Chicago Closing Comments - Friday
27/12/13 -- Soycomplex: Beans closed around 7 to 12 cents higher on the day, helped by weekly export sales coming in above trade expectations of 500-700 TMT at 788,300 MT (including 68,100 MT for 2014/15). That takes the total sold for delivery in 2013/14 to 39.7 MMT against the USDA's target for the entire season of 40.1 MMT - a 99% commitment. Outstanding sales unshipped are 17.8 MMT. Whether, and by how much, we see any of these unshipped bean sales get cancelled in the New Year remains to be seen. South American weather is the other key issue that the trade is currently debating. The forecast is for hot and dry conditions in Argentina and Southern Brazil to continue for the next couple days. However, more favourable weather is in forecast for next week – with cooler temperatures and some decent rains. Argentina is of particular concern as soybeans there were planting into wet ground. "Shallow rooted crops, planted late, would have been subject to severe moisture stress," under the recent conditions. "Cordoba and Santa Fe, key grain provinces just to the north of Buenos Aires were still hot and humid with highs over 100 F yesterday," noted Martell Crop Projections. However, "if the wet forecast verifies, it would go a long way toward repairing damage from recent dryness," they said. Jan 14 Soybeans closed at $13.31 1/2, up 12 3/4 cents; Mar 14 Soybeans closed at $13.13 3/4, up 8 1/2 cents; Jan 14 Soybean Meal closed at $445.70, up $4.70; Jan 14 Soybean Oil closed at 39.02, up 15 points.
Corn: The corn market closed around a cent or so higher in quiet holiday trade - front month Mar 14 corn had a trading range of less than 3 cents on the day. Weekly export sales of almost 2 MMT - made up of 1.48 MMT for 2013/14 and 509,200 MT for 2014/15 were far higher than the expected 550-750 TMT. However, confirmation of China rejecting both US corn and DDGS shipments adds a bearish influence to the market. Few expect the suspect MIR 162 variety in question to get Chinese approval until after their Lunar New Year celebrations than end in February, and some speculate that the situation could go on a lot longer than that. South Korea cancelled a tender to buy 70 TMT of optional corn, possibly preferring to wait and see if it can pick up a cheap "distressed" cargo that's been rejected in China. The Energy Dept said that weekly US ethanol production was down 2,000 barrels/day on last week to 926,000 bpd. The Ukraine Ministry said that the corn harvest there is just about over at 30.25 MMT in bunker weight - easily a record volume. Russia said that it had just finished a corn harvest of 10.68 MMT in clean weight, up 30.1% compared with 2012 and also a record. The Buenos Aires Grain Exchange said that corn planting in Argentina is 73.4% complete, and left their area estimate unchanged from last week at 3.3 million hectares - down from close to 3.7 million last year. Mar 14 Corn closed at $4.27 1/2, up 1 1/4 cents; May 14 Corn closed at $4.35 3/4, up 1 1/4 cents.
Wheat: The wheat market finished mixed, between 3 cents higher and 3 cents lower. Weekly export sales beat trade estimates of 350-550 TMT coming in at 596,900 MT for 2013/14 and 60,000 MT for 2014/15. Recent stalwart Brazil was the top buyer, taking 140 TMT, whilst China also booked 55 TMT. Despite US wheat being offered at substantial discounts to EU wheat, funds seem to be willing to keep pressing the pedal lower. Monday's Commitment of Traders report is expected to show them sitting on a record short position in Chicago wheat. It's proven to be a profitable strategy thus far, with CBOT wheat falling to a low of $6.01/bushel on the Mar 14 contract yesterday - the lowest for a front month since May 2012. Of course that always leaves the door open for a sharp short-covering rally if they get spooked. The Buenos Aires Grain Exchange said that the Argentine wheat harvest is 74.3% complete, producing a crop of just under 6.7 MMT to date. In the Southwest of Buenos Aires and La Pampa South the harvest has generally delivered yields below those expected, they said. However conditions Southeast of Buenos Aires (where harvesting is only 27% done) are said to have been much better throughout the crop year, and yields here are coming in much higher. Hence, they still stand by their forecast for a wheat crop of 10.35 MMT this year. Mar 14 CBOT Wheat closed at $6.09, up 3 cents; Mar 14 KCBT Wheat closed at $6.44 1/4, down 1/4 cent; Mar 14 MGEX Wheat closed at $6.34 3/4, down 3 1/2 cents.
EU Grains Mostly Lower As US Wheat Trades Close To 19-Month Low
27/12/13 -- EU grains closed mostly lower, pressured by Chicago wheat falling close to the $6/bushel mark for the first time since May 2012 yesterday (the US markets were open on Boxing Day).
Jan 14 London wheat bucked the trend ending GBP0.25/tonne higher at GBP164.00/tonne, although all other months posted losses of between GBP0.15-1.30/tonne. Jan 14 Paris wheat finished EUR2.25/tonne easier at EUR208.75/tonne, Jan 14 Paris corn fell EUR0.25/tonne to EUR172.25/tonne, whilst Feb 14 Paris rapeseed dropped EUR0.75/tonne to EUR367.00/tonne.
The euro jumping to a more than two year higher against the dollar today didn't help Paris grains. Reuters reported that Mar 14 Paris wheat is now priced at the equivalent of a more than $60/tonne premium to the same position in Chicago. Yet the pace of EU wheat exports is higher than it's ever been, with the USDA forecasting that Europe will export a record 25 MMT in 2013/14.
Brussels has already issued export licenses for 13.4 MMT of EU soft wheat, a little less than halfway through the marketing year, although surely that pace will tail off later in the season?
India remain active in trying to shift wheat for Jan/Mar 2014, with a couple of government-backed groups currently tendering to sell 250 TMT. There's also competition from Australian and Canadian wheat following bumper production there this year.
Russia's State Statistics Service (Rosstat) today said that the clean weight grain harvest there this year was 91.3 MMT, up nearly 29% versus last year. That included a record corn harvest of 10.7 MMT in clean weight, up more than 30% on last year. Ukraine has also had a record corn crop in 2013, as too has of course America, and it is these large global corn inventories that is currently weighing on wheat prices.
Meanwhile China is currently rejecting large volumes of US corn, and now DDGS too, if they are found to contain traces of the MIR 162 stain which has been waiting for approval for entry into the country for more than two years. The Chinese government don't appear to be in a huge hurry to address the problem, having recently brought in a record corn crop of their own in 2014.
On the international tender front, Bangladesh's state grains buyer reissued a tender to buy 50 TMT of wheat yesterday. Jordan is also re-tendering for 100 TMT of wheat and Qatar are in the market for 84 TMT of optional origin feed barley. Morocco's state grain buyer is tendering for 180 TMT of wheat, but seeking to purchase it on the local market.
There's talk of an "Arctic blast" hitting the US Midwest next week, but perhaps not really penetrating into the main winter wheat growing areas. There's also talk of lack of snow cover possibly being a problem for Russian winter wheat in some areas if and when a hard freeze arrives there, although crop conditions are currently said to be good.
Europe's winter wheat crop is also generally in good shape, with production in 2014 expected to be up around 2%, led by a rebound in output in the west, including of course here in the UK.
EU Grains Mostly Lower
24/12/13 -- EU grains closed mostly lower heading into Christmas, although overall the sideways trend still persists.
Jan 14 London wheat ended down GBP1.25/tonne at GBP163.75/tonne, Jan 14 Paris wheat finished EUR0.25/tonne easier at EUR211.00/tonne, Jan 14 Paris corn fell EUR1.00/tonne to EUR172.50/tonne, whilst Feb 14 Paris rapeseed dropped EUR1.50/tonne to EUR367.75/tonne.
Essentially there was little in the way of fresh news, this was merely a tidying up before Christmas exercise.
Russia said that their winter grains planting was complete at 14.7 million hectares, and that they'd also sown 288k ha of winter rapeseed.
Ukraine said that they'd exported 17.58 MMT of grains so far this season, up 27.7% versus 2012/13. That includes 6.64 MMT of wheat, 2.02 MMT of barley and 8.8 MMT of corn as they now start to major on shipments of the latter.
The Ukraine Ministry forecast grain exports in 2013/14 a record 32.5 MMT, up from 23 MMT a year ago.
Ag Canada forecast that the country would export 22 MMT of wheat this season, up from a previous estimate of 20.5 MMT and compared to 19.4 MMT in 2012/13.
India announced a tender for 60 TMT of wheat as they continue to attempt to clear some space ahead of their next harvest due to begin in late March.
EU Grains Mostly Higher In Quiet Trade
23/12/13 -- EU grains closed mostly modestly higher heading into the year end. Jan 14 London wheat was up GBP0.30/tonne to GBP165.00/tonne, Jan 14 Paris wheat was EUR0.50/tonne firmer at EUR211.25/tonne, Jan 14 Paris corn was EUR0.25/tonne steadier at EUR173.50/tonne and Feb 14 Paris rapeseed rose EUR0.75/tonne to EUR369.25/tonne.
As you might expect, fresh news was thin on the ground for a holiday shortened Christmas week.
The Russian Ministry said that the wheat and barley harvest there was finally over, and that the corn harvest is now entering it's final leg at 95.7% complete.
They say that the wheat harvest finished at 54.4 MMT in bunker weight versus 39.7 MMT a year ago. The barley harvest amounts to 16.3 MMT versus 14.7 MMT in 2012. They've cut 11.9 MMT of corn so far versus 8.3 MMT this time last year.
Overall that gives Russia a net grain harvest of 96.9 MMT, up 29% on last year.
The Ministry are officially forecasting a 2014 grain harvest of 88090 MMT in clean weight. Last year's cleaned total was 4.5% below the bunker weight volume of 75.1 MMT. A similar percentage cut this year would indicate a clean weight harvest of around 92.5 MMT.
On the export front, Russia has shipped out 1.1 MMT of grains so far this month (to Dec 18), including 668 TMT of wheat, 311 TMT of corn and 122 TMT of barley.
Exports for the 2013/14 marketing year to date are now just over 15 MMT, an increase of 18.7% on this time a year ago.
Ukraine meanwhile have exported 1.05 MMT in the week through to Sunday, including 797 TMT of corn, 227 TMT of wheat and 25 TMT of corn.
They exported a record 3.3 MMT of corn in November, more than double the 1.5 MMT shipped out in November 2012 and over 250% the amount exported in October. Egypt was the main export home last month (taking 0.7 MMT), followed by Spain (0.5 MMT).
