EU Grains Up On The Day, But Mostly Down For The Week

13/12/13 -- EU grains closed mostly higher on continued very strong export demand. Brussels issued 780 TMT of soft wheat export licences this past week, another big weekly number and in fact the second highest of the season so far, which take the total volume issued in 2013/14 to 12.55 MMT, up almost 46% on a year ago. The USDA currently has the EU-28 down to export 10.6% more wheat than in 2012/13.

The session ended with Jan 14 London wheat up GBP1.85/tonne at GBP165.40/tonne, Jan 14 Paris wheat was EUR2.75/tonne firmer at EUR208.50/tonne, Jan 14 Paris corn was down EUR0.25/tonne at EUR175.75/tonne and Feb 14 Paris rapeseed rose EUR1.25/tonne to EUR367.25/tonne.

For the week that puts London wheat up GBP0.70/tonne, Paris wheat was down EUR1.50/tonne, Paris corn fell EUR5.00/tonne and Paris rapeseed shed EUR7.25/tonne. So London wheat managed to punch above it's weight a bit this week relative to the other grains (Chicago wheat was 19 cents lower on the week too).

Trade data shows that the UK imported 221 TMT of wheat in October, similar to the volume imported a year previously, and although that does represent a decline on September's imports it's still quite a big number given that Defra were predicting imports to drop off sharply after the first quarter. Corn imports meanwhile are also ahead of last season's pace and totalled 129 TMT in October.

The Ukraine Ministry said that the country will export 3.5 MMT of grains this month, down from the record 4.7 MMT shipped out in November. Jan/Feb exports will decline further, to around 3 MMT each, they said. The vast majority of that is now likely to be corn.

Ukraine farmers will plant around 8.7 million hectares of spring grains in 2014 (versus a little over 7.7 million ha of winter grains), an increase of 600,000 ha versus 2013, said the Ministry. Around 98% of winter plantings have emerged and approximately 92% are said to be in good/satisfactory condition. The 2014 corn area is expected to expand from around 4.8 million hectares this year to 5.2 million ha.

Russian winter crop conditions are said to be "better than last year" despite delayed plantings. Unseasonably warm weather in October and November has helped crops get established before the onset of winter.

The Buenos Aires Grains Exchange said that the wheat harvest there was around 40% complete, and stood by their estimate for final production of 10.35 MMT, despite output of only 2.9 MMT so far. I guess that we must assume that the more productive land is yet to see a combine?

CBH Group estimated the Western Australian grain crop at 14.5 MMT, up from their previous estimate of 13.2-13.8 MMT, due to better than expected yields.

Indian wheat plantings have been completed on 25.4 million hectares, up 11.5% from a year ago, according to the Ministry.

The Morning Papers And The Emperor's New Clothes

13/12/13 -- One of the first things to grab my attention this morning is the news than a group of US senators have got together to introduce a bill to eliminate the US ethanol mandate completely. See here.

Whether it will actually get passed is another matter entirely of course, but it does highlight the fickle times (and markets) within which we operate. One stroke of the pen in Washington or Brussels and the rule book goes out of the window and we all start again from scratch....

"I remember the good old days when wheat was 200 pounds a tonne, don't laugh, it all used to go up the road to this bloody great big factory where they turned it into some shit or other and then they were back on the blower the next day wanting to buy more. Seriously. They passed a law, a fucking law, ordering that everyone had to buy this shit whether they wanted it or not! They didn't even know they were buying it half the time! Imagine that. That was the year when me and yer Nan bought our first Caribbean island. It worked well for a few years, and it would have carried on working if it wasn't for those pesky senators...."

It is particularly interesting to then hear about this: Biofuel suspected in probe into diesel breakdowns happening here in the UK.

Surely this whole biofuel thing can't be simply one enormous Ponzi scheme where the big boys help themselves get richer whilst pretending to be saving the planet? A scheme which the politicians fell for hook, line and sinker?

What happens of the lawmakers realise that biofuels aren't all they're cracked up to be and pull the plug on the whole little lot? A scary thought eh?

But that's not going to happen is it? The big boys are too, well, BIG. And too well connected, and with pockets that go all the way down to the ground.

Chicago Market Tumbles

12/12/13 -- Soycomplex: Beans crashed lower, despite another week of string export sales, on what looks like continued long liquidation heading into the year end. Producer selling with futures prices over $13/bu is said to be brisk with the first new crop Brazilian soybeans expected to be harvested around New Year's Day. Weekly export sales of 1.1 MMT topped trade expectations for sales of 750-950 MMT. As ever, China (558,100 MT) was the biggest buyer. Total commitments for the season are now at 96% of the USDA forecast. The USDA also reported sales of 413,900 MT for 2014/15 delivery, with that particular campaign already off to an excellent start. Actual shipments this week topped 1.7 MMT, with over 1 MMT of that heading for China. The IGC forecast the world 2014/15 soybean crop at 288 MMT, up 2.1% on this season, with consumption coming in at 285 MMT. Looking ahead they projected global soybean output to rise to 312 MMT by 2018/19, with consumption at similar levels. They see 2018/19 world soybean ending rising from 29 MMT this season to 39 MMT five years from now. They expect Brazil's soybean area to grow from the present 29 million hectares to over 32 million by 2018/19, with Argentine plantings up more marginally - from 20.7 million ha to 21.1 million. By 2018/19 they suggest that Brazil's crop could swell to 99.5 MMT, with Argentine production exceeding 60 MMT and US output to 95 MMT. Chinese soybean production is seen declining slightly, from 12.5 MMT this year to 11.8 MMT by 2018/19. Chinese soybean imports will hit 83.5 MMT by then, from their current forecast of 68 MMT in 2013/14, they say. Oil World said that Australia's canola crop is yielding better than expected, and might exceed 3.6 MMT versus ABARES 3.4 MMT and the Australian Oilseeds Federation's 3.2 MMT. Harvesting is 75-85% complete, they added. MDA CropCast raised their forecast for Brazil's 2013/14 soybean crop by 620 TMT from last week to 88.16 MMT. Funds were estimated to have been net sellers of around 8,000 soybean contracts on the day. Dec 13 meal and oil go off the board tomorrow. Jan 14 Soybeans closed at $13.23 3/4, down 20 1/4 cents; Mar 14 Soybeans closed at $13.11 1/2, down 17 cents; Dec 13 Soybean Meal closed at $459.40, down $5.20; Dec 13 Soybean Oil closed at 39.80, down 40 points.

Corn: The corn market closed around 3-5 cents weaker, reversing yesterday's gains. Weekly export sales of 695,400 MT were in line with trade expectations of 600-750 TMT. Total commitments for the 2013/14 marketing year are currently at 72% of the USDA's target for the season versus 52% normally at this time. The USDA also reported sales of 109,400 MT for 2014/15 for Mexico. Shipments of 977,400 MT included 370,700 MT heading for China despite the ongoing problems with some consignments being rejected if they are found to contain traces of the non-approved MIR 162 strain. There's now talk of China also rejecting DDGS shipments from the US on the same grounds. The market was further unsettled by newswire reports that 10 US senators had raised a bill to eliminate the US ethanol mandate completely. They say that the mandate pushes up food prices, damages the environment, costs the US taxpayer billions of dollars and makes fuel prices more expensive. Like they've only just realised that? The USDA announced the sale of 120 TMT of US corn to unknown for 2013/14 shipment under the daily reporting system, but that caused hardly a ripple. FranceAgriMer cut their French corn production forecast from 15.16 MMT to 14.9 MMT (versus 15.34 MMT last year), they also trimmed exports from 5.86 MMT to 5.49 MMT (versus 6.76 MMT in 2012/13) and raised ending stocks from 2.95 MMT to 3.11 MMT (2.47 MMT last year). The IGC said that world corn production in 2014/15 will only fall surprisingly modestly, down 0.4% to 944 MMT. They see world consumption at 940 MMT next season, with production rising to 1016 MMT by 2018/19 and consumption at 1020 MMT. Brazil's corn crop will grow from 72 MMT this season to 83.8 MMT by 2018/19, whilst output in Europe is seen relatively flat over the next 5 years, at 66 MMT in 2018/19 versus 65 MMT this season. China's corn crop will swell from 210 MMT this year to 234.4 MMT five years from now, they estimate. Interestingly they don't see further dramatic growth in corn production in Russia or the Ukraine across the next five years. Both countries have tripled their output in only a few years, but if the IGC are correct then Russia's crop won't be any higher in 2018 than it is now, and Ukraine's will only be modestly higher at 30.7 MMT. Dec 13 Corn closed at $4.28 1/4, down 3 cents; Mar 14 Corn closed at $4.34 1/4, down 5 cents.

Wheat: The wheat market stumbled generally 6-8 cents lower, although front month Kansas wheat crashed over 27 cents. Dec 13 contracts expire tomorrow on all three exchanges. Weekly export sales of 372,200 MT were hardly thrilling, although trade expectations were also modest at 300-500 TMT. India reportedly picked up best bids of between $282-287 in a couple of tenders for various volumes of wheat out of both the east and west coast of the country. These prices are above the government's newly suggested floor of $260 and so presumably will get booked. The IGC forecast the world wheat crop up 0.4% to 699 MMT next year (2014/15), with consumption almost matching production at 697 MMT, an increase of 1%. Production, consumption and ending stocks are all well matched in their early projections for the next five years. Global output will grown to 737 MMT by 2018/19, with use at 738 MMT and ending stocks steady across the period at between 182-184 MMT. They see increased wheat plantings between now and 2018 in most of the major producers, with Europe's area rising from 25.7 million hectares to 26.5 million, and America's up from 18.5 million ha to 20.3 million. Production will climb in Argentina (up from 10.5 MMT in 2013 to 14.1 MMT in 2018), Russia (50.5 MMT to 56.8 MMT), Ukraine (22 MMT to 22.5 MMT), America (57.5 MMT to 65 MMT), whilst holding steady in Europe and declining from the current record high in Canada to around 30 MMT. Chinese wheat production will continue to see modest growth, up from an anticipated 118 MMT this year to almost 124 MMT in five years time. FranceAgriMer said that winter wheat plantings there are down 1.2% to 4.92 million hectares, whilst those for barley are down 0.4% to 1.13 million ha. They trimmed their forecast for the 2013 soft wheat crop in France from 36.96 MMT to 36.84 MMT (up 3.4% versus 35.62 MMT last year), with exports seen rising from the previous forecast of 18.975 MMT to 19.645 MMT thus ending stocks were cut from 2.9 MMT to 2.4 MMT. Brussels confirmed late in the day that they'd issued a further 780 TMT of soft wheat export licences this past week as demand for European wheat remains strong. That takes the cumulative total for the season so far to 12.55 MMT versus 8.6 MMT this time 12 months ago. Dec 13 CBOT Wheat closed at $6.22 1/2, down 7 3/4 cents; Dec 13 KCBT Wheat closed at $6.69 1/4, down 27 1/4 cents; Dec 13 MGEX Wheat closed at $6.52 1/4, down 6 1/4 cents.

EU Grains Mostly Lower, Are We Breaking Out To The Downside?

12/12/13 -- EU grains closed mostly lower with Jan 14 London wheat ending down GBP1.00/tonne at GBP163.55/tonne and Jan 14 Paris milling wheat settling EUR0.75/tonne easier to close at EUR205.75/tonne. Feb 14 Paris rapeseed fell EUR3.00/tonne to EUR366.00/tonne, whilst Jan 14 Paris corn dropped EUR1.00/tonne to EUR176.00/tonne.

The market, which has been stuck in a relatively sideways move for some time, appears to be showing signs of breaking out to the downside. Whether that is purely a function of year-end selling, which will correct itself in the new year, remains to be seen.

The strong, record even, pace of EU wheat exports is a steadying influence. The USDA raised their forecast for those to an all-time high 25 MMT on Tuesday, up 1 MMT on last month and versus 22.62 MMT in 2012/13. Wheat usage in feed was dropped 1 MMT to 51.5 MMT to account for this.

FranceAgriMer said that soft wheat production there came in at 36.84 MMT this year, down slightly from the previously forecast 36.96 MMT, but up on output of 35.62 MMT last year. Exports (including flour) were raised from last month's 18.975 MMT to 19.645 MMT, cutting ending stocks from 2.9 MMT to 2.4 MMT.

ADAS said that the UK wheat crop could amount to around 14.5-15.1 MMT in 2014, if we ignore the 5-year average yield (which has after all included 2 very difficult years) and go with the 10-year average of 7.8 MT/ha instead. Production in 2013 was 12.1 MMT you may recall, so this would represent an increase of around 20-25%.

"Early indications are that the winter crops have all established well and are in good condition going into winter, however early drilling and lush growth does make the crops more susceptible to lodging and disease so, good management in the spring will be required," they said.

The IGC released a mountain of data concerning crop production for next year and beyond. These numbers are obviously intended to be very much guidelines only, as they can't possibly predict any potential weather-related crop disasters - or any bumper production years come to that.

Overall they see the 2014/15 world wheat crop up only marginally (+0.4%) next year at 699 MMT (based on their assessment of 2013/14, not the USDA's), with corn production falling by a similar percentage to 944 MMT. The global barley crop is forecast down 2.1% at 140 MMT, and the OSR harvest little changed at 68.2 MMT at this early stage.

They see world wheat consumption almost matching production next year at 697 MMT, with corn usage at 940 MMT and that of OSR at 67.7 MMT, so overall there's no big build in ending stocks anticipated.

Going forward, that is generally also the case. World wheat carryout is forecast holding relatively steady between 182-184 MMT from 2013/14 as far forward as 2018//19. Corn ending stocks are also seen flat-lining at around 151-152 MMT over the next five years, with those of OSR also steady at between 6-7 MMT.

The world's 8 major wheat producing nations are seen increasing their cropped area from 116.7 million hectares to 122.1 million by 2018/19, with Europe's up from 25.7 million ha to 26.5 million. Production amongst these countries is forecast to rise from 357.4 MMT in 2013/14 to 375.5 MMT in 2018/19. Europe's output is forecast almost the same in 5 years time as it is now (142.8 MMT). Russia's crop is seen rising from 50.5 MMT to 56.8 MMT, with Ukraine's up from 22 MMT to 24.5 MMT and America's increasing from 57.5 MMT to 65 MMT.

The IGC interestingly don't forecast the rapid expansion in corn plantings in Ukraine and Russia that their respective Ministries foresee. The Russian Ministry said only this week that they anticipate corn production there growing to 25 MMT by 2020, the IGC have output in 2018 at only 9.4 MMT. Ukraine's crop meanwhile is only pencilled in at 30.7 MMT in five years time, barely more than this year's expected output.

Chicago Market Regains Tuesday's Losses

11/12/13 -- Soycomplex: Beans reversed yesterday's losses, closing around 4-6 cents firmer on the day, on continued strong demand. The trade is expecting another robust week of export sales from the USDA tomorrow, with bean sales forecast to come in around 750-950 TMT, and with meal sales of 100-200 TMT. The USDA's office in Brazil estimated the soybean crop there at 88.5 MMT, half a million more than the USDA themselves said yesterday, noting generally ideal weather conditions. They peg Brazil's 2013/14 soybean exports at 45 MMT, which is 1 MMT more than the USDA said yesterday, but 0.9 MMT below Conab's estimate. Celeres pegged Brazil's 2013/14 soybean crop at 87.2 MMT, which is now one of the lowest estimates on the table, with others at 90 MMT, or even a little more. There's a little concern surrounding talk that China may be having a re-think on stockpiling agricultural commodities, according to Deutsche Bank. The theory is that this would allow domestic prices to fall closer to world levels (soybeans on China's Dalian Exchange have been trading at the equivalent of around $20/bu lately). What the government need to concentrate on of course is how not to de-incentivise Chinese farmers from producing crops at all if they perceive prices as being too low. Direct farm subsidies is the way, say Deutsche Bank. Don't expect any sudden announcement on this front overnight, but it's something to be mindful of going forward. The funds are long beans, and may be looking to trim that length heading into the year-end. Whether they will fancy re-establishing fresh longs in January with a potentially monster South American crop then imminent is debatable. The threat of a large output from Brazil and Argentina is often enough to see the market put in lows early in the new year. The USDA's Outlook Forum on Feb 20-21 is expected to indicate farmers' intention to "go large" with spring US soybean plantings too, potentially providing a bit more downside. Jan 14 Soybeans closed at $13.44, up 5 3/4 cents; Mar 14 Soybeans closed at $13.28 1/2, up 6 1/2 cents; Dec 13 Soybean Meal closed at $464.60, up $0.50; Dec 13 Soybean Oil closed at 40.20, up 29 points.

Corn: The corn market regained yesterday's losses, and then some, closing around 3-4 cents higher. The US Energy Dept reported the weekly ethanol grind leaping from 913,000 barrels/day last week to 944,000 bpd - the biggest week since January 2012 - as margins in the sector remain robust. The USDA's revised projections for corn demand from the ethanol sector means that production needs to average around 911,000 bpd to hit that target. Also supportive was the USDA reporting the sale of 120 TMT of US corn to "unknown" for 2013/14 delivery. Brazil exported 3.91 MMT of corn in November, according to customs data. That's similar to the volume exported in Nov 2012, and only marginally less than the 3.95 MMT shipped in October. Ukraine's corn harvest is 98% complete at 29.572 MMT. The USDA raised their Ukraine crop estimate from 29 MMT to 30 MMT yesterday - easily a record production and one which they are keen to export into Europe and Asia. Chinese think tank CNGOIC estimated the corn crop there at a record 217.7 MMT, up 6% on last year and versus their previous forecast of 215 MMT. Chinese government support prices for corn are said to be around the equivalent of around $9/bushel. Large US corn shipments to China are still being held up due to some containing traces of the non-approved MIR 162 strain. Chinese Authorities in the eastern province of Zhejiang are said to have rejected a 59 TMT cargo of US corn today. With demurrage rates what they are, US shippers will have to think seriously about loading vessels for China at the moment until this problem is resolved. Trade estimates for tomorrow's weekly export sales for corn are in the region of 600-750 TMT. Dec 13 Corn closed at $4.31 1/4, up 3 3/4 cents; Mar 14 Corn closed at $4.39 1/4, up 3 1/4 cents.

Wheat: The wheat market posted nominal gains, but fell well short of recovering all of yesterday's losses. The spectre of a record large 711 MMT world wheat crop hangs over the market, particularly with wheat prices at such a big premium to corn. Egypt saw the recent price fall as an opportunity to tender for wheat, picking up three cargoes of Romania and two of French origin for Jan shipment. Tomorrow's weekly export sales report for wheat will be interesting (with the trade expecting sales of around 300-500 TMT). Brazil has gone a bit quiet lately, and Conab yesterday forecast their crop significantly higher than the USDA's 4.75 MMT at 5.36 MMT, which is also up sharply on where they were a month ago (4.81 MMT). There's also some talk that Argentina's crop might not be as low as the Ministry suggest, and that their low ball estimate is politically motivated. The USDA yesterday surprised the market by leaving their forecast for the Argentine wheat crop unchanged at 11 MMT. Demand from Brazil has been one of the main factors supporting US wheat lately. So too has been fresh interest from China, and they also seem to have gone quiet - certainly as far as buying US wheat is concerned - as they are said to now be more interested in Australian wheat. We also this week have had the news that Japan is buying Canadian wheat in preference to US origin. All these things conspired to see the USDA raise their forecast for US wheat ending stocks in yesterday's report, whereas the trade had been expecting a drop of 20 million bushels. Dec 13 CBOT Wheat closed at $6.30 1/4, up 3/4 cent; Dec 13 KCBT Wheat closed at $6.96 1/2, up 2 cents; Dec 13 MGEX Wheat closed at $6.58 1/2, down 1/4 cent.

EU Wheat Rebounds From Tuesday Losses

11/12/13 -- EU grains closed generally a little higher, rebounding from yesterday's slump following a bearish USDA report. Egypt bought EU wheat in a tender, also supporting the market.

Jan 14 London wheat ended up GBP1.75/tonne at GBP164.55/tonne, and Jan 14 Paris wheat finished EUR0.75/tonne firmer at EUR206.50/tonne, Jan 14 Paris corn closed unchanged at EUR1.0077/tonne, whilst Feb 14 Paris rapeseed rose EUR3.75/tonne to EUR369.00/tonne.

The euro rose to a 3-week high against the pound and a 6-week high versus the US dollar, capping potential wheat gains across the Channel today.

Nevertheless, Egypt bought 300 TMT of wheat in a tender for Jan 10-20 shipment, of which 180 TMT is to come from Romania, with a further 120 TMT being French origin. The market can't work out if it's good news that they bought all EU origin, or if it's bad news that Romania is still in there pitching after last week's "purchase" was aborted.

Either way, EU wheat exports remain at a brisk pace.

The French Farm Ministry forecast soft wheat exports in 2013/14 at 18.95 MMT, up from their previous estimate of 18.26 MMT and versus 17.2 MMT in 2012/13. They said that 11.8 MMT of this total will go outside of the EU-28 versus 11.2 MMT previously.

Russia bought 19,575 MT of grain for it's intervention fund today, bringing the total bought so far this season to 485,460 MT of mostly wheat (71,820 MT is barley). They look set to fall well short of their intention to rebuild their intervention stocks by 203 MMT this year.

Ukraine has now harvested 99% of its 2013 grain harvest, producing what is easily a record 63.2 MMT to date. Average yields are 4.02 MT/ha, up 27% on last year's 3.17 MT/ha. Corn accounts for 29.57 MMT of that total, off 98% of plan.

Now that we have the USDA report out of the way the market looks like consolidating into year end. Where we go in the early part of 2014 will be interesting.

Some suggest that the current spell of book-squaring and profit-taking on corn will be over by then, and that fund money may be looking to establish/build on existing short positions. That could pressure wheat down further if that's the case.

India will be harvesting new crop wheat by the end of March, and southern US states won't be too far behind that, so there is certainly some downside potential in the first half of 2014 - especially of winter wheat in Europe and the FSU emerges from dormancy in decent condition.

Current pricing structure would appear to indicate that US spring wheat plantings could steal a few acres off corn too.

Demand from Brazil (and maybe China too) could help fashion price direction early in 2014. The latest vibe seems to be that Brazil's wheat crop may be higher than anticipated (and so too might be Argentina's - normally Brazil's largest supplier).

Chicago Dips Following USDA Data - Led By Wheat

10/12/13 -- Soycomplex: The much-awaited USDA report was neutral to a little friendly for beans, subsequent modest losses may have been down a bit of pre-year end profit-taking. Maybe this report simply wasn't bullish enough, even if the USDA did trim US soybean ending stocks from 170 million bushels to 150 million? Whilst world production was raised from 283.5 MMT to 285 MMT, and ending stocks upped from 70.2 MMT to 70.6 MMT, these increases were less than the market expected. Argentine soybean production was raised from 53.5 MMT to 54.5 MMT, and Brazil's crop was left unchanged at 88 MMT. Chinese imports were also unchanged at 69 MMT. Separately, Brazil's Conab pegged the 2013/14 soybean crop there at just over 90 MMT. Abiove estimated Brazil’s 2013 soybean crush at 35.4 MMT (only 60% of the current crushing capacity), down from 36.4 MMT in 2012. They are clearly looking to major on soybean exports rather than crush, with Conab estimating these at 45.9 MMT in 2013/14. China's Nov soybean imports were 6.03 MMT, up 44% versus October. Cumulative Jan/Nov imports now stand at 56 MMT versus 52.5 MMT in 2012. The Chinese are said to have crushed 60.2 MMT of soybeans so far this year, up 9% from a year ago. Jan 14 Soybeans closed at $13.38 1/4, down 5 1/2 cents; Mar 14 Soybeans closed at $13.22, down 4 3/4 cents; Dec 13 Soybean Meal closed at $464.10, up $2.50; Dec 13 Soybean Oil closed at 39.91, down 14 points.

Corn: The corn market closed around 1-2 cents lower on an overall neutral to slightly friendly USDA crop report. They raised world production from 962.8 MMT to 964.3 MMT and cut global ending stocks from 164.3 MMT to 162.5 MMT (versus the expected 163.3 MMT). There was a 1 MMT increase for the Ukraine crop to a record 30 MMT, and production in both Brazil and Argentina was left unchanged at 70 MMT and 26 MMT respectively. Local analysts Conab and Safras e Mercado both see the Brazilian corn crop far higher. Conab today estimated production at 78.8 MMT, and Safras said 77.2 MMT earlier in the week. The USDA cut US corn ending stocks from 1.887 billion bushels to 1.792 billion, versus the average trade guess of 1.871 billion due to increases in US ethanol use and exports. China’s production estimate was unchanged at 211 MMT as were imports at 7 MMT. There's talk of China maybe starting to test DDGS for traces of the non-approved MIR 162 variety that is currently holding up corn imports from the US. The US Energy Dept will report on weekly ethanol production tomorrow, last week's report gave us a weekly grind of 913,000 barrels/day. Russia's corn crop is 89% harvested at 11.3 MMT, with yields at record levels. Morocco imported 580 TMT in Q1 of 2013/14, with most of it coming from South America, according to local customs data. A second shipment of Ukraine corn is said to have landed in China as part of an inter-governmental deal for Ukraine to ship 2 MMT to the Chinese in 2013/14. Dec 13 Corn closed at $4.27 1/2, down 1 cent; Mar 14 Corn closed at $4.36, down 2 cents.

Wheat: This report has come in bearish for wheat in two out of the last three years, and today the USDA made that three out of four. The market was expecting maybe a 20 million bushel cut to US wheat ending stocks in 2013/14, and instead it got a 10 million increase to 575 million bushels. They also raised their global wheat production estimate from 706.4 MMT to 711.4 MMT, usurping last week's 711 MMT forecast from the FAO. World ending stocks were increased from 178.5 MMT to 182.8 MMT versus the 179.1 MMT expected. Argentine production was expected to fall 1 MMT to 10 MMT, but instead was left unchanged. Canadian output was raised from 33.2 MMT to 37.5 MMT, bringing the USDA into line with last week's Stats Canada number. Australian output was also increased 1 MMT to 26.5 MMT. Clear evidence that Japan is switching away from US spring wheat to Canadian origin is unsettling for US export prospects. Japan imported almost 900 TMT of Canadian Western Red Spring wheat in Apr/Nov, a 40% increase on last year. Imports of US Dark Northern Spring wheat meanwhile have slumped by a third to less than 600 TMT in the same period. Today the Japanese bought 111,173 MT of Canadian Western Red Spring wheat in a tender and no US origin material. Conab forecast the Brazilian wheat crop at 5.32 MMT, up 11% from their previous estimate and versus the USDA's 4.75 MMT. Strong buying interest from Brazil is what has been supporting the US market of late. Dec 13 CBOT Wheat closed at $6.29 1/2, down 9 1/2 cents; Dec 13 KCBT Wheat closed at $6.94 1/2, down 9 cents; Dec 13 MGEX Wheat closed at $6.58 3/4, down 9 1/4 cents.

EU Grains Slip Heading Into USDA Report

10/12/13 -- EU grains closed mostly lower, with the exception of malting barley, heading into the December world supply and demand numbers from the USDA, which only came out just as our markets were wrapping up.

The session ended with Jan 14 London wheat down GBP1.60/tonne at GBP162.80/tonne, Jan 14 Paris wheat was EUR3.25/tonne easier at EUR205.75/tonne, Jan 14 Paris corn was down EUR2.50/tonne at EUR177.00/tonne and Feb 14 Paris rapeseed slumped EUR6.50/tonne to EUR365.25/tonne.

This was the first time that a front month on London wheat had closed outside of the recent narrow trading range of GBP163-166/tonne since mid-October.

The trade was expecting that a possible 1 MMT decrease in wheat production in Argentina would be more than offset by rises for Australia and Canada this afternoon's USDA report.

Stats Canada stunned the market last week by projecting the all wheat crop there at a record 37.5 MMT, which is far higher than the USDA's November estimate of 33.2 MMT and 38% up on a year ago.

That was followed by a FAO forecast for a global all wheat crop of 711 MMT in 2013/14, which is 5 MMT more than the USDA said last month despite it containing a relatively low ball estimate for Canada of "only" 34.9 MMT.

Japan bought 111,173 MT of western red spring Canadian wheat in a tender today. They are reported to have been buying Canadian Spring Wheat in preference to the more expensive US Dark Northern Spring variety of late.

They are said to have bought almost 900 TMT of the former during the Apr/Nov period, an increase of 40% on last year. In contrast purchases of US Dark Northern Spring wheat are down by a third in the same period to less than 600 TMT.

Ukraine said that it's 2013/14 marketing year to date grain exports (Jul 1-Dec 9) were up 20% on last year at 15.353 MMT. Corn is now the leading grain being exported (7 MMT), followed by 6.3 MMT of wheat and almost 2 MMT of barley. The Ag Ministry recently increased their forecast for full season grain exports to 32.5 MMT, up more than 40%, or nearly 10 MMT, on 2012/13.

Russia and Ukraine have both seen an exponential jump in corn production in recent years, a trend that looks set to continue into 2104 and beyond, as growers adopt more Westernised agronomy methods and plant higher yielding hybrid varieties much more extensively.

The Russian Ministry said that they expect this year's corn planted area of 2.1 million hectares to grow to 5 million ha by 2020, when they hope to be harvesting a crop of 25 MMT. Annual production was only 3 MMT as recently as 2010.

Ukraine's corn crop is expected to be close to 30 MMT this year, treble the volume produced only a few years ago. Exports meanwhile are seen up 360% in the past 3 years.

Russia bought 22,680 MT of grains for its intervention fund today, taking the total purchased so far this year to just under 466 TMT. The Russian corn harvest is 89% complete, producing a record crop of 11.3 MMT. Yields are averaging an all time high of 5.29 MT/ha.

In their review of the 2012/13 crop year the EU Commission's MARS unit said: "On balance, the EU-28 yields for cereals are favourable and well above both last year’s levels and the five-year average. For soft wheat as well as durum wheat, yields at EU-28 level are close to the five- year average, mediocre yields in France and the UK for soft wheat are offset by good yields in Hungary, Bulgaria and Germany."

"Rapeseed yields are close to the five-year average, as low yields in France and the UK are compensated by those of Germany, Poland and the Czech Republic," they added.

Chicago Grains Mostly Higher Heading Into USDA Report

09/12/13 -- Soycomplex: Beans and meal posted sharp gains, led by nearby months, heading into tomorrow's USDA report. That is expected to show 203/14 US soybean ending stocks falling from last month's 170 million bushels to around 155 million (from within a range of 118-170 million) on continued strong demand. To highlight the latter the USDA today confirmed the sale of 230,000 MT of US soybeans sold to China for 2013/14 delivery, along with a further 60,000 MT for 2014/15 delivery. In addition, weekly export inspections of 60.430 million bushels were robust once more and beat the expected 48-55 million. Oil World estimated China’s 2013/14 soybean imports at new record 70.0 MMT, and 1 MMT more than the USDA's current projection. Will they nudge that up a bit tomorrow? AgRural said that Brazil's soybean crop is 94% planted, up 5 points from last week and 4 points ahead of this time last year. Safras e Mercado estimated the Brazilian 2013/14 soybean crop at a record 89.453 MMT versus the previous all time high 2012/13 crop of 82.125 MMT. Conab come out tomorrow with their Brazilian 2013/14 crop estimates. Last month they estimated plantings at 29.5 million hectares, with production at 87.9-90.2 MMT. Wet and humid conditions in the north of Mato Grosso are said to be raising Asian rust concerns. The average trade guess for Brazilian soybean production tomorrow is 88.736 MMT, with Argentine output forecast at an average 55.329 MMT. Jan 14 beans closed at 13.43 3/4, up 18 1/4 cents; Dec 13 meal closed at $461.60, up $14.30; Dec 13 soybean oil closed at 40.05, down 23 points.

Corn: The corn market closed around 3-4 cents firmer, with funds reportedly continuing to close out short positions ahead of year-end and tomorrow's USDA report. They were estimated to have been net buyers of around 5,000 contracts on the day. Tomorrow's USDA report is expected to show 2013/14 US corn ending stocks at around 1.86-1.87 billion bushels versus 1.887 billion previously. The Argentine corn crop is seen falling from 26 MMT last month to around 25.5 MMT this time round, with Brazil's crop maybe slightly higher than the 70 MMT forecast last month at around 70.3-70.4 MMT. Conab are also out tomorrow, last month they forecast Brazil's corn crop at 78.5-79.2 MMT. Safras e Mercado estimated the Brazilian corn crop at 77.238 MMT versus the 2012/13 crop of 82.070 MMT. They said that 99% of the summer corn crop has been planted versus 97% a year ago. As you can see these local estimates are far higher than where other trade forecasts are lining up. Weekly US export inspections for corn came in at 40.246 million bushels, higher than the expected 28-32 million. The Russian corn harvest is ongoing, producing 11.3 MMT to date. Talk that China has rejected, or is holding, around 10-15 US corn cargoes at various ports due to them containing unapproved GMO strains is bearish, but as long as funds need/desire to cover in their shorts heading into year end then the market will remain supported. Dec 13 corn closed 4 1/2 cents higher at $4.28 1/2; Mar 14 corn was up 3 3/4 cents at $4.38.

Wheat: The wheat market closed mixed across the three exchanges. Weekly export inspections were fair at 19.76 million bushels, and beat the low ball 11-15 million that the trade was expecting. Extremely cold temperatures across almost the entire US is raising the prospect of some winterkill in wheat, although losses are not expected to be higher than 5% and possibly as low as 1% depending on who's opinion you run with. Tomorrow's USDA report is seen trimming US 2013/14 ending stocks from the 565 million bushels estimated last month to around 540-550 million. Argentine wheat production is seen falling from the 11 MMT estimated last month to 10 MMT this time round, but increased output in Canada and Australia should more than compensate for that. World wheat ending stocks in 2013/14 are seen rising to around 179 MMT from 178.5 MMT last month. Safras e Mercado estimated the Brazilian wheat crop at at 5.525 MMT versus 4.698 MMT in 2012/13. There's talk that Egypt could be back in the market for wheat this week after last week's winning bid subsequently got cancelled. The French Farm Ministry estimated soft wheat plantings there to be 89% complete and said that the final area would amount to 4.9 million hectares, a 1.2% drop on last year. Winter barley plantings are seen almost 1% higher at 1.15 million hectares, they added. Dec 13 CBOT wheat closed at $6.39, up 1 3/4 cents; Dec 13 KCBT wheat closed at $7.03 1/2, down 1 3/4 cents; Dec 13 MGEX wheat closed at $6.68, up 5 cents.

EU Grains Mostly Lower, But Still Trades Sideways, USDA Report May Provide Direction

09/12/13 -- EU grains closed mostly lower with Jan 14 London wheat ending down GBP0.30/tonne at GBP164.40/tonne and Jan 14 Paris milling wheat settling EUR1.00/tonne easier to close at EUR209.00/tonne. Feb 14 Paris rapeseed fell EUR2.75/tonne to EUR371.75/tonne, whilst Jan 14 Paris corn dropped EUR0.75/tonne to EUR179.50/tonne.

The market remains stuck in a relatively sideways move, and in need of fresh news and direction, although maybe that will change once we get tomorrow's December WASDE report from the USDA?

French soft wheat exports were only 1.46 MMT in October, down 4.1% versus September and 10% below those of October 2012, according to Bloomberg. Algeria was the top buyer, taking 449 TMT.

Strategie Grains said that the EU-28 will produce 21.3 MMT of rapeseed next year, up 2.4% versus 20.8 MMT in 2013. Plantings will drop 100k hectares to 6.6 million ha, but yields will rise from 3.1 MT/ha to 3.2 MT/ha, they estimate. Output in France will jump 18.6% to 5.1 MMT, they added.

The Australian Oilseeds Federation said that the country will produce 3.2 MMT of canola this year, down from 4.2 MMT last year and the 3.4 MMT estimated previously.

Indian wheat plantings are well advanced at almost 45 million hectares, or nearly 75% of the planned area, up 16.7% on a year ago.

The Russian grain harvest is 95.5% complete at 96.2 MMT in bunker weight. Wheat accounts for 54.1 MMT of that, along with 16.3 MMT of barley and 11.3 MMT of corn.

Russia exported 10.52 MMT of wheat in the Jan/Oct 2013 period, down 26.4% versus the same period on 2012. Wheat imports were up almost four fold at over 650 TMT.

Ukraine shipped an impressive 1.02 MMT of grains in the week through to Oct 8, a similar volume to the previous week, according to APK Inform. This is towards the maximum that their limited infrastructure and logistics will allow.

The trade is now looking towards tomorrow night's (only due out at 5pm London time) USDA WASDE report for some direction. They are not expected to change their November US production estimates for wheat, corn and soybeans, although they are due to revise their global supply and demand forecasts.

The trade is expecting increases for wheat production in Australia and Canada, along with a reduction to output in Argentina.

They are also expected to trim US 2013/14 wheat ending stocks from 565 million bushels last month to around 553 million this time round.

Very cold weather stretching all the way down to Texas from the Canadian border is raising some fears of damage to US winter wheat.