 2012 at least. The Jul 13 future is clearly very technical, it didn't actually trade lower than GBP160.00/tonne on the day, and could easily finish GBP5.00/tonne higher later in the week, just as it did on Friday when Nov 13 was GBP0.25/tonne lower.

The spectre of a strong rebound in Black Sea/Eastern European production this year still hangs over the market. Serbian/Hungarian, Romanian, Ukraine and Russian origin wheat were all competitively offered in Iraq's wheat tender that closed over the weekend relative to EU or US prices.

The Ukraine Weather Centre estimated 2013 grain production at 52-53 MMT versus 46.2 MMT last year. Rain later in the week in Western Ukraine should improve prospects for corn in the region, said Agritel.

The Ukraine Ministry said that the harvest there currently stands at 2.2 MMT, with average yields so far at 2.32 MT/ha, up 43% on this time a year ago. The total includes 1.44 MMT of winter barley and 687 TMT of winter wheat.

The Russian Ministry said that 2.1 MMT of winter grains had now been harvested there, with yields averaging 4.17 MT/ha, up 40% on year ago levels. That includes 945 TMT of barley, with yields up 44%, and 756 TMT of wheat, where early yields are coming in 39% above last year.

The Russian government is still selling intervention stocks off, to be replaced by new crop grain at some point no doubt. They sold 39,477 MT at today's offering, bringing the total sold so far since the auctions began last October to 3.61 MMT.

Stats Canada estimated the Canadian all wheat area at 26.18 million acres, up 10% on year ago levels, although slightly lower than the 26.618 million forecast in April. They pegged this year's barley area at 7.17 million acres, down 3.2%, with corn plantings up 2.8% at 3.645 million and the canola area down 8.5% at 19.7 million. Despite reduced plantings on the latter a recovery in yields this year is expected to see production rise.

This means that "Canadian producers have reduced summer fallow from 11.7 million acres in 2011 to 3.49 million acres (in 2013) in response more marketing flexibility," said Benson Quinn Commodities.

Israel are tendering for 85 TMT of corn, 56 TMT of feed wheat and 20 TMT of barley. Black Sea origin may be the most likely source.

Deutsche Bank became the latest investment bank to predict sharply lower grain prices heading into the final quarter of the year. They said "we see downside to December corn towards USD4.60 a bushel, but we expect demand from China to support corn in the USD4.50-a-bushel range," according to Agrimoney. That's around 15% below where the Dec 13 future currently stands.

Chicago wheat prices could fall around 10% from where they now trade and soybean prices could fare the worst of the three, they said, as they recommended selling November soybean futures short. Prices could fall below USD10 a bushel by early next year, they warned - a dip of around 20-25% versus where the Jan 14 future currently lies.

EU Rapemeal Prices

25/06/13 -- Rapemeal prices on the continent are mostly weaker again today after rapeseed futures in Paris dipped to their lowest levels since late 2010 last night. Not that meal prices are anything like that low mind.

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

Chicago Mixed, Beans Up, Corn And Wheat Lower

24/06/13 -- Soycomplex: Soybeans shrugged off sharply lower overnight trade when the open outcry session began, posting strong nearby gains into the finish. Better than expected weekly export inspections of 7.827 million bushels were up from the 2.7 million the previous week, lending support. These have been running at only around 3-5 million in recent weeks. The trade was looking for US soybean plantings to come in around 95% done after the close, in fact the number was lower than that at 92% done (versus 95% for the 5-year average and 100% this time last year). Emergence was up from 66% a week ago to 81%, but lagging 89% for the 5-year average and 98% this time last year. Crop conditions were only up one point in the good/excellent category to 65% (but better than 53% a year ago), versus hopes for an improvement of up to 3 points. Iowa has the worst crop conditions at 12% poor/very poor. As soon as one report ends we start trading the next. The market is looking for US soybean stocks as of June 1st to come in just above 440 million bushels in Friday's quarterly stocks report. The market will also get the June planted acreage report, with the trade looking for the 2013 soybean acreage to come in at 77.9 million, up from the USDA's March estimate of 77.1 million. Jul 13 Soybeans closed at USD15.12, up 18 3/4 cents; Nov 13 Soybeans closed at USD12.73 1/2, unchanged; Jul 13 Soybean Meal closed at USD451.00, up USD3.30; Jul 13 Soybean Oil closed at 47.55, down 47 points.

Corn: Unlike soybeans, the corn market couldn't manage to recover from overnight weakness. Weekly export inspections of only 5.843 million bushels, versus 14.1 million the previous week, didn't help. Brazil's safrinha, or second crop corn, harvest has now reached the southern state of Parana - the country's second largest safrinha corn state after Mato Grosso. Harvesting is around 3% complete and production of around 10.8 MMT is expected, approximately 1 MMT more than a year ago. As with beans, a 2-3% jump in US good/excellent crop ratings was expected this week. As with beans, after the close the market didn't get it. The USDA said 65% of the US 2013 corn crop was in good/excellent condition, up only one point from a week ago, but better than 56% this time last year. They said that emergence was 96% versus 99%. Iowa has the worst ratings of a major corn state at 14% poor/very poor. Other states did show a marked improvement this week though, with Illinois up from 57% to 67% good/excellent. In Friday's USDA June 1st stocks report US corn stocks are expected to come in at 2.845 billion bushels. The US 2013 corn planted area is seen falling from the 97.3 million acres estimated in March to 95.3 million. Jul 13 Corn closed at USD6.53 1/4, down 8 1/2 cents; Dec 13 Corn closed at USD5.46 1/2, down 9 3/4 cents. With the trade not getting the crop improvement it was looking for then a modest "Turnaround Tuesday" rebound might be on the cards for tomorrow.

Wheat: The wheat market bore the brunt of today's action, at least it did in Chicago and Kansas. There seems to still be enough concern around for Minneapolis spring wheat to support that market relative to the other two. News that US wheat was miles out in offers put up for an Iranian wheat tender that closed on Sunday added to the bearish tone. Weekly export inspections of 14.758 million bushels were down almost 7 million on last week too. Reports suggest that early US winter wheat yields are better than expected now that the harvest is moving into Kansas. The USDA said after the close that the winter wheat harvest was now 20% complete nationally, not as high as many expected, with the top state of Kansas only 8% done. The 5-year average for this time is 37% nationally and 39% in Kansas. This may have a negative impact on some double cropping with soybean plans. Winter wheat crop conditions good/excellent improved one point to 32%. Poor/very poor was unchanged at 43%. Spring wheat plantings are now 96% done versus 99% for the 5-year average, emergence is 90% versus 97% normally. Spring wheat crop conditions good/excellent rose 2 points to 70%. In Friday's USDA reports the trade is looking for June 1st wheat stocks of 745 million bushels and a US all wheat acreage of 55.9 million acres, versus 56.4 million in March. Jul 13 CBOT Wheat closed at USD6.79, down 19 cents; Jul 13 KCBT Wheat closed at USD7.15 1/4, down 21 1/4 cents; Jul 13 MGEX Wheat closed at USD8.11 1/4, down 2 3/4 cents.

EU Grains Paint The Town Red

24/06/13 -- EU grains began the week on the defensive, taking their cue from weaker US wheat markets Friday night and again this morning. Chicago wheat turned sharply lower in afternoon trade once the CBOT open outcry session got underway, adding to the negative tone.

Jul 13 London wheat finished the day GBP4.00/tonne lower at GBP163.50/tonne, and with Nov 13 ending down GBP2.75/tonne at GBP167.50/tonne. Nov 13 Paris wheat settled EUR4.00/tonne easier at EUR196.50/tonne.

Paris rapeseed also extended its recent dismal run, with front month Aug 13 closing EUR5.75/tonne lower at EUR405/00/tonne, breaching the 2011 front month lows and closing in on a potential dip below EUR400/tonne for the first time since  Oct 2010.

Some of the current weakness can be attributed to harvest pressure. Reports out of the US suggest that the winter wheat harvest has progressed into Montanna and is likely to begin in Ohio by the end of the week. Yields out of the top producing state of Kansas are said to be variable, but better than expected overall.

European prospects also seem generally favourable. There's even optimistic talk that the UK crop might yield a bit better than feared, and that quality could actually be pretty good this year.

In Russia, the spring planting campaign is complete at 30.6 million hectares, say the Ministry. The spring wheat area is 12.7 million ha, down just over 300k on last year. The spring barley area is up almost 250k ha on year ago levels at 8.4 million ha and the corn planted area is now seen at 2.3 million ha, over 400k ha higher than last year.

The barley harvest is now well underway in the south and a bit of early wheat has also been cut. The wheat harvest should be full steam ahead by the end of next week.

An Iranian wheat tender closed on Sunday, with the lowest offer said to be a joint venture between Serbia and Hungary at USD311.67/tonne C&F. Russian wheat was said to have been offered at USD318.29/tonne versus US wheat priced in at over USD400/tonne. The tender is for 50 TMT but they usually buy considerably more.

It's not all about harvest pressure though, outside influences are also at play. The commodity market has the jitters following last week's statement from Fed Chairman Ben Bernanke that the US could soon start reigning in it's hitherto "free and easy" approach to QE. A slowdown in Chinese growth is also a cause for concern.

The latest commitment of traders report from the CFTC shows funds cutting their net long in corn and soybeans last week, whilst adding to their wheat shorts in the week through to last Tuesday night.

The trade is expecting meanwhile that the USDA will report US soybean plantings up around the 95% complete region tonight, along with a 1-3% point gain in good/excellent ratings. Corn crop conditions may improve 1-2% good/excellent, with spring wheat performing likewise, whilst the winter wheat harvest is seen advancing to around 25% done versus 11% a week ago.

Oct13/Apr14 wheatfeed pellets in the south east of the UK reportedly traded at GBP140/tonne ex mill on Friday, with sellers over at the price and no buyers today. That means we're unlikely to see a queue of feed compounder buyers lining up to book wheat at current levels just at the moment, even if London wheat has dropped around 20% since the turn of the year.

The Morning Vibe

24/06/13 -- It's red across the board to start the week, with the overnight Globex grains showing wheat 6-8 cents easier, corn down 6-9 cents and soybeans 9-13 cents lower on all but front month Jul 13. Soymeal is flat on the Jul 13 but USD2.60-3.80 lower on the remainder. EU grains look like they will open lower too.

It would seem that the threat of the US pulling back on QE as early as September, and potentially removing it altogether by next summer is prompting more "risk off" trade in commodities in general.

As the Sunday Times said yesterday, introducing QE on this scale was a massive experiment, withdrawing it will also be an experiment.

Predicting what the grain markets will do under such circumstances is therefore not going to be easy as we don't really have a benchmark situation to help us.

When the Yanks do start to turn off the USD85 billion a month morphine drip (and as mentioned before they can hardly keep on doing that forever can they?) a further flight to safety looks the most likely scenario. That could be particularly true if Chinese growth continues to slow.

The world has come to rely on both to keep the global commodity market's head above water since the spectacular financial crash of 2008.

In other news , the trade is looking for an improvement in crop conditions in tonight's USDA report, along with a jump in soybean plantings into the upper 90's complete as of Sunday night.

Tomorrow we get the latest Stats Canada acreage estimates. Thursday brings the usual USDA weekly export sales, before Friday we get the USDA's June acreage estimates and quarterly stocks numbers.

The trade is expecting the Canadian 2013 all wheat area to come in at 26.183 million acres. In April Stats Canada estimate was 26.618 million. The Canadian canola area average estimate is 19.635 million acres. In April they estimated that at 19.133 million.

The average trade estimate for US Jun 1st wheat stocks is 745 million bushels (versus 743 million a year ago), with corn coming in at 2.845 billion (vs. 3.148 billion in 2012) and soybeans at 442 million (vs. 667 million in 2012).

As far as the acreage report is concerned the trade is expecting the corn area to fall 2 million acres on average to 95.3 million from the 97.3 million the USDA estimated in March (and versus 97.2 million in 2012). The soybean area is seen rising to 77.9 million acres, from 77.1 million in March and 77.2 million in 2012. The all wheat area is forecast at 55.9 million acres, versus 56.4 million in March and 55.7 million a year ago.