Nogger's Blog: 8 Sept 2013

Chicago Retreats On Pre-Weekend Profit-Taking

13/09/13 -- Soycomplex: With the exception of expiring from month Sep 13, the remainder of the soybean contracts gave up a fair chunk of yesterday's gains in what looks like pre-weekend profit-taking. There's up to 1 1/2 inches of rainfall in the forecast for some parts of the Midwest this weekend, and they could still be of benefit to some of this late planted and slow maturing soybean crop. As things currently stand though the odds seem to be stacked in favour of a greater chance of final US yields, and therefore production, ending lower than the 41.2 bu/acre and 3.149 billion bushels that the USDA gave us yesterday. "Soybean production estimates on September 1 are notoriously unreliable in years with August drought, being based primarily on a pod count. However, it is the size and number of the soybeans that determines the yield. Once harvesting begins, revealing ground truth, production estimates can sometimes decline sharply," caution Martell Crop Projections. Further significant US soybean yield/production losses potentially place 2013/14 ending stocks in a perilously tight situation, given that cumulative export sales for 2013/14 are already running at 58% of the USDA forecast for the season versus a 5 year average of 43% at this time. As noted yesterday, the South America cavalry are coming to save the day (hopefully), for the second year in a row. What would happen to soybean prices meanwhile should they get a serious weather scare in Brazil/Argentina is anybody's guess. In Brazil’s top soybean-growing state, Mato Grosso, it is illegal to plant soybeans before Sunday (in an effort to contain the Asian Rust virus). Planting began in earnest around Sep 22 last year, but current conditions in the state are said to be too hot and dry, leaving Brazilian growers weather-watching for rain, but there are only scattered light showers in the forecast for the week ahead. Goldman Sachs have now raised their 3-month CBOT soybean price forecast to USD12.50/bu versus a previous estimate of USD10.50/bu. Sep 13 Soybeans went off the board at USD14.88 3/4, up 46 3/4 cents; New front month Nov 13 Soybeans closed at USD13.81 1/2, down 14 1/2 cents; Sep 13 Soybean Meal closed at USD496.20, up USD15.30; New front month Oct 13 Soybean Meal closed at USD444.60, down USD4.60; Sep 13 Soybean Oil closed at 42.22, down 47 points; Oct 13 Soybean Oil closed at 42.34, down 44 points. For the week Sep 13 beans gained 51 3/4 cents, and Nov 13 added 13 3/4 cents. Sep 13 meal posted a gain of USD14.10 versus last Friday and Sep 13 oil fell 114 points.

Corn: Unlike soybeans, the expiring front month Sep 13 corn contract was friendless, crashing 29 cents lower at the close. Other months posted losses of around 6-7 cents for a second session in a row. The USDA report gave the market better than expected yields and production in the US this year, along with higher 2013/14 ending stocks. In short there was nothing bullish for corn aside from a bit of spillover support from soybeans. There is still however the possibility that the USDA's acreage estimates are overstated for both corn and soybeans. The USDA's Farm Service Agency are expected to release updated estimates on the area of corn than went unplanted this spring on Tuesday next week. Reports continue to circulate of better than expected yields out of the southern Midwest, the southeast and Mississippi delta regions, but it's how things shape up once the harvest moves onto the heart of the Corn Belt that will decide where we go from here. The harvest lows might not be in yet for corn. The southest and delta are set to stay largely dry for the weekend and into the early part of next week, which will accelerate harvest activity. Goldman Sachs left their 3-month corn price forecast unchanged at USD4.25/bu. Russia and Ukraine have just begun harvesting what is also expected to be a record corn crop, with the former around 5% done and the latter just 2% into what is expected to be a 29-30 MMT crop. Corn growing conditions in Ukraine have been said to be "near ideal" this year. The two FSU nations are expected to export 20-21 MMT of corn in 2013/14. The Ukraine Ag Ministry said that Ukraine has exported 4.61 MMT of grains between July 1st and Sept 13th, including 2.26 MMT of wheat, 1.47 MMT of barley and 600 TMT of corn - up 10.7% from a year ago. They are expected to be very aggressive sellers of corn come October/November. Despite a production downgrade this week, Europe's corn crop will still rise 11% on last year to 64 MMT, according to Strategie Grains. The USDA see the European crop even higher at 65 MMT. FranceAgrMer today increased the proportion of the French corn crop rated good/very good by one point to 56%, although that still lags last year's level (69%) significantly. The latest Commitment of Traders report showed managed money increasing their net short position in corn by 180 contracts for the week through to Tuesday night, bringing their total net short position to 64,686 contracts. Sep 13 Corn closed at USD4.50, down 29 cents; Dec 13 Corn closed at USD4.59, down 7 1/4 cents. On the week that puts Sep 13 corn down 41 1/2 cents and Dec 13 is 9 1/2 cents weaker.

Wheat: Where corn goes, wheat follows. Whilst the expiring front months did their own thing, generally CBOT wheat finished with losses of around 11-13 cents, with Kansas wheat down 10-12 cents and Minneapolis wheat closing in the region of 7-9 cents easier. The trend for wheat remains lower, dragged down by falling corn. New front month Dec 13 CBOT wheat closed at USD6.41 1/2 tonight, last November it was over USD9.00/bu and has been in terminal decline ever since. So where has it all gone wrong for wheat? The USDA gave us record world production yesterday, up 8.2% to 709 MMT, although consumption is only seen rising by less than half that pace, up 3.8%, in 2013/14. As ever, it's not just how much, but who? And with wheat, we have large production increases coming from quality sellers like Canada, Europe and Australia along with big leaps in output from the cheaper end of the market - Russia, Ukraine and Kazakhstan. This should keep them all six of these major sellers aggressive in the export market whilst the US continues to be generally overpriced. Demand is also seen taking a hit from the impending record world corn crop. US wheat exports are however holding up well this year, thus far, although this is largely due to new business from the likes of Brazil and China. The former won't be buying from the US once it's own (and Argentina's) wheat harvest begins towards the end of the year however, so this is a relatively short-term boost. There have been unconfirmed rumours of Canadian wheat trading into Brazil this week. China meanwhile has gone quiet of late, particularly in relation to purchases from the US. Canada and Australia are also well placed to service their needs. Saskatchewan's grain harvest as of September 9th was said to be 30% complete, with better than average yields being seen. The Buenos Aires Grains Exchange said that beneficial rains fell this week in Argentine wheat areas. There's talk of potential quality problems with Russian and Kazakh wheat which have seen an unusually wet finish to the growing season. Although Russia is expecting a sharp rise in wheat production this year, they may only reap 14 MMT of so-called third grade milling wheat, according to one analyst quoted on Reuters today. That's less than the 19 MMT of 3rd grade milling wheat they harvested last year. That potentially leaves a large surplus of 4th grade biscuit and feed wheat around and looking for a cheap export home in 2013/14. Sep 13 CBOT Wheat closed at USD6.27 3/4, down 14 cents; Sep 13 KCBT Wheat closed at USD6.85, down 21 3/4 cents; Sep 13 MGEX Wheat closed at USD7.05 1/4, down 1/4 cent. For the week that puts CBOT wheat 7 1/4 cents lower, with Kansas down 23 1/2 cents and Minneapolis losing 2 1/2 cents.

EU Grains Under Pressure From Large/Record Harvests, Abundant FSU Production

13/09/13 -- EU grains closed mostly lower on harvest pressure and the increasing size of the global wheat and corn crops to record levels, along with a sharp recovery in barley production. Rapeseed was dragged higher by firmer soya prices in Chicago last night, following the news from the USDA yesterday that US soybean stocks look set to remain tight for another year.

Nov 13 London wheat settled GBP1.15/tonne easier at GBP152.50/tonne whilst Jan 14 was GBP0.70/tonne lower at GBP155.45/tonne. Nov 13 Paris milling wheat slipped EUR0.50/tonne to close at EUR186.25/tonne. Nov 13 Paris rapeseed was up EUR4.50/tonne to EUR376.00/tonne on the notion that rapeseed prices offer value relative to soya.

For the week, Nov 13 London wheat fell GBP5.00/tonne, with Paris wheat down a more modest one euro, whilst Paris rapeseed was still EUR6.25/tonne easier despite today's price hike. The firmer pound hasn't helped London wheat's cause again this week, and today was Friday the 13th after all.

Wheat prices remain under pressure from the impending arrival of the world corn crop, one that is expected to be record large in size - almost 100 MMT higher than last year and up more than 70 MMT on the existing all time high set in 2011/12. World trade in corn meanwhile is seen less than 1 MMT up on that previous record year in 2013/14.

Another negative for wheat is the size of this year's barley crop, both domestically and on a global level. The world barley crop was forecast almost 10% than last year in yesterday's USDA report at 141.7 MMT. The crop in Europe is up 6.5%, led by sharp increases for Spain, up nearly 55%, and the UK which is seen having a production increase of 23% this year.

The very high level of wheat imports into the UK in 2012/13 meant that carryover stocks into 2013/14 were far higher than you would have expected given the sharp drop in production last year. Even with a second successive poor production year in 2013 we've probably still got an exportable surplus of 500-750 TMT this season, yet we've only so far applied for export licences for a paltry 3,600 MT of soft wheat, according to the latest numbers from Brussels. To put that into perspective, Cyprus, Austria and Finland are ahead of the UK in the EU soft wheat export table right now.

On an EU level though exports are roaring away. The USDA yesterday raised their forecast for EU-28 wheat exports to a record 23 MMT, which is 800 TMT ahead of last season. So far Brussels have issued soft wheat export licences for 5.2 MMT already in 2013/14, more than double where we were at this time a year ago. France and Germany are neck and neck in the lead with a little over 1.5 MMT worth of export licences each, with Romania plugging on stoutly in third with 911 TMT worth - more than 250 times the volume that the UK have currently been granted.

The UK do at least lie sixth in the EU barley export table, having currently been granted a little over 80 TMT worth of export licences. Germany top that table with just over 1 MMT, and the French are second with a little over 700 TMT worth.

If this were a school report it would probably read something like: Name: UK; Subject: barley - must try harder; Subject: wheat - never heard of him.

At least we do have some much brighter samples of wheat and barley domestically this year, although unfortunately that also means that the premiums for quality are also much lower than 12 months ago.

The minutiae of yesterday's USDA report reveals minor upward tweaks to UK production estimates, with the wheat crop here raised from the 11.9 MMT forecast last month to 12.1 MMT now. The UK barley crop was increased from 6.75 MMT to 6.8 MMT and the domestic OSR crop was raised from 1.9 MMT to 2.0 MMT.

As ever, a glance at the "cheap seats" provides a useful barometer. Russia and Ukraine are set to harvest their largest corn crop on record, and by some considerable distance. Russia will harvest 9 MMT and Ukraine 29 MMT, according to the USDA. Some private estimates are a million tonnes higher on each, potentially giving them a combined crop of 40 MMT, more than half of which will go for export.

That means that both countries are now producing around three times the volume of corn that they were just 3-4 years ago. A combination of favourable weather, the planting of newer varieties and generally adopting a more Westernised approach is behind this trend - not to mention last year's high corn prices.

Russia's wheat crop was estimated at 54 MMT yesterday by the USDA, a 43% rise on last year. They've already harvested 43 MMT of wheat with around a third of the planted area still left to go, which even allowing for the fact that what's left to harvest will be lower yielding spring wheat, suggests that final production could in fact be closer to 60 MMT.

The USDA increased their forecast for the Ukraine wheat harvest by half a million tonnes yesterday to 22 MMT, a near 40% hike on last year. That crop is already in the bin, and in some cases has already been exported.

Meanwhile Kazakhstan are in for a 17 MMT wheat harvest, a near 73% jump on production in 2012, according to the USDA. The shady old Kazakh Ministry are only currently forecasting an entire grain crop of 15 MMT - although the fact that they've already harvested more than 7.5 MMT off 40% of the planted area suggests that their estimate may be too low.

As well as much larger wheat and corn crops in 2013, these three FSU nations will also see a sharp jump in barley production this year. Russia's barley crop is seen rising nearly 22% to 17 MMT, with Ukraine's up 8% to 7.5 MMT and Kazakhstan's 47% higher a 2.2 MMT. Ukraine's barley exports are forecast by the USDA to hold steady at 2.2 MMT, but Russia's will jump 43% and Kazakhstan's will more than double.

Chicago Ends Mixed, US Bean Stocks In 2013/14 Already Seen Tight

12/09/13 -- Soycomplex: The USDA came out with a 2013 US soybean production estimate of 3.149 billion bushels, and pegged yields at 41.2 bu/acre, just about exactly in line with the average trade guess. The thing that got the market really excited was cutting 2013/14 US ending stocks to 150 million bushels. That was down sharply for a second month, and below trade expectations which on average were 165 million. This means that they USDA have now slashed 135 million bushels off their projected ending stocks for the coming season in the past two WASDE reports. That takes us from being in a comfortable surplus situation to potentially another year of tightness and price rationing. They left 2012/13 US ending stocks unchanged at 125 million bushels. Firstly, the trade thinks that this "line in the sand" number is too high, just that the USDA is too afraid or stubborn to admit it. That means that beginning stocks for 2013/14 are probably too high. Second, the trade thinks that final yields may well end up lower than today's 41.2 bu/acre estimate. Thirdly, the USDA didn't include any reduction in harvested acres for this year in today's report. The trade thinks that these will come in subsequent reports. All three of those add up to making 2013/14 ending stocks far tighter than today's 150 million bushels estimate suggests. Essentially, the USDA have transported us all back in time 12 months. The South American cavalry ARE coming to save the day, don't you worry your pretty little head about that. It's just that they haven't even started saddling the horses up yet. The USDA increased their forecast for Brazil's 2013/14 soybean crop from 85 MMT to a new record 88 MMT, which is in line with what other analysts have been saying recently, today's price hike might even encourage them to plant a little bit more than they've indicated thus far. Argentina's crop was left unchanged from last month at 53.5 MMT, not quite a record, but more than 4 MMT up on this year and again there's plenty of time for upward revisions based on higher plantings than currently anticipated. Paraguay's crop estimate was increased from 8.4 MMT to 9.0 MMT. It's just that none of this has even been planted yet. One subtle difference between this year and last is perhaps that at least Brazil and Argentina do have something left to sell of their 2012/13 crop, this time 12 months ago the "sold out" signs were already hanging in the shop windows down in South America. From a global demand perspective the USDA left China's import requirement in 2013/14 unchanged at a record 69 MMT, that could still be a bit too high. US exports were trimmed a little, as too were Argentina's. Brazil and Paraguay picked up the slack. Sep 13 Soybeans closed at USD14.42, up 36 3/4 cents; Nov 13 Soybeans finished at USD13.96, up 37 3/4 cents; Sep 13 Soybean Meal closed at USD480.90, up the daily USD20.00 limit; Sep 13 Soybean Oil closed at 42.69, up 4 points. All Sep 13 contracts go off the board tomorrow.

Corn: For corn this was a bearish report, with 2013 US production increased from last month's 13.763 billion bushels to 13.843 billion. The average trade guess was 13.646 billion. Yields were estimated at 155.3 bu/acre, up from 154.4 bu/acre last month and above the average trade estimate of 153.9 bu/acre. The upward revision for the US corn crop was balanced by downward adjustments for Argentina (down 1 MMT to 26 MMT), the EU, Canada and Serbia. World corn consumption in 2013/14 was revised over 2 MMT lower, taking ending stocks to 151.4 MMT, which is 1.2 MMT more than estimated last month and 28.8 MMT, or 23.5% up on carryout at the end of 2012/13. The USDA actually slightly increased US harvested acres in this report, which was a bearish surprise. The trade may think that some cuts to the harvested area will ultimately have to be made, and these may come somewhere down the line. IKAR estimated Russia's 2013 corn crop at 10.0 MMT, SovEcon said 9.7 MMT versus 8.2 MMT last year and 9.0 MMT from the USDA. IKAR pegged Russian corn exports at 3 MMT which is 1 MMT above today's USDA forecast. To date Russia has harvested just under 600 TMT of corn off less than 5% of the planted area. Strategie Grains cut their forecast for the EU-28 corn crop from 65.7 MMT to 64.0 MMT, although that is still an 11% rise on last year. Adverse summer weather conditions have taken the shine off yield potential in some of the key growing zones like France, Germany and central Europe. "The hot, generally dry conditions throughout the summer in these countries have caused water stress for the plants, and decreased yield potentials," they said. The USDA are a million tonnes higher than that. Argentina approved a further 3 MMT of 2012/13 corn for export. The harvest there is just about done and the Ministry are very bullish on production prospects with an estimate in excess of 32 MMT. That's far higher than the USDA's 25.5 MMT and outstrips their domestic requirement of 8.0 MMT very comfortably indeed. The USDA left their 2013/14 Brazilian corn production estimate unchanged from last month at 72.0 MMT, down 9 MMT on last year's record output. MDA CropCast forecast a Brazilian corn crop of 73.6 MMT next year. Weekly corn export inspections came in below expectations of 400-600 TMT at 332,600 MT. By the close about to expire Sep 13 Corn stood at USD4.79, down 3/4 cent, with Dec 13 Corn at USD4.66 1/4, down 6 1/4 cents. In the case of Sep 13 that was almost 13 cents off the lows of the day and Dec 13 ended 10 cents off the lows on spillover support from soybeans.

Wheat: The USDA report was always expected to be more about corn and soybeans than it was for wheat, and so it proved. CBOT wheat subsequently traded both sides on the day, but ultimately closed a little higher. The USDA raised their world wheat production estimate for 2013/14 from 705.4 MMT to a new all-time high of 708.9 MMT. Canada's wheat crop was raised 2 MMT from last month to 31.5 MMT, a near 16% increase on a year ago. The EU-28 wheat crop was raised 1.5 MMT to 142.9 MMT, a 7.4% increase on last year. Ukraine got a 0.5 MMT rise to 22.0 MMT, more than 39% up on last year. World wheat consumption was trimmed slightly to 706.5 MMT, taking global 2013/14 ending stocks to 176.3 MMT, up 3.3 MMT on last month and a very comfortable 25% stocks to use ratio. US wheat exports in 2013/14 were left unchanged at 30 MMT. Stiff competition from Canada and Europe was noted by increasing exports there by 0.5 MMT to 20.5 MMT and 1 MMT to 23.0 MMT respectively. Exports from Russia (17 MMT) and Ukrane (10 MMT) were left unchanged from last month although both offer significant increases on last season's performance (Russia 2012/13 exports were 11.3 MMT and Ukraine's 7.2 MMT). Egypt's imports were raised 0.5 MMT, also to 9.5 MMT, making them joint top with China in the world wheat import table. Iran's imports were raised 0.5 MMT to 4.5 MMT. French Analysts Strategie Grains raised their forecast for EU soft wheat production by 1.3 MMT to 135.5 MMT, 8% up on a year ago. Add in 8.1 MMT of durum wheat too and we have a European all wheat crop of 143.6 MMT, which is 700 TMT higher than today's USDA estimate. Weekly US wheat export sales came in at 543,900 MMT for shipment in 2013/14 and a further 2014/15 sale of 8,000 MT to Mexico (5,500 MT) and Malaysia (2,500 MT). These were in line with trade expectations were 400-650 TMT. Brazil was again a featured buyer for 2013/14, booking 210,800 MT. They've been the leading buyer of US wheat now for four out of the past five weeks, which is providing a welcome boost for US exports. Corn continues to offer a bearish bias to the wheat market, although the seasonal trend says that for wheat the lows should now be in. Sep 13 contrcts expire tomorrow. Sep 13 CBOT Wheat closed at USD6.41 3/4, up 6 3/4 cents; Sep 13 KCBT Wheat closed at USD7.06 3/4, down 1 1/2 cents; Sep 13 MGEX Wheat closed at USD7.05 1/2, unchanged.

EU Grains Mostly Lower Ahead Of USDA Crop Report

12/09/13 -- EU grains were mostly lower ahead of this afternoon's important USDA crop report.

At the close Nov 13 London wheat settled GBP1.35/tonne easier at GBP153.65/tonne, and Jan 14 was EUR1.30/tonne lower at GBP156.15/tonne. Nov 13 Paris milling wheat fell EUR1.25/tonne to close at EUR186.75/tonne and Nov 13 Paris rapeseed slid EUR0.75/tonne to EUR371.50/tonne.

The HGCA said that the English cereal harvest is just about done, save for a few last minute bits of tidying up. Nationally the UK wheat harvest is said to be 95% complete versus 85% done a week ago. Yields are averaging at around 7.6-7.7 MT/ha, they said.

The winter barley harvest is over. Spring barley harvesting has advanced from 70% complete last week to 85% finished this time round. Yields are 5.5-5.7 MT/ha. The winter OSR crop is 98% harvested and the spring OSR crop is 25% done, they added. Yields on the former are said to be 3.2-3.4 MT/ha and "good" on the latter.

Strategie Grains raised their forecast for the EU-28 soft wheat crop by 1.3 MMT from last month to 135.5 MMT, which is 8% more than last year and the fourth monthly increase in a row. They increased their European barley production estimate by 800 TMT to 59.1 MMT, which also represents an 8% rise on 2012 and is their fifth successive output hike. The EU-28 corn crop was lowered 1.7 MMT from last month to 64.0 MMT, although that is still 11% more than a year ago.

The Russian grain harvest lumbers slowly on, now standing at 67.7 MMT off just over 64% of the projected crop area. Wheat accounts for 42.6 MMT of that off 64.5% of plan. Wheat yields stubbornly refuse to go down, averaging over 40% up on year ago levels. They could end up with a wheat crop of 60 MMT at this rate, even if a larger proportion of it than normal is only feed grade.

They've also currently harvested 13.4 MMT of barley (off 73% of plan), along with almost 600 TMT of corn (5%) and 1.1 MMT of sunseed (6%).

The Russian government are debating whether to increase the 42 billion rubles already promised farmers to compensate them for crop damage this year by a further 12 billion rubles. In sterling terms 54 billion rubles is GBP1 billion in round figures. That does make the cynic wonder if this year's crops are being deliberately under-estimated by local government to qualify for a larger slice of the compensation pie.

MDA CropCast cut their Argentine wheat production forecast by 100 TMT to 11.60 MMT. "Rains favoured central and eastern Buenos Aires this past week, which improved moisture a bit for wheat. However, dryness and hot conditions are resulting in significant crop stress in western and northern areas. Rains should build across Santa Fe, Entre Rios, northeastern Buenos Aires, and La Pampa this week, which will improve moisture there for wheat. However, the sudden shift to much cooler conditions will likely continue to stress the wheat," they said.

Other than that they made no other alterations to the global supply line for wheat on 2013/14.

Wet weather in the FSU, especially Ukraine, is seen boosting corn production prospects in the region.

As the EU market closed the USDA was releasing it's latest September WASDE report, which will dictate market direction tomorrow.

Septic Peg Speaks

12/09/13-- Septic Peg, my spirit guide from beyond the grave, has been in touch via the ouija board and says that this afternoon's USDA report will be BEARISH on beans, quite BEARISH on corn and NEUTRAL on wheat.

Beans will be 30-40 cents lower shortly after the numbers come out, corn will trade around 15 cents easier and wheat will follow corn lower, she says. Woooooo....

Morning Musings

12/09/13 -- Well folks here we are, sitting waiting for another USDA report that may immediately be dismissed as being bollocks due to it being based on an unusually immature crop. Still, there's another one due out next month....

MDA CropCast have thrown their prediction hat late into the ring, cutting their US corn production forecast by 91 million bushels from last week to 13.376 billion. That's a bit below the average trade guess of 13.62 billion, although not outrageously so (and still a record crop). They do have a regular habit of being on the low side however, I find.

"Rains remained quite limited this past week, which favoured maturing corn across the southern Midwest and Delta. Rains are expected to build back across western areas this week, especially Iowa, northern Missouri, and western Illinois. However, the rains will be too late to improve conditions for corn, as growth is now finishing up there," they said. I'll agree with that bit at least.

They do seem rather bearish on soybean production prospects though, even more so than Allendale. They've cut their 2013 US soybean production estimate by 39 million bushels from last week to only 2.967 billion. That's 4.4% down on last year's drought riddled crop and below the lowest trade estimate in a recent Reuters survey. Rain might be coming but it's coming too late to help beans they say.

Allendale gave us a soybean yield estimate of only 39.0 bu/acre last week - the lowest in the range of trade estimates. I just can't buy that, not with the USDA having 52% of the crop rated good/excellent versus only 32% this time a year ago when yields ended up at 39.6 bu/acre. I don't see the USDA buying it either.

Some of the lower production estimates in the ring are partially down to an expected lower harvested area than the USDA said in August though. Remember all those unplanted acreage estimates from the USDA's own Farm Service Administration? An intended 1.6 million acres of US soybeans never got planted this year, along with 3.4 million acres of corn, that's what they said last month.

The question is will the USDA cut their harvested area forecasts to reflect this? We don't know, this is the USDA that we are talking about here remember. All we can do is sit and wait to find out the answer.

For beans the USDA's August estimate for harvested area was 76.4 million acres, and for corn it was 89.1 million. The average trade guess for today is 76.25 million on beans and 88.56 million on corn, so the market isn't expecting the USDA to lose that much in area, at least not this month.

I don't do predictions but if I did the this has nil nil written all over it. Who said that? Or was it "I saw the Russian weightlifter's snatch this morning and it was amazing" or "The batsman's Holding, the bowler's Willey" - I forget which. Anyway IF I was going to predict what will happen this afternoon then it would be that the corn and bean production numbers could be higher than the trade expects.

Harvested area might indeed end up being lower than what the USDA forecast last month, I just don't think that they will make any big adjustments today.

However, even if the numbers are big, and therefore bearish for prices, then it's entirely possible that they will be disregarded as inaccurate and that the market will return to trading what it perceives to be "the real numbers" regardless of what the USDA with their Spectrum ZX, a few coloured pencils and their back of a fag packet calculations say.

I therefore confidently predict that the market could do anything this afternoon! I'll get the old runes out about 4ish and see if I can get something a bit more concrete off my old deceased mucker Septic Peg, my spirit guide from beyond the grave, who has a fairly decent track record in these things.

Wooooooo, is there anyone in the room called John? Is your great, great grandfather dead John? He is isn't he, I knew it. I can see a man with a moustache wearing old fashioned clothing. Did your great, great grandfather wear old fashioned clothing too John? He did. Well I never, this is going rather well isn't it. Was it dark clothing, John? He never wore yellow did he? No. I knew it. Did he sometimes wear a tie on special occasions? A coat when it was chilly? Yes. It's him alright and no mistake. He's got a message for you John, he says it's very important. Woooooo. He says.......what its it? He says hit the buy Nogger a beer button and all your dreams will come true, yes even the one featuring Kylie and her sister....he's fading now....leave the money on the plate on the way out John, there's a good lad.

Meanwhile, in other news, our old garlic munching chums Strategie Grains have released their latest September EU-28 crop production estimates today. They've raised their soft wheat crop estimate by 1.3 MMT, led by a 600 TMT upgrade for the French crop, to 135.5 MMT, an 8% increase on last year. They've also upped their EU-28 barley production estimate by 800 TMT to 59.1 MMT, also an 8% increase on 2012. For corn they've cut their forecast by 1.7 MMT from last month to 64.0 MMT, although that's still 11% more than last year.

The Russian grain harvest lumbers slowly on, now standing at 67.7 MMT off just over 64% of the projected crop area. Wheat accounts for 42.6 MMT of that off 64.5% of plan. Wheat yields stubbornly refuse to go down, averaging over 40% up on year ago levels. They could end up with a wheat crop of 60 MMT at this rate, even if a larger proportion of it than normal is only feed grade.

They've also currently harvested 13.4 MMT of barley (off 73% of plan), along with almost 600 TMT of corn (5%) and 1.1 MMT of sunseed (6%).

Is it 5 o'clock yet?

EU Rapemeal Prices

12/09/13 -- Rapemeal prices on the continent are higher across the board on ideas that these levels are cheap on a percentage basis relative to soymeal.

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

Sep13	210.00	+6.00
Oct13	213.00	+5.00
Nov13/Jan14	218.00	+3.00
Feb/Apr14	219.00	+4.00
May/Jul14	217.00	+4.00
Aug/Oct14	206.00	+4.00
Nov/Jan14	213.00	+6.00

Chicago Market Subdued Ahead Of USDA Report

11/09/13 -- Soycomplex: The soy market gave the impression that traders have positioned themselves where they want to be heading into tomorrow's USDA report for a second day, closing with only marginal gains. The most active Nov 13 soybean contract had a trading range of less than 13 cents during the daytime open outcry session. Satellite technology firm Lanworth Inc estimated this year's US soybean crop at 3.113 billion bushels, down a fraction from their previous estimate of 3.114 billion. They have the world soybean crop in 2013/14 at 278 MMT, unchanged from their previous estimate and a little below the USDA's 281.7 MMT forecast. Planting in South America will be underway within days, and both Brazil an Argentina are expected to ramp up the seeded area in preference to corn. In the Brazilian state of Parana the local Ag Department said that they expect farmers to sow 4.85 million hectares of soybeans, a 4% increase on last year and almost seven times the area that will be sown to corn (710,800 ha), producing a record crop of 16.1 MMT in 2013/14. The Chinese government are to auction off another 500 TMT of state-owned soybean reserves tomorrow. CNGOIC estimated China's 2013 soybean crop at 12.5 MMT, down 4.2% from a year ago. All we can do now is sit and wait for tomorrow's USDA report. There's a feeling that, taken at face value, this might be bearish for beans. However, the trade is already starting to discount this report before it's even been released. The late maturity of the crop makes final yields more of a guess than normal in a September report, there is also a feeling that harvested acres might not be revised lower until next month. Combine both of those factors and we have the potential for production and yields to maybe come in higher than the average trade guess of 3.14 billion bushels and 41.17 bu/acre respectively. The average trade guess for 2012/13 US soybean ending stocks is 123 million bushels, even though the USDA have steadfastly refused to go lower than 125 million for months now. Carryout for 2013/14 is expected to be cut sharply for the second month in a row, to 165 million bushels from 220 million last month. Sep 13 Soybeans closed at USD14.05 1/4, up 1 1/2 cents; Nov 13 Soybeans closed at USD13.58 1/4, up 3 1/4 cents; Sep 13 Soybean Meal closed at USD460.90, down USD1.60; Sep 13 Soybean Oil closed at 42.65, down 8 points. Note that Sep 13 contracts go off the board on Friday so some volatility in those positions could be expected. The large disparity between Sep 13 and Nov 13 beans (and Oct 13 meal) could mean that the new front months attempt to add in some premium over the deferreds. Trade estimates for tomorrow's weekly export sales report for beans are 650-800,000 MT.

Corn: The corn market also posted modest gains heading into tomorrow's report. Lanworth raised their forecast for US 2013 corn production from 13.33 billion bushels to 13.396 billion, up 24% on a year ago and a new record. Lanworth estimated US 2013 corn yields at 152.2 bu/acre. They upped their estimate for the world corn crop by 2 MMT to 942 MMT thanks to larger output from the US and Ukraine. In the latter they increased their estimate by 3% from previously to a record 26.4 MMT. The Ukraine Ag Ministry are even more bullish on corn production prospects this year, they raised their forecast to 29-30 MMT amidst what has been described as near perfect growing conditions helped by recent rains. That potentially would give them a total grain crop in excess of 60 MMT this year. Getting it to market will now be their biggest problem. There's talk of Argentina raising their corn export quota by a further 3 MMT to 20 MMT. The French Ministry say that their corn crop will be up 2.8% on last year to 15.9 MMT despite unhelpful weather. The average trade estimate for tomorrow's US 2013 corn crop is 13.620 billion bushels, from within a range of estimates of 13.330–14.013 billion. The USDA's August estimate was 13.763 billion and 2012 final production was 10.780 billion. Yields are seen averaging 153.69 bu/acre, from within a range of estimates of 150.2–157.2 bu/acre. The USDA's August estimate was 154.4 bu/acre and 2012 final yields were 123.4 bu/acre. China's CNGOIC said that their 2013 corn crop will be a record 215 MMT, and that domestic consumption in 2013/14 will be just under 200 MMT. They only forecast imports at 5.5 MMT which is 1.5 MMT less than the USDA. Chinese private mills currently have an annual corn import quota of just under 2.9 MMT, with state-owned mills having a further 2.6 MMT, which is where CNGOIC's estimate of 5.5 MMT comes from. Feed millers have been buying US sorghum and DDGS as a corn alternative by all accounts. Taiwan have signed a deal to buy 5 MMT of US corn and to 500 TMT of US DDGs over the next 2 years. Weekly export sales also due out tomorrow are expected to come in between 400-600,000 MT. Sep 13 Corn closed at USD4.79 3/4, up 5 cents; Dec 13 Corn closed at USD4.72 1/2, up 3 1/2 cents.

Wheat: The wheat market also managed modest gains ahead of tomorrow's report. This was likely due to light short-covering just in case the USDA spring a surprise. If they do it is more likely to be for corn or soybeans than wheat, but where corn goes wheat follows so a bit of prudence was probably in order. US wheat remains priced out into Egypt. The USDA did however announce the sale of 120 TMT of HRW US wheat sold to Nigeria for 2013/14 delivery. Russia's grain harvest stands at 67.2 MMT off 63.4% of the planned area. The Russian wheat harvest currently stands at 42.3 MMT off 63.9% of the expected area, with yields up 39.7% at 2.64 MT/ha. Rain is making for slow progress, as indeed it is also in Kazakhstan. Quality downgrades in wheat are possible in both. Northern Kazakhstan is sid to have had 36mm of rain in the past two days. The French wheat crop is getting larger now that the harvest is over, the Farm Ministry there raised their forecast to 37 MMT, up 4% on last year and a 9 year high. Separately FranceAgriMer forecast 2013/14 French soft wheat exports rising to 18.1 MMT, a 5.2% increase versus 17.2 MMT last season. Exports to non-EU destinations are forecast to rise more than 11% to 11 MMT, and some private estimates are as high as 12 MMT. The average protein content in this year's French wheat crop is said to be 11.2% versus 11.4% last year. Bangladesh picked up a best offer of just over USD288/tonne C&F in their tender to import 50 TMT of wheat. Iran said that they might need to import as much as 7.5 MMT of wheat in 2013/14 "due to shortcomings in the agricultural sector." Lanworth estimated the world 2013/14 wheat crop at 702 MMT, unchanged from their previous forecast. There's talk of India wanting to sell 2 MMT of state-owned wheat, although the rupee has fallen considerably of late price could still be an issue as the Indian government have paid over world prices for the stock that they own. Trade estimates for tomorrow's weekly export sales report for wheat are 400-650 TMT. Sep 13 CBOT Wheat closed at USD6.35, up 1 1/4 cents; Sep 13 KCBT Wheat closed at USD7.08 1/4, up 1 1/2 cents; Sep 13 MGEX Wheat closed at USD7.05 1/2, up 4 1/2 cents.

EU Grains Mixed In Range-Bound Trade

11/09/13 -- EU grains closed mixed with Nov 13 London wheat settling GBP0.50/tonne higher at EUR155.00/tonne and Jan 14 also GBP0.50/tonne firmer at GBP157.45/tonne. Nov 13 Paris milling wheat rose EUR0.25/tonne to EUR188.00/tonne whilst Nov 13 Paris rapeseed settled EUR1.25/tonne lower at EUR372.25/tonne.

Chicago wheat traded 2-3 cents higher for most of the morning, but turned a bit lower in afternoon trade after revised US weather forecasts showed a chance of rain in some of the driest areas of the western winter wheat belt on the Central and Southern Plains where planting for 2014 is just about getting underway.

The EU wheat market remains range-bound. London wheat has only closed above GBP160/tonne once in the past six weeks, and Paris wheat above EUR190/tonne twice in the past seven weeks. The pound rose above 1.58 against the US dollar for the first time since February and hit an intra-day high of 1.1925 against the euro today - it's highest since January. That helped keep a lid on London wheat.

The French Farm Ministry late yesterday raised their forecast for soft wheat production there from 36.1 MMT to 37 MMT, a nine year high and more than 4% up on last year. Yields have averaged 7.42 MT/ha this year, up slightly versus last year and the 5-year average despite early harvest fears, they said.

The French corn crop is forecast 3.8% higher at 15.90 MMT, but barley output is seen falling 7.2% to 10.53 MMT, and OSR production is down by more than 20% to 4.36 MMT.

Separately FranceAgriMer forecast 2013/14 French soft wheat exports rising to 18.1 MMT, a 5.2% increase versus 17.2 MMT last season. Exports to non-EU destinations are forecast to rise more than 11% to 11 MMT, and some private estimates are as high as 12 MMT. While the supply side of the French market leans bearish, can they export more than the 9.9 MMT shipped outside the EU in 2012/13 whilst the Black Sea continues to sell to Egypt and others at cheaper levels?

French wheat has so far failed to make any inroads into Egypt this season, who've now booked more than a million tonnes of wheat in the past fortnight, all of it from cheaper sellers on the Black Sea. In yesterday's tender, where they purchased a Ukraine, Russian, Romanian 235 TMT combo for Nov shipment, French wheat was priced at USD278.50/tonne including freight versus Black Sea offers around USD267-268/tonne.

French cash prices today are around EUR183/tonne for milling wheat FOB Rouen (around GBP154/tonne), with feed barley priced at EUR175/tonne (GBP146.50/tonne) and new crop corn as available FOB Bordeaux at EUR167/tonne (GBP140.50/tonne).

The EU Parliament today voted to cap the proportion of biofuels used from food crops in transport fuels to 6%, supporting an earlier motion from the EU Commission. The proposal will now go before the heads of the 28 member states for final ratification.

A record world rapeseed crop is on the way, according to Informa Economics, led by an 18% jump in Canadian production to 15.7 MMT. The EU-28 crop will rise 7% this year to 20.5 MMT, they added. Ukraine has exported 0.9 MMT of OSR in the first nine weeks of the new marketing year, meaning that they could be all done before Christmas, say Agritel. They won't mind that a bit with a monster corn crop on the horizon.

Heavy late August and early September rains in the FSU countries are proving to be a mixed blessing. Oil World say that they've improved conditions considerably for winter OSR planting in Ukraine which is about halfway done. They've also boosted corn production potential there. The Ukraine Ministry today increased their corn production forecast from 26 MMT to 29-30 MMT, smashing the previous all time high of 22.8 MMT set in 2011 by some considerable distance.

The rains in Ukraine have however stalled the sunflower harvest and are also leading to slow progress, and possible quality losses, for late wheat harvesting in Russia and Kazakhstan - northern Kazakhstan has had 36mm of rain in the past two days.

The Russian wheat harvest is 63.9% complete, producing a crop of 42.3 MMT to date, with yields up 39.7% on last year at 2.64 MT/ha. The Kazakh harvest stands at over 6 MMT off around a third of the combinable crop area.

Ask Nogger

11/09/13 -- Today's question comes from Mr Joe Public of Hackney, who writes:

Q: Dear Nogger, at the end of the day it seems to me that 99% of all farmers are just a gang of loaded, money-grabbing, government subsidised, inbreds who live in a big house with half a dozen cars in the garage yet do nothing but moan about their lot whilst sitting on their fat backsides all day driving a tractor whilst shooting pheasants out of the window and clubbing little baby badgers to death. Tell me I'm wrong.

A: You are wrong Joe, this is a common fallacy amongst people like yourself who live in council houses and watch Jeremy Kyle all day and have no knowledge of country ways. The correct percentage is 97.4%, according to the latest figures from Defra. Next.

EU Rapemeal Prices

11/09/13 -- Rapemeal prices on the continent a bit firmer today, consolidating a little from some steep losses yesterday. Informa are forecasting a record world OSR crop of 65.2 MMT this year, led by a jump of 18% in Canada and a European crop 7% higher than last year.

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

Sep13	204.00	+2.00
Oct13	208.00	+2.00
Nov13/Jan14	215.00	+2.00
Feb/Apr14	215.00	+1.00
May/Jul14	213.00	+1.00
Aug/Oct14	202.00	+1.00
Nov/Jan14	207.00	unch

The Morning Papers

11/09/13 -- The overnight Globex grains are narrowly mixed, mostly a tad higher. It looks like the trade has positioned itself where it wants to be ahead of tomorrow's USDA report. EU grains are following suit, also showing little change in early exchanges.

The pound has traded up above 1.58 versus the USD for the first time since February this morning, and at 1.1925 against the euro - its best since January - after news that UK unemployment fell to 7.7% in May/Jul versus 7.8% in the previous quarter. That's got a few people thinking that the long era of ultra low interest rates may not be tooooo far off coming to an end.

China's CNGOIC forecast a record domestic corn crop again this year (no surprises there then) with production at 215 MMT. That will outstrip consumption by 15 MMT, they say. They see Chinese corn imports at 5.5 MMT in 2013/14, almost double those of 2012/13, but 1.5 MMT less than the USDA currently project.

Chinese private mills currently have an annual corn import quota of just under 2.9 MMT, with state-owned mills having a further 2.6 MMT, which is where CNGOIC's estimate of 5.5 MMT comes from. Feed millers have been buying US sorghum and DDGS as a corn alternative by all accounts.

The Argie government may raise corn export quotas by 3 MMT to 20 MMT, according to local traders. The Ministry are forecasting a bumper corn crop this year, the harvesting of which is just about done.

The French Farm Ministry have raised their soft wheat production forecast from 36.1 MMT to 37 MMT, up 4% versus 35.5 MMT last year. They have this year's corn crop at 15.9 MMT versus 15.32 MMT last year. Barley output is seen down to 10.53 MMT from 11.34 MMT and OSR production falling to 4.36 MMT from 5.46 MMT.

Egypt bought 4 cargoes of Black Sea wheat last night, priced at around USD251.50-255/tonne FOB, or circa USD267-268 including freight. The cheapest French offer was USD258.50/tonne FOB, or USD278.50/tonne C&F.

The EU Parliament is today expected to back proposals from the EU Commission to limit the percentage of biofuels in transport fuel coming from food crops to 5.5% by 2020. If passed the motion still needs to be approved by the EU-28 member state's own governments though.

The Russian wheat harvest currently stands at 42.3 MMT off 63.9% of the expected area, with yields up 39.7% at 2.64 MT/ha. Rain is making for slow progress.

Oil World say that late August rains (which have carried through into early September) have improved soil moisture conditions for Ukraine winter OSR, of which the crop is around half planted. The weather has however stalled the Ukraine sunseed harvest.

APK Inform say that Ukraine will harvest a record 57.1 MMT of grain this year, higher than UkrAgroConsult's forecast of 56 MMT of yesterday. They see exports of wheat, corn and barley being limited by logistics to 23.5 MMT in 2013/14, although potentially Ukraine could export far more than this. That means that carryover stocks into 2014/15 could be large.

Informa have increased their world OSR production estimate to a record 66.8 MMT, from 65.2 MMT previously and up 7% on last year's 62.5 MMT. They have the Canadian crop at 15.7 MMT, a rise of 18% on last year. Their forecast for the EU-28 OSR crop is 20.5 MMT, up almost 7% on 2012.

Informa estimate the 2013/14 US soybean crop at 87.4 MMT, up 6.5%. The Brazilian crop next year is seen at a new record 85.2 MMT, up 4% and the Argie crop is also forecast to come in at a record 58 MMT, up 16%.

Chicago Traders Position Themselves For USDA Report

10/09/13 -- Soycomplex: The trade looks like it's more or less given up on the weather adding anything extra to US soybean yields this year. What is out in the field will soon be in the barn. At least there's no early frost talk. The trade also now seems to have positioned itself where it wants to be heading into Thursday's USDA report, judging by tonight's close at least. Trade expectations for that centre around a US 2103 soybean crop of 3.1-3.2 billion bushels, with yields seen around 41.2-41.2 bu/acre. The USDA were 3.225 billion and 42.6 bu/acre last month. Michael Cordonnier left his US 2013 bean yield estimate unchanged at 40.5 bu/acre today. The other big thing to watch out for as far as beans are concerned on Thursday are where will 2013/14 US soybean ending stocks be placed? The USDA cut 75 million bushels off their July estimate last month, from 295 million to 220 million. The average trade guess for this report is a further sharp decline to 165 million, which is not that much better than the 2012/13 "line in the sand" of 125 million - a level that was seen as being sufficiently tight to send prices much higher than where they currently reside. To add further demand support to new crop, the USDA today announced the sale of 121 TMT of US soybeans sold to "unknown" for 2013/14 shipment. Customs data this week showed that China imported 6.37 MMT of soybeans in August. Their imports are seen falling to 4.9 MMT in September and again to 4.6 MMT in October, before they start to pick up again. Safras e Mercados said that Brazil has sold 25% of their 2013/14 bean crop versus 17% a month ago, although well behind the level of 43% a year ago. Sales have picked up due to the recent price rally and the continued depreciation of the Brazilian real, they said. They estimated Brazil’s 2013/14 bean crop at a record 88.17 MMT, up 7.5% versus 82.0 MMT a year ago. Planting of that will begin within a week. Argentine growers are also expected to "go large" with soybean plantings. Paraguay’s Ag Ministry estimated their 2013/14 soybean crop at 9.3 MMT, matching last year's record crop. Sep 13 Soybeans closed at USD14.03 3/4, down 1/2 cent; Nov 13 Soybeans closed at $13.55, down 1 1/2 cents; Sep 13 Soybean Meal closed at USD462.50, down USD3.30; Sep 13 Soybean Oil closed at 42.73, down 8 points.

Corn: Corn was mixed, but mostly higher, as fund money did some light short-covering ahead of Thursday's WASDE report. The trade is expecting the USDA to come out with a 2013 US corn production number around the 13.6 billion bushels mark, with yields in the 153.5-153.9 bu/acre region. Last month the USDA were at 13.763 billion bushels and 154.4 bu/acre. Reports today suggest that Michael Cordonnier left his US 2013 corn yield estimate unchanged at 152.0 bu/acre. The trade will also have an eye on 2012/13 and 2013/14 demand/carryout on Thursday. It seems that the USDA have overstated demand from the ethanol sector for the 2012/13 marketing year based on the weekly reports from the Energy Dept, so old crop ending stocks could come in a bit higher than last month's 719 million bushels should they make an adjustment there. As far as new crop goes, current forward sales are ahead of themselves, and 2013 production is probably lower than thought in August, so the trade is expecting a reduction to 2013/14 carryout from the 1.827 billion bushels estimated last month to around 1.70-1.75 billion. Unlike soybeans, South American corn production is seen trending lower for 2013/14. They do have plenty of old crop left though, and Brazilian corn is currently the cheapest in the world - even lower than Ukraine origin. Brazil's CONAB today estimated the 2012/13 corn crop at 81.3 MMT, up 1.0 MMT from previously, and a new record. UkrAgroConsult meanwhile forecast Ukraine's corn crop this year at a record 25.5 MMT. A report on Reuters today suggested that Chinese feed mills are buying US sorghum as corn import quotas run out. Some also suggest that China's DDGS imports could double to 4 MMT in 2013/14 as they seek corn alternatives. The US corn harvest in the south is fairly well advanced. In Georgia the harvest is 69% complete, Louisiana is 97%, and Arkansas is 43%. The cash market is already beginning to feel the impact of this increased supply. The latest weekly ethanol production data comes out tomorrow, last week's report showed production at only 819,000 barrels/day. Sep 13 Corn closed at USD4.74 3/4, down 2 1/2 cents; Dec 13 Corn closed at USD4.69, up 5 1/2 cents.

Wheat: Wheat closed with modest gains on all three exchanges. As with corn, there was light fund buying and short-covering ahead of Thursday's USDA report. No major changes are expected for wheat, but there's always the capacity for a surprise. It's certainly possible though that corn could do something dramatic, and wheat would likely follow suit. UkrAgroConsult forecast the Ukraine wheat crop at 21 MMT, up by a third on a year ago. The Russian grain harvest currently stands at 66.8 MMT off 63% of the planned area. Kazakhstan's grain harvest (mostly wheat) currently stands at just over 6 MMT off almost a third of the planned area. Both suggest that official Ministry forecasts for 2013 could be on the low side. Egypt were back in the market again for wheat (for Nov shipment), buying two cargoes from Ukraine and one each from Russia and Romania. They say that they have sufficient purchases to cover their needs through to February, but the market expects them to buy more for Nov/Dec shipment in the coming days/weeks. In a "half full or half empty" move, ABARES cut their forecast for the 2013 Australian wheat crop from 25.4 MMT to 24.5 MMT, although that's still 11% more than they produced in 2012. They also said that Australia will export a hefty 80% of their production in 2013/14 - 19.5 MMT. Oman bought 30 TMT of Russian wheat for Nov shipment. Japan seeks 113,572 MT of US, Canadian, and Australian milling wheat for Oct/Dec shipment in their regular weekly tender. Iraq are tendering for at least 50 TMT of wheat, but usually buy more. As the trade continues to evaluate the magnitude of losses to the 2013 Brazilian wheat crop caused by frost, CONAB today cut their forecast to 4.95 MMT versus previous estimate of 5.62 MMT. The Brazilian government increased the volume of duty-free wheat that local millers can import from 2.3 MMT to 2.7 MMT, and extended the duty-free period up until the end of November, to coincide with the end of their own harvest and the beginning of that in neighbouring Argentina. Sep 13 CBOT Wheat closed at USD6.33 3/4, up 5 cents; Sep 13 KCBT Wheat closed at USD7.06 3/4, up 5 1/4 cents; Sep 13 MGEX Wheat closed at USD7.01, up 2 1/4 cents.

EU Wheat Narrowly Mixed, Direction Needed

10/09/13 -- EU grains closed narrowly mixed, with the market hoping for some much-needed direction in Thursday's upcoming USDA WASDE report.

Nov 13 London wheat settled GBP0.25/tonne easier at GBP154.50/tonne whilst Jan 14 was GBP0.20/tonne firmer at GBP156.95/tonne. Nov 13 Paris milling wheat stumbled EUR0.50/tonne higher to close at EUR187.75/tonne.

Egypt were back in the market again for wheat, their tenth tender of 2013/14 and the fifth in the past fortnight. They are looking for wheat for Nov 1-10 and 11-20 shipment, with the results expected later this evening. They've already bought 2 MMT of wheat since they re-entered the market in July, and now say that they have sufficient supplies to last them through to mid-February, although they haven't bought anything beyond November yet.

French wheat offers have been getting a bit closer to Black Sea wheat in recent Egyptian tenders, although Romanian and Ukraine origin will probably be the favourites again.

UkrAgroConsult increased their forecast for the Ukraine grain crop from 53.8 MMT to a new record 56 MMT today. That total includes record corn output of 25.5 MMT, along with 21 MMT of wheat and 7.23 MMT of barley.

Ukraine FOB grain prices are amongst the cheapest in the world at the moment: 12% milling wheat USD245-248/tonne; 11% milling wheat USD235-240/tonne; feed wheat USD227-230/tonne; corn USD190-195/tonne.

The Russian grain harvest now stands at 66.8 MMT off 63% of the planned area. Wheat accounts for 41.8 MMT of that off 62.2% of plan, along with 13 MMT of barley off 71% of plan.

According to Russian customs data they exported 3.48 MMT of grain in August versus 2.75 MMT in August a year ago. Of that total 3 MMT was wheat. That takes their 2013/14 grain exports to date to 6.42 MMT, up 20% versus 12 months ago.

The Kazakh grain harvest stands at just over 6 MMT off 32.3% of plan. That makes the Ministry estimate for full production of "only" 15 MMT look too low.

Australia's ABARES cut their forecast for wheat production there to 24.5 MMT from a previous estimate of 25.4 MMT, although that's still up 11% on last year. Lack of rain in WA, NWS and QLD is to blame. In traditionally the top producing state of WA they cut their estimate from 8.8 MMT to 7.3 MMT, although that was largely compensated for by a rise in output in SA from the previously forecast 4.1 MMT to 5.2 MMT.

Despite the near 1 MMT cut in production, they only trimmed their 2013/14 wheat export forecast by 100 TMT to a pretty robust 19.5 MMT. They pegged the coming year's barley crop at 7.7 MMT versus 6.8 MMT a year ago and OSR output was seen at 3.31 MMT versus 4.1 MMT last year.

Chicago Lower Ahead Of USDA Report

09/09/13 -- Soycomplex: Beans ended sharply lower on front month Sep 13, which expires on Friday, with most active Nov 13 also posting double digit losses. Profit-taking and book-squaring ahead of Thursday's upcoming USDA WASDE report were probably the main reasons behind the declines as Midwest weather forecasts were little changed, and weekend rains were as scattered as advertised. A Reuters survey esitmated US 2012/13 soybean ending stocks at an average 123 million bushels, from within a range of 107-145 million and the USDA's previous "line in the sand" of 125 million. World 2012/13 ending stocks are seen little changed from last month's 62.22 MMT at 61.73 MMT. For 2013/14 the average trade guess for US carryout was seen well below the USDA's August forecast of 220 million bushels at 165 million. Note that this was as high as 295 million from the USDA just a couple of months ago and reflects the strong pace of new crop US sales. Factoring in Friday's weekly export sales figures, cumulative 2013/14 US soybean sales now stand at 54.5% of the USDA forecast for the season versus a 5-year average of 40%. The Reuters survey pegged world 2013/14 soybean ending stocks at 71.17 MMT, a little over a million down on last month's 72.27 MMT. China's August soybean imports were 6.37 MMT, down 11.5% versus July but up 44% compared to July 2012. That puts Jan/Aug Chinese soybean imports at just over 41 MMT, a rise of 4.4$ year-on-year. Recent dry weather in Argentina is seen pushing some intended corn area into beans. Agritrend said 120,000 hectares of land planned to go into corn production will be switch to bean acres. They forecast the 2013/14 Argentine soybean crop at a record 53 MMT. Brazil is also seen producing a record 85-88 MMT of soybeans in the coming season. Planting there begins next week. After the close the USDA cut the proportion of the US soybean crop rated good/excellent by "only" 2 percentage points to 52%. The trade was expecting a more dramatic 3-5 point cut. Soybean good/excellent ratings this time a year ago were only 32%. They have 97% of the crop setting pods versus 99% this time last year, and 11% dropping leaves versus 34% in 2012 and 19% normally. Weekly export inspections came in at 2.222 million bushels, in line with the expected 1-3 million. Sep 13 Soybeans closed at USD14.04 1/4, down 32 3/4 cents; Nov 13 Soybeans closed at USD13.56 1/2, down 11 1/4 cents; Sep 13 Soybean Meal closed at USD465.80, down USD16.30; Sep 13 Soybean Oil closed at 42.81, down 55 points.

Corn: The corn market slumped to double digit losses as traders gear up for the USDA to underline their forecast for record 2013 US corn production on Thursday. How record large is this crop is the big question? Linn Group forecast production thus year at 13.751 billion bushels, with yields at 156.8 bu/acre. A Reuters survey came up with an average trade estimate of 13.62 billion bushels and yields at 153.7 bu/acre. Bloomberg said 13.641 billion bushels and 153.9 bu/acre on Friday. The USDA's August estimates were 13.763 billion bushels and 154.4 bu/acre. Some trade estimates are still very bullish on this year's corn crop (and therefore bearish on prices). Informa said Friday that they expect the USDA to raise their forecast for the 2013 US corn crop to above 14 billion bushels. A Reuters survey estimated 2012/13 US corn ending stocks at 718 million bushels, barely changed from the USDA's 719 million in August. For 2012/13 world ending stocks they found an average trade estimate of 122.8 MMT versus 123.1 MMT last month. US 2013/14 corn ending stocks are seen rising sharply to 1.732 billion bushels, although that's a little below the 1.837 billion that the USDA forecast in August. World 2013/14 carryout is seen at 146.93 MMT versus 150.17 MMT previously. South Korea have been busy booking an assortment of corn cargoes over the weekend. Various South Korean feed millers are said to have bought 383 TMT of optional origin corn for Feb-March shipment since Friday. There is said to be carryover interest of a further 220 TMT still in the market. How much, if any, of this corn will ultimately come from the US remains to be seen. New crop US corn is priced around USD219/tonne FOB NOLA versus Brazilian corn at USD194/tonne FOB. Both Argentine and Brazilian growers are seen trimming their corn acreage for 2013/14 on a combination of weather and low prices, although output there will still be large and cheap. After the close, the USDA cut the proportion of this year's US corn crop rated good/excellent by 2 percentage points from last week to 54%, in line with trade expectations. That's still hugely better than only 22% this time last year. Maturity still lags though, despite the warm weather, at 9% versus 55% a year ago and 28% normally at this time. The crop is 64% dented versus 92% this time last year and 75% normally. Weekly corn export inspections came in at 9.827 million bushels versus trade expectations of 11-15 million. Harvest pressure continues. Reports of better than expected yields in the south are rife, although many of these will be from irrigated land. Sep 13 Corn closed at USD4.77 1/4, down 14 1/4 cents; Dec 13 Corn closed at USD4.63 1/2, down 4 3/4 cents.

Wheat: Corn was down, so wheat went with it. Fund money is short on CBOT wheat, and has been so for the past year. Friday's Commitment of Traders report showed non-Commercial traders were net short 41,323 CBOT wheat contracts, up 6,410 contracts for the week through to Tuesday night. ABARES Australian crop report is due out tomorrow. Conditions are said to have improved dramatically in Western Australia and are also getting better for wheat in South Australia, Victoria and southern New South Wales. Dryness and heat is still said to be an issue in northern New South Wales and southern Queensland. Macquarie estimated the 2013 Australian wheat crop at 24.0 MMT versus the current USDA estimate of 25.5 MMT. Weekend rains have improved things in the winter wheat belt in Southern Argentina, although Western areas remain dry. Macquarie estimated Argentina’s 2013 wheat crop at 10.5 MMT versus the current USDA estimate of 12.0 MMT. Russia has harvested over 41 MMT of wheat, more than last year's entire crop, with almost 40% of the planned area still to be cut. Yields are up 41%. A Reuters survey estimated 2013/14 US wheat ending stocks at 551 million bushels, unchanged from the USDA's August estimate. World 2013/14 ending stocks were seen at an average of 172.76 MMT, from within a range of estmiates of 169.35-175.72 MMT, little changed from the USDA's August forecast of 172.99 MMT. The USDA said that 80% of the US 2013 spring wheat crop has now been harvested, slightly above the 5-year average of 79%. They said that 5% of the 2014 US winter wheat crop has been planted, which is comparable with normal. Weekly export inspections came in at 31.589 million bushels, down from 37.105 million the previous week, but in line with trade expectations of 29-33 million. US wheat sales are holding up well, thanks to new business from Brazil and China, even if the latter have gone quiet of late. As of August 29th, cumulative sales stand at 53% of the USDA forecast for 2013/14 versus the 5-year average of 43%. This, and the size of the fund short in CBOT wheat, should continue to provide support and buying interest on the dips. The outlook for potentially lower still US corn prices however provides the pressure for the wheat market to move lower yet. Sep 13 CBOT Wheat closed at USD6.28 3/4, down 6 1/4 cents; Sep 13 KCBT Wheat closed at USD7.01 1/2, down 7 cents; Sep 13 MGEX Wheat closed at USD6.98 3/4, down 9 cents.

EU Grains Mostly Lower To Start The Week

09/09/13 -- EU grains were mostly lower to start the week, although there wasn't a great deal of conviction either way. London wheat seems comfortable, at least for now, trading in the mid-150's, and Paris wheat likewise in the upper 180's.

At the close Nov 13 London wheat settled GBP0.30/tonne easier at GBP154.75/tonne, and Jan 14 was EUR0.75/tonne lower at GBP156.75/tonne. Nov 13 Paris milling wheat fell EUR1.50/tonne to EUR187.25/tonne and Nov 13 Paris rapeseed slumped EUR7.50/tonne to EUR374.50/tonne.

As the UK harvest enters the home stretch it's time to evaluate the quality of this year's crops. All in all they look far better than many had dared hope for back in the spring.

As far as the wheat crop is concerned, "dry conditions at harvest have resulted in some of the highest Hagbergs recorded in the past few years," the HGCA said today. They did however note that a large proportion of the samples tested so far come from Eastern England and amongst predominately group 1 and group 2 varieties.

“As harvest progresses and more nabim group 3 and 4 samples are included in the wheat analysis, there will be changes to the wheat data," they said of the current average test results of Hagbergs averaging at 334 and specific weights of 77.8 kg/hl. Protein content is lower than last year at 12.4%, but above the 3 year average of 12.1%, and moisture levels have averaged 14.8%, they said.

Meanwhile barley (both winter and spring varieties combined) specific weights of 67.9 kg/hl are "a marked improvement on last year, but also ranks as one of the highest weights in the past 8 years," they added.

The latest statics from Defra show 512 TMT of wheat was milled in the UK during the first 4 weeks of 2013/14 (to Jul 27), up 3.2% versus the same period in 2012. The volume of imported wheat used was up 220% versus a decline in home produced of almost 26%. Overall the proportion of home produced wheat used in the grist dropped from 88% in Jul 2012 to 63% in Jul 2013.

Barley usage by the brewing, distilling and malt industries in the period was up 13.7% to 156 TMT.

The Czech Stats Office today raised their forecast for the 2013 grain crop there from 6.53 MMT to 6.75 MMT, a near 20% increase on last year. They have wheat production up 31% to 4.61 MMT, with yields rising 29% on a year ago. The OSR crop is seen 29% higher than last year at a record 1.42 MMT, largely due to a 23% jump in yields. Barley production is seen little change from a year ago at 1.6 MMT despite yields being 8% higher.

What's left of the Russian, Kazakh, Romanian and Ukraine harvests have all been slowed by heavy rain. "Almost all of Romania, the centre of Ukraine, and a large part of the west Russia, have received large rains during the last 15 days. Drier weather is forecast for the beginning of the week, but that will become again rainy by the end of the week over Rumania and Ukraine," said Agritel.

The Russian grain harvest has now reached 60% complete, producing 64.7 MMT so far, with average yields up almost 26% at 1.86 MT/ha. The wheat crop now stands at 41.1 MMT off 60.5% of the planned area, with average yields 41% higher than a year ago at 2.71 MT/ha. They've also produced 12.8 MMT of barley off 69.6% of the planned area, along with 968 TMT of sunseed off 5.7% of the plan and 517 TMT of corn off 4.4% of plan.

The Kazakh grain harvest meanwhile is only around 25% complete to date. The Ukraine sunseed harvest is seen 21% complete, along with 8% of the soybean crop. They and Romania will soon be moving onto harvesting corn.

EU Rapemeal Prices Rise In Tandem With Soymeal

09/09/13 -- Rapemeal prices on the continent are firmer, taking their cue from strong soymeal prices Friday and again this morning.

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

Sep13	206.00	+1.00
Oct13	212.00	+2.00
Nov13/Jan14	220.00	+2.00
Feb/Apr14	221.00	+3.00
May/Jul14	219.00	+3.00
Aug/Oct14	208.00	+1.00
Nov/Jan14	216.00	+4.00

Major Server Upgrade

09/09/13 -- Please note that my server problems which began Friday require a major upgrade which is taking place right now.

Some of the elements of the blog and/or content contained within may go missing temporarily during this time. Apologies for the inconvenience.

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