Chicago Closing Comments At The End Of A Very Choppy Week
21/03/14 -- Soycomplex: Beans closed sharply lower on the day, but higher on the week. Persistent, and very strong, jungle drums say that China is looking to wash out large quantities of Brazilian (and maybe even US) beans. China is said to be awash with beans amidst negative crush margins, and a slump in domestic demand due to bird flu. There are also some reports of credit being tight. Nevertheless, Chinese customs data today revealed that the country had imported 4.8 MMT of soybeans in February, a near 64% increase on a year ago, with around 96% of that volume coming from the US. That puts 2014 (Jan/Feb) imports at 10.7 MMT, a 40% hike on a year ago. The US have supplied over 10 MMT of that. China also imported more than 1 MMT of rapeseed in the first two months of the year, a near 74% rise on 2013. Oil World estimated Jan-Feb Brazilian soybean exports at 2.8 MMT versus only 960,000 MT a year ago. The Brazilian soybean harvest is now at a fairly advanced stage, and they have now begun harvesting in Argentina. A vessel that had run aground, blocking shipping in both directions into and out of Argentina's main port of Rosario for two weeks has finally been refloated. Reuters reported that, as of Thursday, up to 90 vessels were anchored along the Parana River, waiting to gain access to the port. Ag Canada estimated the canola crop there at 16.0 MMT in 2014, unchanged from their previous estimate and down 2 MMT from last year's record. They see Canadian 2014/15 canola exports at 8.5 MMT, unchanged from previously and up from 8.1 MMT this season. The latest Commitment of Traders report shows managed money adding around 6k contracts to their net soybean long for the week through to Tuesday night, leaving them sitting on a long position of close to 200k lots. Rabobank forecast US soybean plantings this spring at "only" 78.5 million acres. Whilst that is up 2 million on last year, and still a record, it's well below some of the other estimates of 81 to 83+ million that have been floating around of late. The USDA issue their planting intentions report on Mar 31. May 14 Soybeans closed at $14.08 3/4, down 25 cents; Jul 14 Soybeans closed at $13.82 1/4, down 27 3/4 cents; May 14 Soybean Meal closed at $455.90, down $10.60; May 14 Soybean Oil closed at 41.02, down 29 points. For the week May 14 beans gained 32 3/4 cents, with meal adding $6.90 and oil falling an even 100 points.
Corn: The corn market ended little changed on the day, and with small gains for the week. The USDA announced 340,000 MT of US corn sold to Egypt for 2013/14 shipment under the daily reporting system. Chinese customs data showed that they imported around 480 TMT of corn in February, up nearly 22% on a year ago. Imports from the US however were down 48% at 206 TMT. Jan/Feb Chinese corn imports were 1.1 MMT, an increase of 43% on a year ago. Ag Canada forecast the corn crop there this year at 12.7 MMT versus a previous estimate of 13.1 MMT and down from 14.2 MMT in 2013. The USDA's Mexico attaché estimated the 2014 corn crop there at 22.5 MMT versus 21.9 MMT a year ago. They also estimated Mexico's 2014 corn imports at 10.4 MMT versus 11.5 MMT a year ago. Mexico are traditionally a large US corn customer. The latest Commitment of Traders report showed managed money adding a further 18k contracts to their net corn long for the week through to Tuesday. Are they getting tired? It was 50k last week and more than 70k the week before. Their total net corn long holding is now a heavy near 278k lots. The confirmed number of cases of the deadly PEDv virus in the US increased by 296 in the week ended March 15, bringing the total number to 4,757. There is no official count regarding the number of pigs that died from the disease, but some private estimates are around 4-5 million. Rabobank estimated the US 2014 corn planted area at 93 million acres, down a relatively modest 2.4 million on last year. Other trade estimates in the last week or so have been around 90-92 million. They said that they expected the price ratio between corn and soybeans to "restore some balance" to the market and essentially not cut US farmers' desire to plant corn quite as much as other analysts expect. They raised their forecast for US corn prices in the final quarter of the year by 20 cents to $4.60/bushel. UkrAgroConsult forecast a 2014 Ukraine corn crop of 23 MMT versus around 30 MMT last year. Some growers will plant spring barley instead of corn as it's cheaper to cultivate and matures earlier, allowing them to turn the crop into cash quicker, they said. APK Inform this week also suggested that some Ukraine corn growers will opt to plant soybeans over corn this year due to price considerations. The EU issued 350 TMMT of corn import licences this past week, taking the 2013/14 marketing year to date total to 9.6 MMT versus 8.6 MMT this time a year ago. May 14 Corn closed at $4.79, up 1/2 cent; Jul 14 Corn closed at $4.83 3/4, up 1/4 cent. For the week, May 14 corn was 6 3/4 cents higher.
Wheat: The wheat market posted losses of around 10-12 cents across the three exchanges, ending mixed for the week. Managed money added around 13.5k lots to their new Chicago wheat long for the week through to Tuesday night, according to the latest Commitment of Traders report. They now sit on a net long of 24k lots, which is only very modest relative to the size of the position that they hold in corn and soybeans. Does this give wheat more upside potential than the other two? Only time will tell. Chinese customs data shows that the country imported 579 TMT of wheat in February, a 160% increase on a year previously. Their Jan/Feb imports now stand at over 1.3 MMT, a hefty 225% increase versus the same period in 2013. The US supplied 506 TMT of the wheat that China imported in the first two months of the year, a hike of more than 775% of the volume that they sold them in the same period in 2013. A report in the China Daily said "The price of domestic wheat is now around 2,610 yuan ($425) a metric ton, while wheat of a similar quality from the US is priced at 2,200 yuan a metric ton in the Chinese market after customs clearance, data from China's Zhengzhou Commodity Exchange shows. Chinese mills therefore are willing to buy cheaper US wheat to reduce their flour costs and tackle the rising costs of labour, energy prices and logistics services, instead of buying the same products from the domestic market." Ag Canada estimated the all wheat crop there at 29.3 MMT, unchanged from previous estimate and down nearly 22% from the record 37.5 MMT harvested last year. This is partly due to a decrease in plantings, seen at 9.7 million hectares versus 10.4 million a year ago. Despite the drop in production though, a large hangover of carryover stocks from this season means that 2014/15 Canadian all wheat exports will rise to 22.1 MMT versus 21.6 MMT in 2013/14, they said. The Canadian barley crop was forecast at 8.3 MMT versus a previous estimate of 8.4 MMT and compared to 10.2 MMT a year ago. "As weather starts to dominate wheat discussions with winter wheat crops starting to come out of dormancy, weekend temps and rains are taking on more and more significance. Mid-day forecast turned wetter in rain event seen for TX, OK, KS, AR, and MO out into April 3-5 timeframe and the timing of the update hitting the wires seemed to coincide with another bout of sell pressure in the wheat," said Benson Quinn Commodities. Rabobank forecast Chicago wheat to fall to $5.60/bushel in the final quarter of the year. May 14 CBOT Wheat closed at $6.93 1/4, down 10 1/2 cents; May 14 KCBT Wheat closed at $7.71 1/4, down 10 3/4 cents; May 14 MGEX Wheat closed at $7.43 1/4, down 12 cents. For the week, CBOT wheat finished a choppy 5 days 3 cents higher, whilst Kansas wheat rose 19 3/4 cents and Minneapolis wheat fell 7 1/4 cents.
EU Grains Consolidate,French Crops Looking Good
21/03/14 -- EU grains closed the day mostly lower, in further light consolidation following the recent run up to multi-month highs.
The day ended with Mar 14 London wheat going off the board unchanged at GBP167.35/tonne, and with new crop Nov 14 London wheat closing GBP0.50/tonne lower at GBP160.00/tonne. May 14 Paris wheat closed EUR0.50/tonne weaker at EUR210.75/tonne, Jun 14 Paris corn slipped EUR0.25/tonne to EUR185.50/tonne, whilst May 14 Paris rapeseed fell EUR1.50/tonne to close at EUR401.25/tonne.
For the week, Mar 14 London wheat was GBP0.55/tonne firmer, with Nov 14 up GBP0.65/tonne. May 14 Paris wheat fell EUR0.75/tonne, Jun 14 Paris corn was down EUR1.25/tonne and May 14 Paris rapeseed was down a similar amount.
On Wednesday this week we saw London wheat close at GBP168.35/tonne, the highest finish for a front month since last July, whilst new crop Nov 14 touched GBP163.80/tonne - the highest for the contract since last June. Chicago wheat meanwhile put in the highest close for a front month in almost a year on Wednesday, for a near 30% rise from the January lows.
This week's London wheat high "only" represents a 12.6% rise from the January lows. Does that mean that London wheat is undervalued? Some of course would like to think so, although it's worth noting that Paris wheat has only risen by a similar percentage to the London market during this time, which may indicates that spec money has pushed Chicago wheat considerably higher than is justified.
Rabobank seem to think so, they estimated Chicago wheat prices in Q4 of this year at only $5.60/bushel, which is around 23% lower than where forward levels currently reside.
"Favourable crop conditions throughout the Black Sea region and the European Union continue to support our view of modest gains to the stocks of major wheat exporters for the 2014-15 season," they said.
Others disagree, saying that drought conditions are currently in force pretty much anywhere from Germany eastwards to the Black Sea.
Certainly the unseasonably mild and dry conditions have allowed Ukraine growers to make a good start to spring plantings, despite the political problems in the region, with the Ministry there reporting early spring sowings already completed on almost twice the area of last year, and 32% of the target.
UkrAgroConsult today forecast the 2014 Ukraine grain harvest at 53 MMT, only a relatively modest drop on the 57-58 MMT that they say was achieved last year (although they noted that the official Ministry estimate for the 2013 harvest was 63 MMT). They said that this year's wheat harvest will amount to 19.6 MMT, with corn production at 23 MMT and barley output at 7.8 MMT.
They said that Ukraine spring barley sowing is at the best rate in 6 years, and they expect the area seeded in 2014 to expand - partly due to the leftover area of planned winter grains that never made it into the ground in the autumn, but also as the crop pinches land from corn. It's cheaper to cultivate, and the fact that it's harvested earlier than corn means that it can be turned into cash quicker - an important advantage in these tight credit times, they added.
Brussels issued 536 TMT of soft wheat export licences this past week it was announced last night, taking the marketing year to date total to 21.9 MMT, 49% up on last year. They also approved 350 TMT worth of corn import licences.
FranceAgroMer reported that French winter wheat maturity is well advanced, with 43% of the crop displaying an ear of at least 1cm, up sharply from 19% a week ago and versus only 3% this time a year ago. They said that 37% of the winter barley crop has an ear of at least 1cm versus 12% last week and only 3% a year ago.
French growers have been very active planting spring barley this past week, with a stunning 67% of the crop sown in a week. Plantings now stand at 87% versus 62% a year ago.
As far as crop conditions go, FranceAgriMer rated 75% of the winter wheat crop as good/very good, unchanged on a week ago and up 8 points on a year ago. Winter barley is rated 71% good/very good, also unchanged from last week. Note that 2% of both crops flipped from "good" to "very good" this week.
A different French analyst, Cetiom, said that French rapeseed yield potential is "much better than last year" and that without the excess rain that we also saw here in the UK in the early part of the year the outlook would have been for "excellent" yields.
That puts France on track to regain pole position as Europe's largest rapeseed producer in 2014, a place that they lost to Germany last year, as growers there have also increased plantings by 6%, according to FranceAgriMer.
Chicago Corn And Wheat Stumble, Beans Hold Steady
20/03/14 -- Soycomplex: Beans closed mixed, with strong (and not negative on old crop as some had suggested) export sales supporting. They came in at 202,200 MT of old crop and 437,500 MT of new crop versus expectations of -100 TMT to +300 TMT on old crop, and with new crop sales of 300-600 TMT. US weekly soybean shipments of 1,119,149 MT take exports so far to 94% of the USDA target for the season, with commitments now running at 107%. Separately, the USDA announced 120,000 MT of US new crop beans sold to China. Talk that the latter are still actively looking to sell already purchased Brazilian beans into US homes is rife. Some suggest that the effects of the bird flu outbreak in China have being under-estimated and that the country is therefore over-bought. One report I saw today said that Chinese soybean imports could fall to 63 MMT this year, a huge amount but far less than the 70-72 MMT that others have been forecasting. Traders will be mindful that US growers are soon expected to begin planting their largest soybean crop on record. FAPRI estimated US soybean acres at 78.7 million this year, up from 76.5 million last year, but below some of the other trade estimates that we've seen in the last week that have been in the 81-83 million region. They forecast 2014/15 US soybean prices averaging only $9.84/bushel versus $12.57 this season. What would they have forecast for prices using an acreage in the 80's? Lanworth estimated the Brazilian soybean crop at 87.8 MMT and the Argentine crop at 56.6 MMT. MDA CropCast peg them at 86.37 MMT and 54.39 MMT respectively. The USDA's attaché in Brazil estimated ‘13/14 Brazil bean crop at 88.0 MMT versus a USDA estimate of 88.5 MMT, with exports at 45 MMT - the same as the USDA. They see the 2014/15 Brazilian crop soaring to 97 MMT, with exports of 50 MMT - both would easily be record levels. The Rosario Grain Exchange says Argentine farmers still sitting on 5 MMT of old crop soybeans as a hedge against inflation. May 14 Soybeans closed at $14.33 3/4, up 2 1/2 cents; Jul 14 Soybeans closed at $14.10, down 3/4 cent; May 14 Soybean Meal closed at $466.50, up $4.50; May 14 Soybean Oil closed at 41.31, down 79 points.
Corn: The corn market slumped on ideas that bird flu in China is reducing demand, which may explain their lack of urgency to approve the disputed MIR 162 variety for import. COFCO said that China might import less than 3 MMT of corn in 2013/14 versus the current USDA estimated of 5 MMT. You may recall that not that long ago some were pegging Chinese corn imports this season at 8-10 MMT. Weekly export sales came in at 745,800 MT of old crop, with no new crop. Trade estimates for that had been for a combined 500 TMT to 1.05 MMT. Net commitments are now 94% of the USDA's export forecast for the season, compared to 75% in an average year. Note though that, unlike in soybeans, the proportion of unshipped sales is still high. Lanworth estimated the Brazilian corn crop at 71.2 MMT, with the Argentine crop at 25.5 MMT. MDA CropCast went 69.7 MMT and 23.7 MMT respectively. FAPRI estimated US corn plantings for 2014/15 at 91.3 million acres, a 4.1 million fall from last year's 75-year high. They suggest that the harvest might come in at 13.638 billion bushels, down 0.289 billion on last year, with exports at 1.875 billion, a 0.38 billion drop on 2013/14. They see US corn prices in 2014/15 averaging $4.17/bushel. AgResource estimated the 2014/15 global corn crop at 978.4 MMT, a new record versus the 967.5 MMT produced in 2013/14. Strategie Grains estimated the 2014/15 EU-28 corn crop at 65.2 MMT, a 1% rise on last year. Taiwan Sugar Corp cancelled a tender to buy 20,000 MT of US corn and 15,000 MT of US beans for May shipment. The Buenos Aires Grains Exchange said that the Argentine corn harvest is 7% complete, up from 4% a week ago, but down versus 14.5% a year ago. They estimated the Argentine corn crop at 23.5 MMT, unchanged from their previous figure. APK Inform said that some Ukraine farmers will plant soybeans instead of corn this spring due to price considerations. Japan seem to be using more corn and less feed wheat at current price differentials. The Japanese Ministry said that in January the use of corn in animal feed was 45.7% versus 45.2% in December and versus 42.2% in January 2013. Fund selling was estimated at around a net 7-9,000 lots on the day. May 14 Corn closed at $4.78 1/2, down 9 1/4 cents; Jul 14 Corn closed at $4.83 1/2, down 9 1/4 cents.
Wheat: The wheat market made new highs for the recent move, but then stumbled lower on profit-taking. Weekly export sales of 401,800 MT of old crop and 195,200 MT of new crop were in line with expectations for sales of 250,000-500,000 MT of old crop and 50,000-200,000 MT of new crop. MDA CropCast raised their 2014/15 US winter wheat production estimate by 11 million bushels to 1.569 billion due to acreage and yield improvements in the Pacific North West. They cut Ukraine's potential this year by 0.7 MMT to 20.3 MMT, but raised Russia by 1 MMT to 48.3 MMT. FAPRI estimated the US all wheat area for 2014/15 at 57 million acres versus 56.2 million last year. They see the coming all wheat harvest at 2.203 billion bushels (versus 2.130 billion last year), with exports at 1.069 billion (1.120 billion) and the average US wheat price next season at only $5.55/bushel versus $6.82 this season. AgResource estimated the global wheat crop at a record high 713.8 MMT in 2014/15. Strategie Grains increased their forecast for the EU-28 soft wheat crop by 0.2 MMT from last month to 137.7 MMT, a 2% increase on last year. They also raised their 2013/14 soft wheat export estimate by 1.3 MMT to a record 25.6 MMT and increased 2014/15 exports from 21.7 MMT to 22.4 MMT. They suggested that some buyers in North Africa and the Middle East might shy away from buying Ukraine wheat for the time being and prefer to buy from Europe. If they are correct, all that will happen is that Ukraine origin will be offered even cheaper than its normal harvest-time discount until a buyer is found. As shipments have continued out of the region more or less normally across the height of the Crimean crisis, it seems unlikely that Ukraine's reliability as a supplier will worsen later in the year - as things stand. There's some talk that today's reversal may have been down to a slightly wetter outlook for US wheat on the Southern Plains. It should be considered that although US winter wheat conditions have deteriorated sharply over the past few months, they did enter dormancy with one of the best good/excellent ratings in recent history, so the starting level was rather elevated. It should also be noted that even with the decline, ratings in states like Kansas, Colorado and Nebraska are still better than they were a year ago. May 14 CBOT Wheat closed at $7.03 3/4, down 12 cents; May 14 KCBT Wheat closed at $7.82, down 6 1/4 cents; May 14 MGEX Wheat closed at $7.55 1/4, down 5 3/4 cents.
Ladies And Gentlemen, Place Your Bets At The Wheat Casino
20/03/14 -- EU grains closed a see-saw day mostly lower, with expiring tomorrow Mar 14 London wheat down GBP1.0/tonne at GBP167.35/tonne, and with new crop Nov 14 also GBP1.00/tonne lower at GBP160.50/tonne. May 14 Paris wheat closed EUR2.00/tonne weaker at EUR211.25/tonne, Jun 14 Paris corn was down EUR0.75/tonne to EUR185.75/tonne and May 14 Paris rapeseed fell EUR2.50/tonne to EUR402.75/tonne.
Fund money has been flooding into the wheat market since Russia annexed Crimea, pushing prices to fresh multi-month highs, with new crop Nov 14 London wheat hitting GBP163.80/tonne earlier today - it's best level since last June. Spec money was given credit for finishing up as net buyers of around 10,000 contracts in Chicago wheat last night, it's been a long time since they've featured to that kind of extent in one single session.
Afternoon weather forecasts on the US Plains suddenly developed a wetter look, and the wheat market quickly did a sharp about turn. Profit-taking following the recent very sharp rally is also likely to have been a feature. These are the volatile times we are in. Having either nothing bought, or nothing sold forward (depending on which side of the fence you are on) looks like an extremely risky strategy right now, and one that carries 100% exposure to markets trading erratically on whim and emotion.
French analysts Strategie Grains increased their forecast for 2013/14 EU soft wheat exports from the 24.3 MMT record estimated last month to a new all-time high of 25.6 MMT. The increase reflected strong shipments from Romania, Germany and Poland, they said. France appears to remain heavily reliant on Algeria and Tunisia for its wheat exports.
Strategies Grains also increased their 2014/15 export projection from the 21.7 MMT forecast in February to 22.4 MMT, saying that some buyers in the Middle East and North Africa would be cautious about buying from Ukraine.
On the production side of the coin they increased their forecasts for EU-28 soft wheat, barley and corn output from last month. The EU-28 soft wheat crop was raised from the 137.5 MMT forecast last month to 137.7 MMT, and a 2% increase on last year's production. The EU-28 barley crop was increased from 55.0 MMT to 55.4 MMT, although that's still a 7% drop on last year, whilst this year's corn crop was forecast at 65.2 MMT (up from 65.1 MMT last month), a 1% increase versus last year.
Crops in Europe are generally in good condition, and said to be "very good" in SE Europe. Rain is needed in central Europe and the Baltic countries, they added.
MDA CropCast raised their forecast for the Russian wheat crop this year by 1 MMT from last week to 48.3 MMT, although that's still a near 8% decline on last year. They cut Ukraine's wheat output by 0.7 MMT to 20.3 MMT, a 6.5% fall on last year. Kazakhstan's 2014/15 wheat crop meanwhile is seen 15.6% higher at 16.3 MMT.
The Ukraine Ministry said that early spring grain plantings were completed on 927,000 hectares, or 32% of plan, and around double the 477k ha that had been planted this time a year ago. The vast majority of that area is spring barley (711k ha).
APK Inform said that a survey they'd conducted revealed that around 80% of Ukraine growers expected to plant a similar spring grain area to last year and 10-20% were hoping to expand sowings. They noted that some growers were thinking of sacrificing land sown with corn last year in favour of soybeans due to price considerations.
US analysts AgResource said that they expect the world wheat crop in 2014/15 to set a new record at 713.8 MMT. They also forecast the world corn crop rising to a record 978.4 MMT versus 967.5 MMT in 2013/14.
The Food and Agricultural Policy Research Institute (FAPRI) forecast US all wheat plantings at 57 million acres this year, up from 56.2 million a year ago. They see US all wheat production rising from 2.13 billion bushels to 2.203 billion, and estimate the average wheat price in 2014/15 at $5.55/bushel, which is well below where prices currently stand for next season. They see US corn prices averaging $4.17/bushel in 2014/15, falling to $4/bushel in 2015/16. US soybean prices in 2014/15 will average $9.84/bushel versus $12.57/bushel this season, they say.
India are maintaining their "little and often" approach, with state-owned firm MMTC tendering to sell 35,000 MT of wheat for April/May shipment. India’s PEC have also tendered to sell 65,000 MT of wheat for April shipment. India's 2014 harvest is now just days away. Reports of late crop damage caused by heavy rain and hail in recent days are being played down by the Ministry who say that losses will be minimal.
Chicago Wheat Hits 10-Month High On Heavy Fund Buying
19/03/14 -- Soycomplex: Beans closed higher for a third day despite apparent confirmation that a Chinese crusher has sold Brazilian beans to US buyers on the east coast, and that the first such shipment is already en-route from Santos. As ever, it's soybean jam tomorrow. Doane Advisory Services estimated that US farmers will plant a record 83.6 million acres of soybeans this year. That's more than 7 million acres up on last year, for a rise of over 9%. And with domestic soybean prices where they are right now, then why wouldn't they? That's the highest public estimate in the ring so far, although it's not too far ahead of Allendale's suggested 83.2 million acres, it's well above the USDA's Outlook Forum forecast of 79.5 million. Old crop stocks remain tight though, with the trade thinking that Mar 1 inventories could be below 1 billion bushels. The USDA will report on both quarterly stocks and planting intentions on Mar 31. Tomorrow's weekly export sales report will be of interest, with trade estimates for old crop sales ranging from -100 TMT to +300 TMT, and with new crop sales of 300-600 TMT. That report will also tell us what volume of soybeans got shipped in the past week. Last week's cumulative total was already over 93% of the USDA's forecast for the season which is barely more than halfway through. May 14 Soybeans closed at $14.31 1/4, up 13 cents; Jul 14 Soybeans closed at $14.10 3/4, up 15 cents; May 14 Soybean Meal closed at $462.00, up $6.20; May 14 Soybean Oil closed at 42.10, down 17 points.
Corn: The corn market closed with small gains. Weekly ethanol production rebounded from 869,000 barrels a day last week to 891,000 bpd this time round, although that's still below the required level of around 932,000 bpd needed to hit USDA targets. Doane Advisory Services said that US corn plantings this spring would hit a four year low of 90.9 million acres. That's at the low end of other trade forecasts. Goldman Sachs currently estimate the US 2014 corn acreage at 93.5 million versus Allendale's 92.349 million and the USDA Outlook Forum figure of 92.0 million. Plantings last year were 95.4 million. China were said to have bought a couple of cargoes of Ukraine corn as part of an inter-governmental deal. They still haven't approved MIR 162 corn for import, which has effectively dried up shipments from the US for the time being. Weekly export sales for corn tomorrow are expected to be around 400-700 TMT for old crop and in the region of 100-350 TMT for new crop, for a combined 500 TMT to 1.05 MMT. Tensions in Ukraine remain high, although things still don't seem to be having too much of an adverse affect on grain exports. The Ukraine Ministry said that the country had exported 1.7 MMT of grains so far this month, almost all of which (1.6 MMT) was corn. The 2013/14 marketing year to date corn export total out of Ukraine is 16.2 MMT. The Ukraine Ministry said that Crimean ports only account for around 7% of grain shipments, although SovEcon said that the true figure is more like 10%. May 14 Corn closed at $4.87 3/4, up 1 1/2 cents; Jul 14 Corn closed at $4.92 3/4, up 1 3/4 cents.
Wheat: The wheat market was lower in overnight trade, but quickly turned that around in afternoon trade to close sharply higher on heavy fund buying - estimated by some to be as much as a net 11,000 contracts in Chicago wheat taking prices up to a 10-month high. Heightened tensions in the Black Sea region, concerns aver dryness on the Southern Plains, and talk of dryness in Germany, eastern Europe, the FSU and even now Australia ahead of the planting season there all added to spec money's new found enthusiasm for holding wheat. Doane Advisory Services estimated the US all wheat area at 57.5 million acres versus a USDA Outlook Forum estimate of only 55.5 million. Japan issued a tender for 120,0000 MT of feed wheat and 200,000 MT of feed barley for June shipment. Tunisia bought 34,000 MT of optional origin durum wheat for April/May shipment. Libya tendered for 50,000 MT of optional origin milling wheat for April shipment. The Ukraine Ministry said that the country had shipped 108,500 MT of wheat so far this month, taking the 2013/14 marketing year to date total to just under 7.5 MMT versus 6.2 MMT a year previously. Total grain shipments out of Ukraine are 26.0 MMT, up 38% on a year ago. US weather refuses to co-operate, with the short-term forecast putting warm, dry and windy weather over western Kansas and Oklahoma along with another round of below-normal temperatures for the US Midwest next week. May 14 CBOT Wheat closed at $7.15 3/4, up 23 1/4 cents; May 14 KCBT Wheat closed at $7.88 1/4, up 25 cents; May 14 MGEX Wheat closed at $7.61, up 19 1/2 cents.
EU Grains End Higher, Although UK Wheat Plantings At 6-Year High
19/03/14 -- EU grains closed mostly higher, with Mar 14 London wheat up GBP1.95/tonne at GBP168.35/tonne, whilst new crop Nov 14 was GBP2.50/tonne firmer at GBP161.50/tonne. May 14 Paris wheat closed EUR4.50/tonne higher at EUR213.25/tonne, Jun 14 Paris corn was up EUR2.00/tonne to EUR186.50/tonne and May 14 Paris rapeseed rose EUR5.25/tonne to EUR405.25/tonne.
Fresh news was relatively thin on the ground, but Ukrainian uncertainties appear to continue to be pushing fund money back into grains and underpinnnig the market.
The Ukraine Ministry said that Crimean ports only accounted for around 7% of grain exports, and that the "slack" could easily be taken up by the major shipping ports such as Odessa, Ilyichesk and Nikolaev.
Weather concerns remain, with US winter wheat areas suffering from drought and declining crop conditions.
Dryness in Australia is also causing some trade concern ahead of the planting season there.
Meanwhile, the European part of the Black Sea Basin is also under drought stress, having received only 50% of normal rain in the past 6 months, according to Agritel.
Dryness is an issue in Germany too where "it is drought, not wetness, threatening the 2014 wheat harvest. The most serious drought is in Bayern, southern Germany, where winter rainfall was less than 50% of average," said Martell Crop Projections.
"Troublesome drought has continued in March," and "seems to be spreading into Poland another important wheat-producing country", they added.
Tunisia tendered for 42 TMT of optional origin durum wheat for Apr/May shipment, and Algeria for 50 TMT of durum for April delivery.
Reuters reported that Canadian grain movements by rail have bucked up significantly since the government introduced quotas for the various state-owned rail companies there.
UK customs data shows that of the 1.44 MMT of corn imported in the Jul/Jan period, 362.5 MMT came from France, 320.9 MMT came from Ukraine and a further 312.6 MMT came from Bulgaria.
Russian early spring grain planting in the Stavropol district is said to be 27.7% complete.
The Scottish government reported that the winter wheat planted area there was up 12% at 203,600 ha, whilst the winter barley area was down 1% to 56,400 ha.
With DEFRA reporting the English/Welsh winter wheat planted area at 1.815 million ha a couple of weeks ago, that takes total UK plantings to in excess of 2 million ha, excluding Northern Ireland - the largest planted area since 2008.
Chicago Market Jumps Higher On Fund Buying
18/03/14 -- Soycomplex: Beans closed sharply higher on active fund buying (said to be at around a net 5,000 contracts on the day). Argentine exports out of the port of Rosario have come to a standstill after a ship carrying 45 TMT of Paraguayan beans ran aground, completely halting traffic into and out of the port. There are said to be 7 ships loaded upriver waiting to leave the port and a further 54 vessels downstream waiting to enter. To add to Argentine woes, a port workers strike is also in the offing. Dr Cordonnier estimated the 2013/14 Argentine bean crop at 54.0 MMT, unchanged from his previous estimate and pegged Brazilian output at 86.0 MMT, down from his previous estimate of 87.0 MMT. Abiove estimated the Brazilian bean crop at 86.1 MMT versus a previous estimate of 88.6 MMT, and placed 2013/14 Brazilian bean exports at 44.0 MMT versus a previous estimate of 44.5 MMT. The USDA currently have the Brazilian crop at 88.5 MMT and exports at 45 MMT. Any sign of further supply tightening puts renewed pressure on US supplies, with exports already set to beat the USDA forecast for the season. The Brazilian harvest is 58% complete, according to Celeres. May 14 Soybeans closed at $14.18 1/4, up 26 1/2 cents; Jul 14 Soybeans closed at $13.95 3/4, up 20 1/2 cents; May 14 Soybean Meal closed at $455.80, up $9.20; May 14 Soybean Oil closed at 42.27, up 38 points.
Corn: The corn market closed around 7 cents firmer as fund money came in for an estimated net 7,000 contracts on the day. Dr Cordonnier estimated the 2013/14 Brazilian corn crop at 68.5 MMT, and the Argentine crop at 23 MMT, both unchanged from his previous estimates. The USDA are currently at 70 MMT and 24 MMT respectively. South Korea's NOFI bought 193,000 NT of US and South American corn for June/July shipment. There's talk of US corn plantings being late due to a combination of dryness in some areas and extreme cold in others. The Texas corn crop is only 15% planted versus the 5-year average of 31%. Note though that last year was one of the latest planted years on record, and the US still grew a record crop. Informa's US acreage estimates come out next week, and the USDA will release theirs at the end of the month. Tomorrow brings the usual weekly ethanol production report from the Energy Dept. Last week's ethanol production was 869,000 barrels/day, down from 894,000 bpd the week previously and well below the more than 930,000 bpd required to hit the USDA's target for the season. Early spring grain planting is underway in Ukraine, although corn planting wouldn't normally begin until the end of April. The trade is keeping a very close eye on developments there. Despite the USDA's protestations to the contrary, the lack of availability of credit could be a problem for some when it comes to purchasing seed and other inputs. May 14 Corn closed at $4.86 1/4, up 7 1/4 cents; Jul 14 Corn closed at $4.91, up 7 cents.
Wheat: The wheat market jumped higher, recovering all of Monday's losses and then some. Fund money was estimated as being a net buyer of around 4,000 Chicago wheat contracts on the day to add to their newly acquired long. Egypt bought a combination of Russian, US and Romanian wheat. Note that they didn't appear to have a problem buying from Russia. Even with the more expensive freight added on, the trade will have been pleased to see US wheat compete though. Russia has now largely managed to annex Crimea without too much turmoil and violence. There is speculation now that they may have ambitions to take over some of the other regions of eastern Ukraine. Talk persists that spring grain plantings in Ukraine will suffer this year, and so too will yields as farmers cut back on fertiliser and agrochemical applications, whether due to lack of cash or lack of availability. The plunging Ukraine hryvna makes the cost of importing these products pretty prohibitive. The same could also be said of the Russian rouble, so maybe we might see some reduced level of inputs there this year too? US winter wheat areas remain dry, and crop conditions are deteriorating on a weekly basis. Current weather models offer only light precipitation potential for much of the HRW belt in the coming week, but there are better prospects later in March/early April. May 14 CBOT Wheat closed at $6.92 1/2, up 18 cents; May 14 KCBT Wheat closed at $7.63 1/4, up 19 3/4 cents; May 14 MGEX Wheat closed at $7.41 1/2, up 17 1/4 cents.
EU Grains Recover Losses, UK Wheat Imports Fall But Corn Continues To Pour In
18/03/14 -- EU grains closed the day mostly firmer, largely recovering the bulk of yesterday's losses.
The day ended with Mar 14 London wheat GBP1.65/tonne firmer at GBP166.40/tonne, and with new crop Nov 14 London wheat closing GBP2.00/tonne firmer at GBP159.00/tonne. May 14 Paris wheat closed EUR1.00/tonne higher at EUR208.75/tonne, Jun 14 Paris corn was up EUR0.25/tonne to EUR184.50/tonne, whilst May 14 Paris rapeseed rose EUR3.25/tonne to close at EUR400.00/tonne.
Egypt's GASC bought 175 TMT of Russian, US and Romanian wheat for April 11-20 shipment. The prices paid, including freight, were said to be $311.79, £312.59 and $313.24 respectively. There were no Ukraine offers. Some would say that is significant, and others simply that they are merely sold out. I'd tend to be in the latter camp.
The Ukraine Ag Ministry said that growers there have planted 24% of their early spring grain crop on 693,000 hectares. That area is mostly spring barley (518,000 ha), with a little spring wheat. The Ministry said that early spring grain planting is likely to reach 2.9 million ha, and could total 8.9 million once the 2014 corn crop is in.
Ongoing developments between Ukraine/the West and Russia continue to make the market nervous.
Latest figures from the UK's Customs Dept shows that our domestic wheat imports fell to 122 TMT in January, the lowest monthly total of the season so far. Year to date imports (Jul/Jan) are now 1.47 MMT, down only a little on 1.63 MMT a year previously.
The rate of corn pouring into the UK however continues unabated, with nearly 312 TMT imported during the first month of 2014, taking the marketing year to date total to 1.44 MMT, an almost identical match to the volume of wheat shipped in and a rise of 54% on this time a year ago.
Lebanon bought 25,000 MT of Kazakh wheat for April shipment. Tunisia seeks 42,000 MT of optional origin wheat for April-May shipment.
Much is being made of deteriorating winter wheat crop conditions in the US due to ongoing dryness, with Kansas down from 37% a week ago to 34% good/excellent, Oklahoma down from 22% to 18% and Colorado down 8 points in the last 2 weeks to 35%. Note though that some of these numbers are still better than how things looked a year ago when Kansas wheat was only rated 29% good/excellent, with Oklahoma at 24% and Colorado at only 12%.
There are reports of wheat breaking dormancy in southwest Kansas given the warmer temperatures, with some areas set to see highs near 70 by the middle of this week.
Large parts of Central and Eastern Europe also remain dry, delaying spring planting and potentially harming winter grains. The EU Commission's MARS unit will release their first estimates on potential EU yields on Monday.
Chicago Market Report - Monday
17/03/14 -- Soycomplex: Beans closed with small gains, as the market brushed off talk that China had resold a few cargoes of Brazilian beans to the US. Weekly export inspections came in at the top end of trade estimations at 940 TMT. The USDA announced 110,000 MT of US meal sold to unknown for 2014/15 shipment. Safras e Mercado estimated Brazil’s soybean crop at 86.14 MMT versus last week's CONAB estimate of 85.4 MMT. They said that 84% of the Mato Grosso bean crop has been harvested versus 87% a year ago and 74% on average at this time. AgRural said Brazil’s bean harvest is 59% complete versus 49% a week ago and 54% a year ago. They estimated Brazil’s bean crop at 86.0 MMT. Brazil was mostly dry over the weekend, whilst heavy rains were reported in Argentina. The NOPA crush for February continues to show strong domestic demand for US beans, coming in at 141.6 million bushels versus trade expectation for a figure of around 140.9 million bushels and the 136.322 million crushed in February 2013. May 14 Soybeans closed at $13.91 3/4, up 3 1/4 cents; Jul 14 Soybeans closed at $13.75 1/4, up 3 1/2 cents; May 14 Soybean Meal closed at $446.60, up $2.60; May 14 Soybean Oil closed at 41.89, down 40 points.
Corn: The corn market slumped lower on fund selling (estimated at around 5,000 lots on the day). Weekly export inspections of 977 TMT were in line with trade estimations, and the USDA announced 107,400 MT of US corn sold to Mexico for 2013/14 shipment. Safras e Mercado said Brazil’s summer corn crop is 57% harvested versus 44% a year ago. They said that Brazil’s winter corn crop is 85% planted versus 88% a year ago, and estimated Brazil’s 2013/14 total corn crop at 71.1 MMT versus 82.1 MMT a year ago. The Argentine corn harvest is 4% complete versus 12% this time a year ago, according to the Buenos Aires Grain Exchange. They held their Argentine production estimate unchanged at 23.5 MMT. Ukraine were said to have shipped around 700 TMT of corn last week, and nearly 16 MMT so far this season. Russia have exported almost 2.8 MMT of corn so far in 2013/14. SovEcon estimated Russia’s 2013/14 corn exports at 3.8 MMT versus a previous estimate of 3.5 MMT. China were said to have bought 50 TMT of Ukraine corn over the weekend. Due to political turmoil in Ukraine one analysis group, UCAB, said that the country's grain output could fall by around 11.0 MMT in 2014 due to a sharp decrease in planting area caused by a shortage of funds. Much of that is likely to be corn. Texas corn is 15% planted versus 40% this time last year and the 31% average pace. May 14 Corn closed at $4.79, down 7 cents; Jul 14 Corn closed at $4.84, down 6 1/2 cents.
Wheat: The wheat market fell on what looked like "buy the rumour, sell the fact" trade in relation to weekend developments in Ukraine. Maybe the trade feels that wheat has enough of a "risk" premium built in after the recent sharp rally? Weekly export inspections came in at 496 TMT, which was in line with expectations, if not spectacular versus 652,806 MT in the same week a year ago. Russia said that it had exported 19.355 MMT of grains so far this season, including 14.293 MMT of wheat. SovEcon estimated Russia’s 2013/14 grain exports at 24.0-24.4 MMT versus a previous estimate of 23.1 MMT. Russia seem to be picking up extra business due to the weak rouble, and now that the government have abandoned their intervention purchase program. SovEcon estimated Russia’s 2013/14 wheat exports at 17.4-17.8 MMT versus a previous estimate of 16.5 MMT. Kazakhstan said that they'd exported 418,400 MT of wheat in January, up 53.9% from a year ago. Egypt’s government said that they intend to buy 4 MMT of local wheat this year. Their harvest should be underway in about a month's time. Egypt's GASC issued a late tender for wheat for Apr 11-20 shipment. I'd expect Russia to feature highly in that one when the results come out tomorrow. China are to auction 878,300 MT of government-owned wheat stocks on Wednesday. After the close Texas wheat good/excellent was only rated at 13% versus 28% a week ago. Oklahoma good/excellent was cut to 18% from 22% a week ago. May 14 CBOT Wheat closed at $6.74 1/2, down 12 3/4 cents;
May 14 KCBT Wheat closed at $7.43 1/2, down 8 cents; May 14 MGEX Wheat closed at $7.24 1/4, down 9 3/4 cents.
EU Grains Lower, Ukraine Exports Continue Unhindered
17/03/14 -- EU grains finished mostly lower in consolidation from the recent price spike.
Mar 14 London wheat ended the day GBP2.05/tonne easier at GBP164.75/tonne, and with new crop Nov 14 GBP2.35/tonne lower at GBP157.00/tonne. May 14 Paris milling wheat fell EUR3.75/tonne to EUR207.75/tonne, Jun 14 Paris corn was EUR2.50/tonne lower at EUR184.25/tonne and May 14 Paris rapeseed dropped EUR5.75/tonne to EUR396.75/tonne.
The Crimean vote at the weekend returned the largely expected near landslide vote to return to Russian control. This wasn't seen as a market mover. We now have to wait and see if the dispute spreads to other areas of Ukraine.
Meanwhile grain exports continue apparently unhindered. The Ukraine Ministry said that the country had exported 25.66 MMT of grains so far this marketing year (to Mar 14), a 37.5% increase on a year ago.
That total included 15.84 MMT of corn and 7.44 MMT of wheat.
A week ago exports to Mar 7 we're said to be 24.9 MMT, including 15.12 MMT of corn. That suggests that the country shipped out 760 TMT of grains last week, of which 720 TMT was corn.
That doesn't indicate that the current problems are contributing to a significant slowdown in exports at all.
Chinese buyers were reported to have booked 50,000 MT of Ukraine corn over the weekend.
Russian grain exports for the Mar 1-12 period meanwhile stand at 523 TMT, of which 212 TMT was wheat and 263 TMT corn.
Russia's marketing year to date exports are now 19.355 MMT, including 14.293 MMT of wheat, 2.776 MMT of corn and 2.053 MMT of barley.
Friday's Commitment of Traders report showed fund money continuing to flood into Chicago corn and wheat. Agrimoney reported today that they've featured as the largest net buyer in corn across the last 4 weeks since the news of the big Russian drought broke in the summer of 2010.
We may have seen some consolidation today, but it might not take a lot to see further upside potential coming from more spec money coming back into the grains sector in the days and weeks ahead. Developments in Ukraine hold the key for now, although concerns are also being raised over US winter wheat health, and even for spring grains plantings in the Midwest.
