Chicago Closing Comments From Friday Night
08/08/14 -- Soycomplex: Beans closed mixed, with strong gains nearby, but the ever present weight of a potentially monster US crop around the corner weighing on the further forwards, capping gains. The USDA announced 113,000 MT of US beans sold to unknown for 2014/15 shipment. Chinese customs data showed that the country imported 7.47 MMT of beans in July, up 17% from June and far more than the Ministry of Commerce estimate of 5.87 MMT. The same source now says that China has imported 41.68 MMT of beans this calendar year, up 20.14% from a year ago. The Ministry estimate for August bean imports is only 3.84 MMT. Few would bet on that being easily exceeded, although stocks at the ports are again said to be approaching record levels. The Buenos Aires Grains Exchange said that Argentina finished 2013/14 harvesting a record 55.5 MMT of soybeans. The quality there this year is said to be low due to persistent wetness. Weather forecasts for the week ahead look a bit wetter in the US. Beyond that "Extended fall forecasts are starting to make the rounds with EU model apparently indicating normal temps for September with an active moisture pattern followed by a warm October. If current and extended weather is realized, talks of lofty corn and beans yields look justified," said Benson Quinn Commodities. Aug 14 Soybeans closed at $12.84 3/4, up 34 3/4 cents; Nov 14 Soybeans closed at $10.84 3/4, up 6 3/4 cents; Aug 14 Soybean Meal closed at $397.50, up $6.90; Aug 14 Soybean Oil closed at 35.44, down 18 points.
Corn: The corn market closed lower on the day, but little changed for the week. Shanghai JC Intelligence said that China's 2014 corn crop could fall to 200 MMT from 203 MMT last year, the first year-on-year decline in 5 years. Corn is not something that they have a shortage of though, with the government still holding regular weekly auctions with varying degrees of success. The Buenos Aires Grains Exchange said that the Argentine corn harvest is 84% complete versus 79.7% a week ago and 97.8% a year ago. They left their production estimate unchanged at 25 MMT. US fertiliser giant CF Industries said that US corn plantings in 2015 would come in at "over 90 million acres" - which suggests an area little different to the 91.6 million sown this year. It's a big week next week, with Monday night bringing the latest crop condition report from the USDA, before the WASDE report on Tuesday. Both could indicate a 2014 US corn crop in fine fettle, and with record yields and production only weeks away. The USDA is expected to raise corn yields to above 170 bu/acre on Tuesday versus 165.3 bu/acre in July. Several notable analysts now have yields in the 173-175 bu/acre region. South Korea's KFA bought 55,000 MT of optional origin corn for Jan shipment. Sep 14 Corn closed at $3.51 3/4, down 7 3/4 cents; Dec 14 Corn closed at $3.63 1/2, down 7 3/4 cents. Sep 14 was 3/4 cents lower for the week.
Wheat: The wheat market closed lower on the day, but mostly higher for the week, led by gains in the Chicago contract. Profit-taking may have been a factor today, with all sorts of geopolitical balls up in the air over the weekend, not to mention the USDA reports out on Monday and Tuesday. The Buenos Aires Grains Exchange said that wheat planting in Argentina is 94.2% complete versus 91.3% a week ago and 97.9% a year ago. They left their area estimate unchanged at 4.2 million ha, a sharp rise on a year ago. The USDA attaché in Australia estimated the 2014 wheat crop there at 24.5 MMT, down 9% from a year ago. France are said to have had the wettest July on record this year. Although this persistent wetness may be giving Europe some quality issues, "rain makes grain" is what they say, and production estimates are rising in France. Agritel estimated the French wheat crop at 38.16 MMT versus previous estimate of 37.3 MMT, and very close to the record crop in 1998 of 38.25 MMT. ODA estimated the French wheat crop at 37.8 MMT, up 0.5 MMT from their previous forecast. FranceAgriMer said that the French harvest had advanced to 92% complete as of Monday, so it should be virtually all over by now, just in time to avoid any disruption from the leftovers of Hurricane Bertha. The German wheat harvest is now said to be around 60% complete. Sep 14 CBOT Wheat closed at $5.49 1/4, down 12 1/4 cents; Sep 14 KCBT Wheat closed at $6.29 1/4, down 17 cents; Sep 14 MGEX Wheat closed at $6.18 3/4, down 15 3/4 cents.
EU Grains Give Up More Of The Week's Gains
08/08/14 -- EU grains closed mostly lower on the day, although wheat was generally a little higher for the week. The gains all came earlier in the week on concerns over the quality of the EU crop and the massing of Russian troops on the Ukraine border prompting fears of an imminent Crimean-style "peacekeeping" invasion.
The day ended with Nov 14 London wheat down GBP1.20/tonne at GBP123.80/tonne, Nov 14 Paris wheat was EUR2.00/tonne lower at EUR172.25/tonne, Nov 14 Paris corn fell EUR2.00/tonne to EUR158.50/tonne and Nov 14 Paris rapeseed rose EUR1.00/tonne to EUR328.00/tonne.
For the week that puts London wheat up GBP1.80/tonne, with Paris wheat gaining EUR0.50/tonne, corn down EUR5.00/tonne and rapeseed unchanged.
Yesterday's news that deliveries would be accepted against the Paris wheat contract on wheat with hagbergs as low as 170, albeit at an allowance, and protein levels of 10.5% doesn't set the bar too high for a "milling wheat" contact. There certainly won't be a queue of international buyers wanting to buy what could end up be a very full Rouen futures store system come November.
The HGCA said that around 40% of the UK combinable crop area had been cut as of Aug 5, one of the best starts in recent years. The wheat harvest was already nearly 20% done as of Tuesday versus only around 5% normally at this time.
It's still too early to give a forecast on yields, they said. However hagberg levels on what has been cut are good, typically around the 300 mark. Specific weights are also good at around 77kg/hl, and protein levels in milling wheats are around averaging 12%, they added.
Almost all the UK winter barley and rapeseed was now cut. They said that average yields in that were 7.2-7.4 MT/ha versus a 10-year average of 6.4 MT/ha. Rapeseed yields are coming in at an average 3.4-3.6 MT/ha compared to the 10-year norm of 3.3 MT/ha. "Malting barley is mostly achieving specification, with only occasional crops with high screenings or very low grain nitrogen," they added.
UK growers will be keen to get as much of their harvest in as possible before the well advertised remnants of Hurricane Bertha arrive on these shores on Sunday. There still seems to be a fairly large degree of uncertainty/disagreement over exactly how far north (or south) it will hit.
Oil World yesterday increased their forecast for the EU-28 rapeseed crop to a record 23.1 MMT. That included upgrades from their previous estimates for Germany (to 6.2 MMT versus 5.9 MMT last month and 5.8 MMT last year), France (5.3 MMT versus 5.2 MMT and 4.4 MMT respectively) and Poland (2.9 MMT versus 2.8 MMT last month and last year). The UK crop was pegged at 2.5 MMT, unchanged from July but 19% up on last season.
That's the largest EU-28 production estimate in the ring so far, from a company not normally noted for having flights of fancy. Strategie Grains said 22.9 MMT and Informa 22.4 MMT earlier in the week.
Ukraine said that they'd exported 2.534 MMT of grain so far this month (to Aug 6), including 1.1 MMT of barley and a very similar amount of wheat. Corn exports so far this season stand at just under 300 TMT, but these will soon start to pick up once the 2014/15 harvest gets underway.
Russia said that they'd now harvested 55.8 MMT of grains off 36.2% of the planned area. That includes 41.4 MMT of wheat (off 45.4% of plan), with yields averaging 3.6 MT/ha, an 18.8% increase on this time last year.
Belarus said that they'd harvested 8.165 MMT of grains off 84.7% of the planned area. They still hope to achieve a record 10 MMT grain crop this year.
France said that they'd exported 12.2 MMT of soft wheat to non-EU destinations in 2013/14, a 23% rise versus a year previously. Top home was Algeria taking 5.7 MMT, a 44% increase compared to 2012/13. They probably won't feature so prominently in 2014/15, given France's well touted quality problems. French soft wheat exports within the EU in 2013/14 were down 5% at 6.8 MMT.
FranceAgriMer said that the French wheat harvest was 92% done as of Monday, up from 76% a week previously and versus only 61% a year ago. The winter barley harvest is finished. The spring barley harvest stood at 87% complete versus 67% a week ago and only 49% done this time last year. The corn crop is 97% silking versus 88% last week and 70% a year ago. Corn crop conditions are impressive at 84% good/very good, unchanged on a week ago and up from only 53% this time last year.
Meanwhile the 3-day truce in Gaza is over, and things have sadly but predictably resumed where they left off. Obama has OK'd air strikes against Islamist militants in northern Iraq and who knows what might happen in eastern Ukraine next? The world could be a different place by Monday.
The FTSE 100 and DJIA closed at near 4-month lows last night on the back of heightened investor nerves over such turmoil. Will that mean a flock back to commodities, or will their risk aversion appetite also include the grain sector? Only time will tell.
I'm off for a week now (the Lakes - yes I know, we aren't taking any suntan lotion), but the usual regular daily reports will still get posted whilst I'm away, although perhaps they may adopt a temporarily more "minimalistic" look. TTFN. Nogger.
Chicago Mostly Lower As Trade Prepares For Next Week's USDA Report
07/08/14 -- Soycomplex: Beans closed higher on old crop and a bit lower on the new. Weekly export sales of 94,900 MT for 2013/14 and just over 1 MMT for 2014/15 were broadly in line with expectations. China (700,000 MT) and unknown destinations (138,000 MT) were predictably the largest buyers on the new crop. The USDA also announced 113,000 MT of US beans sold to unknown for 2014/15 shipment under the daily reporting system. Meal sales were robust at 252,100 MT for 2013/14 (expecting 50-150,000 MT) and 479,000 MT for 2014/15 (expecting 250-450,000 MT). MDA CropCast estimated the US 2014 soybean crop at just over 100 MMT, unchanged from last week and 15.3% higher than last year. That's 3.677 billion bushels in foreign money and also easily a record volume. The USDA will give us their latest estimates next week. The average trade guess is 3.823 billion bushels, from within a range of estimates of 3.70-3.95 billion. The July WASDE estimate was 3.8 billion and 2013 production was 3.289 billion. Conab trimmed their forecast for the 2013/14 Brazilian soybean crop to 85.7 MMT from a previous estimate of 86.27 MMT. Oil World estimated the EU-28 2014 rapeseed crop at a record 23.1 MMT, up from a previous estimate of 22.7 MMT and versus 2013 production of 21.3 MMT. Aug 14 Soybeans closed at $12.50, up 13 cents; Nov 14 Soybeans closed at $10.78, down 2 cents; Aug 14 Soybean Meal closed at $390.60, up $2.60; Aug 14 Soybean Oil closed at 35.62, down 17 points.
Corn: The corn market closed around 2-3 cents lower on the outlook for a huge US corn crop this year. The USDA are likely to increase their yield estimate for that next week, although the trade thinks it unlikely that they will "go the whole hog" in one go. Last month's figure was 165 bu/acre, but many estimates are now well above 170 bu/acre. Lanworth were today said to have suggested yields could average 174.8 bu/acre, almost 10 bu/acre up on the USDA's July estimate. MDA CropCast today increased their forecast for the US crop by 5 MMT from a week ago due to largely favourable conditions in most areas. That takes production up to a record 366.9 MMT (14.444 billion bushels), a 5.5% increase on last year's previous all time high output. The average trade guess for what the USDA will say next week is production at 14.253 billion bushels, from within a range of estimates of 13.988–14.778 billion. The July WASDE estimate was 13.86 billion and 2013 production was 13.925 billion. The average yield estimate for this report is just over 170 bu/acre. Weekly US corn export sales came in at 120,900 MT of old crop (expecting 100-200,000 MT) and 758,700 MT of new crop (expecting 800 TMT to 1 MMT). Conab forecast the Brazilian total corn crop at 78.55 MMT versus a previous estimate of 78.20 MMT. The Brazilian Ministry said that they will start to auction corn from next week. South Korea MFG bought 110,000 MT of optional origin corn for Dec-Jan shipment in a tender. Sep 14 Corn closed at $3.59 1/2, down 3 3/4 cents; Dec 14 Corn closed at $3.71 1/4, down 3 cents.
Wheat: The wheat market reversed the trend of six higher sessions, giving up some of the "Putin premium" that had been built in. Weekly export sales came in at 590,900 MT versus the expected 600-800,000 MT. Conab estimated Brazil's wheat crop this year at 7.50 MMT versus a previous estimate of 7.40 MMT. That's a strong rebound on production of only 5.3 MMT 12 months ago, and also 1.2 MMT above the USDA's current estimate. With a better Argentine wheat crop also expected/hoped for in 2014/15 then Brazil's imports from the US could decrease significantly. There's talk of better wheat production potential in South Australia and Western Australia than ABARES currently predict. On a national level the NAB see the Australian wheat crop at 26 MMT this year, down only modestly from 27 MMT a year ago, and much better than ABARES current forecast of 24.54 MMT. The Tunisian grain crop in 2014/15 is seen more than 150% up on last year's drought-ravaged crop at 3.2 MMT. Rusagrotrans raised their forecast for the Russian 2014/15 grain crop to 100.9-103.3 MMT. They didn't put a specific figure on wheat production, but the crop there certainly seems to be getting larger. Japan bought 154,245 MT of mostly US origin milling wheat for Sep–Oct shipment. The FAO estimated the 2014/15 global wheat crop at 707.2 MMT versus a previous estimate of 702.7 MMT. The Argentine Ag Ministry said that growers there had only forward sold 64.79% of their 2013/14 wheat crop versus 96.93% a year ago. Sep 14 CBOT Wheat closed at $5.61 1/2, down 6 1/2 cents; Sep 14 KCBT Wheat closed at $6.46 1/4, down 10 cents; Sep 14 MGEX Wheat closed at $6.34 1/2, down 8 1/2 cents.
EU Wheat Trades Lower, Mulling Russian Situation
07/08/14 -- EU grains closed mixed, but with wheat mostly lower, in light consolidation following yesterday's decent gains.
The day finished with Nov 14 London wheat down GBP1.00/tonne at GBP125.00tonne, Nov 14 Paris wheat ended EUR2.00/tonne lower at EUR176.25/tonne, Nov 14 Paris corn was p EUR1.25/tonne at EUR156.50/tonne, whilst Nov 14 Paris rapeseed was up EUR1.25/tonne at EUR327.00/tonne.
It was announced that both delivery points against the Paris milling wheat contract had agreed on the minimum specification that they would accept against the 2014 crop. Minimum protein levels of 10.5% look easily achievable, although a minimum hagberg level of 220 does not. There was however a "rider" attached that hagbergs down to 170 would be allowed, albeit at an allowance,
Russian Premier Putin is expected to make an "urgent announcement" to the nation at 20.30 Moscow time. The trade is anxious as to what that might entail.
Traders are already debating what the implications are for the grain trade of the Russian decision to ban the import of various meat and agricultural products from Europe, the US and others. It may certainly mean that less Russian wheat is available on the export market, as more could need to be fed locally.
It could also mean a reduction in demand for feed in some countries. Russia is the second largest global buyer of US chicken for example. It could also mean that at least some of that demand is simply switched elsewhere eg. Brazil.
Meanwhile, Rusagrotrans raised their forecast for the Russian 2014 grain crop from 98.2-99.9 MMT to 100.9-103.3 MMT. Production in 2013 was 92.4 MMT according to the Ag Ministry.
The Russian Ag Ministry said that the country had harvested 55.8 MMT of grains to date, off only 36.2% of the planned area. Yields were said to be up almost 20% at 3.3 MT/ha.
That total includes 41.4 MMT of wheat off 45.4% of the anticipated area, along with 8.7 MMT of barley off 31.6% of plan. If these figures are accurate then the 2014 Russian harvest could ultimately prove to be much higher than current estimates even if yields decline as the harvest progresses into less productive areas and lower yielding spring wheat.
Ukraine said that they'd exported 2.534 MMT of grains so far this season, including over 1.14 MMT of barley and in excess of 1 MMT of wheat.
APK Inform said that 63% of this year's Ukraine wheat harvest was of milling standard, down from 70% a year ago.
They added that this year's wheat harvest had suffered badly from high levels of fusarium due to a lack of adequate spraying because of a general lack of credit, heightened by the wet growing season.
Tunisia said that their 2014 grain harvest was already past the 1 MMT mark (to Jul 31), and that they expected a 2014 crop of around 3.2 MMT this year, up almost 150% on last year's drought hit crop of only 1.3 MMT.
Oil World forecast the EU-28 2014 rapeseed crop at a new record 23.1 MMT, up 1.9 MMT on last year and higher even than Strategie Grains' recent estimate of 22.9 MMT.
As the EU-28 wheat harvest picks up, so too are exports. Brussels granted 532 TMT worth of soft wheat export licences this past week, the busiest week so far, taking the season to date total to 1.8 MMT. They also issued 131 TMT worth of barley export licences, taking the 2014/15 total so far to 1 MMT.
Corn imports continue to more or less match the pace of wheat exports, with 490 TMT of corn import licences granted this week. The season to date total is now 1.6 MMT.
The EU also issued 48,950 MT of duty free wheat import licences to Ukraine under the existing preferential deal that permits 950 TMT of Ukraine wheat to enter the bloc tariff free. The exemption period runs to Oct 31. To date 426 TMT worth of licences have been issued.
Putin To Address The Nation Tonight
Will he send the troops into eastern Ukraine under the guise of some sort of peacekeeping/humanitarian move? Only a deranged megalomaniac would do that surely? What? He IS a deranged megalomaniac who's popularity with the Russian people has soared since the taking of Crimea. Oh dear.
The tit-for-tat ban on US, EU, Australian and Canadian agricultural products will doubtless lead to increased food prices in Russia, raising inflation and pushing the economy there closer to recession, but at least the man's popular. That's what really matters.
Which is a bit like saying "you can say what you like about Hitler, but at least he made the trains run on time."
Apparently Russia accounts for around 21.5% of all EU vegetable and 28% of EU fruit exports, along with being the second largest buyer of US chicken meat after Mexico. They are, or were, a large buyer of Australian beef too.
The latest gossip is that they are now considering a ban on passenger flights over Russian airspace for Europeans travelling to Asia. That's my Thai holiday next year fcuked up already then. The bastard. Is it just me or does he always look like he's in the middle of a long, drawn out poo?
What do you mean, you've never noticed? Have a look at this: There's 3 "breather rings" on that
And this: You'll have to beat that with a stick to get that down the pan
See what I mean?
"Never trust a man who always looks like he's in the middle of a long poo, our David." that's what me Nan always used to say, and it's stood me in very good stead up until now.
Chicago Grains Jump On Short-Covering, Russian Jitters
06/08/14 -- Soycomplex: Beans closed higher, reversing the overnight trend, on what looks like short-covering ahead of next week's USDA report. "Fresh sabre rattling by Putin along the Russia/Ukraine border" as Benson Quinn put it will also have been a contributory factor. Shandong Sunrise Grain were said to have estimated China’s 2014/15 soybean import requirements at a very large 78.0 MMT. That's 5 MMT above where the USDA currently sit and 9 MMT more than in the previous year. Yesterday's relatively low Informa estimates of a 2014 US soybean yield of "only" 44.5 bu/acre and production at 3.7 billion bushels may have added a bit of support too today. Brazil's Conab are out with their latest crop production estimates tomorrow. The latest weather forecasts for the Midwest are less wet today than they were yesterday. "The long-range forecast for rainfall is near normal August 11-15. Above normal would be better for replenishing dry fields," said Martell Crop Projections. Aug 14 Soybeans closed at $12.37 1/4, up 14 1/2 cents; Nov 14 Soybeans closed at $10.80, up 14 1/4 cents; Aug 14 Soybean Meal closed at $388.80, up $6.60; Aug 14 Soybean Oil closed at 35.78, up 31 points.
Corn: The corn market closed higher on what also looks like short-covering ahead of next Monday's USDA report and in the wake of heightened nervousness over Russia's intentions on Ukraine. Support also came from the USDA announcing 160,000 MT of US corn sold to Colombia for 2014/15 shipment. Talk that Argentina has stopped issuing corn export licences was also friendly. New from the US Energy Dept that ethanol production fell by more than 50k barrels/day last week was not however. The trade is now weighing up Russia's move to ban the import of "certain kinds of agricultural produce and raw materials and food products" emanating from countries that have imposed sanctions against them. They didn't specifically say which products or which countries they mean, but it's probably not very hard to guess. Russia buys fruit and vegetables from the EU worth an annual EUR2 billion and food and agricultural products from the US worth around EUR1 billion a year, according to the BBC. Fund money was estimated to have been a net buyer of around 7,000 corn contracts on the day. Sep 14 Corn closed at $3.63 1/4, up 7 cents; Dec 14 Corn closed at $3.74 1/4, up 7 cents.
Wheat: The wheat market closed sharply higher on a combination of short-covering and possibly fresh speculative long positioning on the back of increasing tensions between the West and Russia. Reports of quality damage to the European wheat crop this year was also supportive. Talk of a possible embargo on Russian wheat would certainly be friendly for demand for US origin grain should it come off. It's probably unlikely to meet with wholesale support though. I just can't see the likes of Egypt refusing to buy from Russia, especially with Europe maybe not able to offer the volume and quality that they are looking for, and US wheat several thousand miles away. Iraq bought 50,000 MT of Black Sea origin wheat for August shipment. The Philippines are looking for 100,000 MT of feed wheat for Dec-Jan shipment. Fund money was estimated a being a net buyer of around 5-6,000 Chicago wheat contracts on the day. With all the uncertainty regarding Russia and the EU's quality problems the market appears to be thinking "do we really need to be at 4-year lows?" Sep 14 CBOT Wheat closed at $5.67 3/4, up 15 1/4 cents; Sep 14 KCBT Wheat closed at $6.56, up 13 1/4 cents; Sep 14 MGEX Wheat closed at $6.44, up 14 3/4 cents.
EU Grains Trade Higher On "Putin Factor"
06/08/14 -- EU grains closed mostly higher on nervousness over a build up of Russian troops on the Ukraine border and continued reports of quality issues with the ongoing 2014 European wheat harvest.
The day ended with new crop Nov 14 London wheat closing GBP2.50/tonne higher at GBP126.00/tonne, Nov 14 Paris wheat was EUR3.50/tonne firmer at EUR178.25/tonne, Nov 14 Paris corn was up EUR1.25/tonne to EUR155.25/tonne and Nov 14 Paris rapeseed was unchanged at EUR325.75/tonne.
Is this the start of a turnaround in the wheat market from the recent slump to 4-year lows? It certainly could be as far as milling wheat is concerned, as there looks like being a shortage of that across parts of Europe this year, judging by reports coming out of France and Germany. The market is still awaiting clarification on the quality specification that will be accepted against the Paris milling wheat contract this year. Regardless of what will ultimately prove to be acceptable, milling wheat premiums of the standard demanded by the flour millers could ultimately rise.
Shorts will be nervously keeping an eye on developments in Ukraine, with Russian troops said to be increasing their numbers on the border. Chicago wheat jumped 30% between late January and the first week of May following the Russian taking of Crimea. What would it have done if it had been known that there was also a serious lack of quality in European wheat at the time?
That doesn't necessarily mean that London feed wheat should be in for a rally too though. What isn't French or German or Polish milling wheat is ultimately extra feed wheat overflowing out of the grain bin of despair.
As far as feed wheat goes, we now need to keep an eye on new crop corn. Informa yesterday said that the 2014 EU corn crop would come in at 67.8 MMT versus a previous estimate of 66.4 MMT. That's more than 2 MMT above the USDA's current estimate.
The progress of the Ukraine corn crop also warrants keeping an eye on. The Ag Ministry there said yesterday that the current dry weather may "significantly" reduce the Ukrainian corn yields. There's also the question of will everything that's been planted get harvested, particularly in the east of the country?
The Polish Prime Minister today said that the threat of a direct intervention by Russia's military in Ukraine has risen over the last couple of days, according to a report on Reuters. Nato said that it was concerned that Russia would use "the pretext of a humanitarian or peace-keeping mission as an excuse to send troops into Eastern Ukraine".
The Ukraine Ag Ministry said that the country had harvested 31.2 MMT of early grains (excluding corn) to date off 8.824 million hectares, or around 90% of plan. That includes 21.553 MMT of wheat and 8.632 MMT of barley. APK Inform said that the country would harvest 57.4 MMT of grain, including corn, this year - unchanged from their previous forecast. Some fields remain unharvested in the Donetsk and Lugansk regions due to "military operations" they said.
They'd also harvested 2.052 MMT of OSR as of the same date. UkrAgroConsult forecast Ukraine's rapeseed exports falling 17% to 1.85 MMT in 2014/15.
The ongoing turmoil in Ukraine, and the latest round of Western sanctions imposed on Russian banks, see the Ukraine hryvna down by 4.4% and the Russian rouble 3.8% lower versus the US dollar in the past fortnight. The hryvna has lost almost a third of it's value against the US dollar since the beginning of the year.
Low prices, continuing conflict, lack of credit and higher input costs due to weak domestic currencies will have farmers in both countries scratching their heads with regards to 2015 cropping plans.
Current heat and dryness may have speeded up the wheat harvest in the region, but it won't be helping later crops such as corn, soybeans and sunflowers. It could also further reduce/harm the planting of winter crops later in the year.
Still, Russian sellers remain aggressive, actively searching for nearby business as they want dollars and they want them now, with 12.5% milling wheat offers FOB the Black Sea said to be around the $245/tonne level (circa GBP146/tonne), and with feed wheat FOB Azov/Rostov as cheap as $170/tonne FOB (circa just GBP101/tonne). Ukraine new crop corn offers are around $187-189/tonne (circa GBP112/tonne).
Chicago Closing Comments: Wheat Rises On EU Quality Issues
05/08/14 -- Soycomplex: Beans closed lower after overnight rains proved to be more extensive, and covered an area farther into the heart of the US corn/soybean belt than expected, according to Benson Quinn Commodities. The latest forecasts have also adopted a wetter outlook. "The Midwest forecast calls for heavy soaking rains and very cool temperatures. The near term forecast is extremely wet. At least 1 inch of rain is predicted but 3-4 inches locally in corn and soybean farms. This would be due to a stalled trough of low pressure with recurring showers. Soaking rains are welcome in corn and soybeans, as field conditions have grown progressively drier in recent weeks. Soybeans especially need heavy rainfall in August to optimize the yield. This is the key period for seed development in pods, wetness promoting larger beans. Cool temperatures are predicted again this week the forecast calling for 2–6 F below normal," said Martell Crop Projections. Informa estimated US 2014 soybean yields at 44.5 bu/acre and production at 3.7 billion bushels, unchanged from last month and a bit lower than many others (including the USDA's 45.2 bu/acre and 3.8 billion bushels). FCStone yesterday forecast yields at 46 bu/acre with production at 3.865 billion bushels. They see average yields in Illinois at a record 55 bu/acre, and those in Iowa at a record 53 bu/acre. AgRural estimated Brazil’s 2014/15 soybean plantings at 31.0 million hectares, up 4.9% from a year ago. They see production in 2014/15 at an all-time high 94.0 MMT versus the USDA estimate of 91.0 MMT and the current 2013/14 record crop of 85.6 MMT. A Reuters survey forecast Q4 2014 US soybean prices at $10.27/bu,which would represent a 21.8% fall year-on-year. The range of estimates was $9.42-11.30/bu. Aug 14 Soybeans closed at $12.22 3/4, down 9 3/4 cents; Nov 14 Soybeans closed at $10.65 3/4, down 13 3/4 cents; Aug 14 Soybean Meal closed at $382.20, down $6.00; Aug 14 Soybean Oil closed at 35.47, down 55 points - just 2 points away from Friday's 5-year closing low.
Corn: The corn market closed a couple of cents lower. The wetter forecast is seen as being beneficial for corn, even if the crop could also use some heat units. Preliminary data shows July 2014 to be the 3rd coolest on records dating back to 1950, according to Martell Crop Projections. The coolness has at least conserved soil moisture by reducing evaporation, they said. "The forecast remains cooler than average this week and also in the 6-10 day outlook," they added. Informa estimated US 2014 corn yields at 168.0 bu/acre versus a previous estimate of 165.0 bu/acre and compared to the current USDA estimate of 165.3 bu/acre. They see production at 13.988 billion bushels, up from a previous estimate of 13.73 billion and higher than the USDA's July estimate of 13.86 billion. They are record numbers, although not as ambitious as they might have been, FCStone yesterday estimated yields at 172.4 bu/acre, with production of 14.455 billion bushels. It's interesting to see such a disparity on yield estimates so relatively late in the season. Everybody seems to think that this year's yields will set new records, but nobody seems sure exactly how high the bar will be raised. The widely followed Pro Farmer US Midwest crop tour may shed some more light on things. That takes place August 18-21st. Informa also estimated the 2013/14 Brazilian total corn crop at 78.1 MMT versus a previous estimate of 76.55 MMT. They said that the 2014 EU corn crop would come in at 67.8 MMT versus a previous estimate of 66.4 MMT. CONAB come out on Thursday with their latest Brazilian crop estimate updates. The USDA attaché in Argentina estimated their 2014/15 corn crop at 23.5 MMT versus the current official USDA estimate of 26.0 MMT. There's talk of developing dryness in Ukraine and Russia harming potential corn yields there. A Reuters survey estimated Q4 2014 US corn prices at $3.52.bu, from within a range of estimates of $3.02-4.15/bu. That would represent a year-on-year decline of 16.6%. Sep 14 Corn closed at $3.56 1/4, down 2 1/2 cents; Dec 14 Corn closed at $3.67 1/4, down 2 cents.
Wheat: The wheat market closed higher, aided by repeated talk of serious quality issues in Europe. With fund money short in CBOT wheat, that prompted some to scramble to exit those positions, explaining why Chicago wheat gained more than Minneapolis or Kansas. Funds were estimated as net buyers of around 2,000 Chicago wheat on the day. There are also reports of reduced quality in Ukraine wheat, plus addition talk of a build up of Russian troops on the Ukraine border to keep the shorts nervous. Russia's wheat crop keeps getting bigger by the day though. Informa today estimated wheat production there at 56.0 MMT versus a previous estimate of 52.5 MMT and the current USDA estimate of 53.0 MMT. Local analysts IKAR this week raised their projection to 58.5 MMT, making it look increasingly likely that the USDA will have to increase their estimate next week. Informa also now have the Kazakhstan wheat crop estimated at 15.5 MMT versus a previous estimate of 13.5 MMT. In addition they forecast the 2014 US all wheat crop at 1.986 billion bushels versus a previous estimate of 1.960 billion. The USDA attaché in Argentina estimated the country's 2013/14 wheat exports at 2.5 MMT versus the official USDA estimate of 2.0 MMT. A decision on what quality is acceptable for delivery against the French MATIF milling wheat contract is expected this week, according to a report on Reuters. The situation certainly needs clarifying, although opinion remains divided on exactly how demanding the spec will be. "I think the silos will accept all the crop or set criteria that are not very restrictive, otherwise they're going to cut themselves off from half the market," one trader told Reuters. If they are relatively relaxed about the quality that is acceptable then we could see the French market give up some of the existing premium of around $25/tonne that it presently commands over London feed wheat. More rain was reported overnight in eastern France, Germany and Poland. A Reuters survey estimated CBOT wheat prices in Q4 of this year at an average $5.52/bu, from within a range of $5.02-5.92/bu. Sep 14 CBOT Wheat closed at $5.52 1/2, up 8 1/2 cents; Sep 14 KCBT Wheat closed at $6.42 3/4, up 4 1/4 cents; Sep 14 MGEX Wheat closed at $6.29 1/4, up 5 3/4 cents.
EU Wheat Rises, Corn And Rapeseed Dip
05/08/14 -- EU grains closed mixed, wheat was higher and corn and rapeseed lower.
The day ended with Nov 14 London wheat up GBP1.15/tonne at GBP123.50/tonne, Nov 14 Paris wheat was EUR1.50/tonne higher at EUR174.75/tonne, Aug 14 Paris corn fell EUR1.50/tonne to EUR158.50/tonne and Aug 14 Paris rapeseed dropped EUR2.25/tonne to EUR325.75/tonne.
Reuters reported that an announcement on minimum quality standards acceptable for French wheat to be delivered against the Euronext contract is expected this week. That should hopefully clarify the situation. Depending on what they say, the Paris contract could rise, or conversely retreat closer to the price of feed wheat.
There are reports that the quality of Ukraine's wheat crop may also have been adversely affected by rain this year, just days after the local Weather Centre said that yields could be highest since the country gained independence.
Volume is not the problem, the Ukraine Ministry said that the country had already harvested 90% of the intended wheat area, producing a crop of 19.4 MMT to date. Local consultancy ProAgro said that 35% of this year's crop might only be feed grade, up from 25-30% a year ago.
By comparison Russia's 2014 wheat harvest is said to be 77.5% milling standard and 22.5% feed grade.
Harvesting there is going well, very well in fact if the figures coming from the Ag Ministry are to be believed. They say that the country has already produced 53.9 MMT of grain off less than 35% of the planned area. This time a year ago the harvest only stood at 40.2 MMT. Yields are said to be averaging 3.32 MT/ha, a near 20% rise on last year.
Wheat accounts for 40.7 MMT of that total, off less than half (44.5%) of the planned area. Barley is responsible for a further 7.9 MMT of the total off less than a third (28.8%) of plan.
Russian grain exports also continue at a rapid pace. Having exported close to 3 MMT in July (a record for the month), total shipments in August are expected to rise to 3.5-3.6 MMT, according to Rusagrotrans. Domestic wheat prices in Russia are said to be steady as exporters scramble for supplies to fulfil existing sales obligations and ship wheat out of the country before Western sanctions start to bite.
There's a school of thought that the real effect of restricting Russian banks' access to Western capital markets won't really show up until farmers thoughts turn to planting for the 2015 harvest in the autumn.
Russian farmers may experience difficulties in obtaining finance to fund their winter planting programme, and the weak rouble will also increase input costs for the 2015/16 harvest. That could have a detrimental effect on crop production next year.
Chicago Grains Higher To Start The Week
04/08/14 -- Soycomplex: Beans closed higher as the latest weather forecasts adopted a drier look for the week ahead, unlike last week's wetter prognosis. "Surplus soil moisture in early July has given way to dry ground in August in the Midwest. There was virtually no rain last week in the US heartland. Field moisture was ample to begin with early in July, but now has become severely depleted. Soybeans are most in jeopardy for a reduced yield as the key pod filling period advances in August. August rainfall is the key indicator for the soybean yield, the heaver the rainfall the better. Conditions in corn and soybeans have remained remarkably favourable despite very low rainfall and strong drying in recent weeks. Exceptionally cool temperatures were beneficial keeping evaporation low. Yet over time field moisture has declined with very low rainfall," said Martell Crop Projections. The USDA then surprised the trade after the close, revealing unchanged good to excellent soybean ratings of 71%. They said that 57% of the crop was setting pods, up from 38% a week ago and 9 points ahead of the 5-year average. Separately the USDA announced 102,000 MT of US beans sold to Taiwan for 2014/15 shipment, along with 110,000 MT sold to China. FCStone estimated US soybean yields at 46 bu/acre. Informa are due to release their latest forecasts tomorrow. Strategie Grains estimated the 2014 US soybean crop at a record 101 MMT (3.71 million bushels), up 1 MMT from their previous estimate. They also see record EU-28 rapeseed production this year, forecasting a crop of 22.9 MMT, up 400 TMT from their previous forecast and 8.5% higher than 21.1 MMT a year ago. Weekly US soybean export inspections of 39,256 MT were below the expected 50,000-115,000 MT. Aug 14 Soybeans closed at $12.32 1/2, up 17 1/2 cents; Nov 14 Soybeans closed at $10.79 1/2, up 21 cents; Aug 14 Soybean Meal closed at $388.20, up $0.70; Aug 14 Soybean Oil closed at 36.02, up 57 points.
Corn: The corn market closed around 6-7 cents higher. A drier August outlook for the Midwest is not likely to be as damaging for corn as it could be for soybeans, although nevertheless a drink would be nice. "Most of the Midwest corn pollinated under favourable conditions, though conditions were too dry for last 35-40% of pollinating crop," said Martell Crop Projections. Short-covering and spill over support from wheat probably helped corn today. So too did another round of robust weekly export inspections. These came in at 1.14 MMT versus trade expectations of 750-950 TMT. After the close the USDA confirmed trade expectations with a 2 point drop in corn crop ratings to 73% good/excellent, although that's still a very impressive figure for this time of year. They said that 90% of the crop is now silking versus 78% a week ago, 84% a year ago and 88% for the 5-year average. They also said that 36% of the crop is now at the "dough" stage versus 17% a week ago and this time last year. The 5-year average is 29%. It would seem that the cool temperatures witnessed throughout July haven't necessarily held back crop development on a national level, pushing the harvest forward and increasing the risk of frost damage a bit later in the season. All the leading corn producing states appear to be displaying maturity ahead of normal. Some northern states like Michigan, Wisconsin and North Dakota are behind normal development though. FCStone estimated US 2014 corn production at a record 14.455 billion bushels, with an average yield of 172.4 bu/acre. The yield figure includes a 203 bu/acre state average for Illinois. "The 6-10 day forecast calls for continuing coolness, a threat for late-maturing Midwest crops. Rainfall chances would be near normal August 9-13 on most Midwest farms, though less wet in the eastern Midwest with a 40-50% chance of rain," said Martell Crop Projections. Sep 14 Corn closed at $3.58 3/4, up 6 1/4 cents; Dec 14 Corn closed at $3.69 1/4, up 7 cents.
Wheat: The wheat market ended higher on short-covering prompted by ideas that Europe's 2014 crop will be down on quality. That would potentially open the door for more US wheat exports, although competition from Russia in particular remains fierce. There's little sign as yet of Western sanctions against the latter are having any effect on the global wheat trade. Russia's Ag Ministry said that grain exports in the first 30 days of the new 2014/15 marketing year totalled 2.827 MMT, a 17.5% rise on a year ago. Wheat accounted for the vast majority of that - 2.436 MMT, they said. Russian analysts IKAR trumped last week's forecast from ProZerno for a wheat crop of 58.2 MMT this year, coming up with a new estimate of 58.5 MMT, which is 1 MMT higher than their previous forecast and a 6-year high. The Russian Ministry said that the country had already harvested more than 40 MMT of wheat in bunker weight off only 44% of the planned area. IKAR forecast Russia's 2014/15 wheat exports at 22 MMT or more. In Brazil, the world's third largest wheat buyer according to the USDA, Conab said that the crop in Parana state was 85% in good condition, with 12% satisfactory and only 3% poor. They expect Parana's wheat crop to come in at 3.8 MMT this year, a sharp increase on only 1.8 MMT a year ago. In Rio Grande do Sul however heavy rains mean that output this year will fall to 3.0 MMT from 3.2 MMT in 2013/14. The two states account for the vast majority of Brazil's wheat production. The USDA said that the 2014/15 US winter wheat harvest was now 90% complete, up from 83% a week ago and versus 85% for the 5-year average. US spring wheat crop conditions were pegged at 70% good/excellent, unchanged on a week ago and 2 points ahead of this time last year. They said that 97% of the crop was headed, which is exactly in line with the norm. Weekly export inspections of 351,503 MT were at the bottom end of trade expectations. Sep 14 CBOT Wheat closed at $5.44, up 9 3/4 cents; Sep 14 KCBT Wheat closed at $6.38 1/2, up 5 3/4 cents; Sep 14 MGEX Wheat closed at $6.23 1/2, up 7 1/2 cents.
EU Wheat Posts Modest Gains, Russian Crop Estimates Rising Though
04/08/14 -- EU grains closed mixed, but mostly high. London wheat traded both sides, but generally managed a modestly higher close, despite the one thing that the trade does currently seem certain of is that Europe is in for a large feed wheat surplus this year.
The day finished with Nov 14 London wheat up GBP0.35/tonne at GBP122.35tonne, Nov 14 Paris wheat ended EUR1.50/tonne firmer at EUR173.25/tonne, Aug 14 Paris corn was down EUR3.50/tonne at EUR160.00/tonne, whilst Aug 14 Paris rapeseed was unchanged at EUR328.00/tonne.
As well as a larger wheat crop in 2014/15 (estimated at 147 MMT last week by the IGC - a 2.7% increase on last year and the second largest ever), Europe will also see higher corn production this year (up 3.8% to 66.4 MMT). It's the combination of the larger than normal market share of feed grade out of a bumper wheat harvest, and increased competition from corn that's keeping London wheat under pressure.
The prospect of another season of big EU corn imports from the likes of Ukraine doesn't augur well for too much upside potential for feed wheat prices awhile yet either.
Paris wheat meanwhile doesn't know what to do, follow Chicago up, or relinquish some more of the premium that it currently holds over the London market. In essence nobody seems to know right now what average specification wheat in France is this year, and even more importantly what quality can actually be delivered against the futures contract.
Friday night's closes put the premium held by the Nov 14 Paris wheat contract over it's London counterpart at around $25/tonne - which is historically rather high. Whether that premium is justified without knowing what the deliverable specification is on the MATIF contract is questionable.
In other news, Agritel said that Ukraine seaports had exported 494.1 TMT of grains in the week Jul 28-Aug 3. That was up from 463.2 TMT and week previously and included 183.7 TMT of wheat, 284 TMT of barley and 23 TMT of corn.
The country's exports for 2014/14 (Jul/Jun) now stand at 2.36 MMT, including just over 1 MMT of barley and slightly under that volume of wheat. Corn exports so far are fractionally less than 300 TMT.
The Ukraine National Weather Centre said that early grain harvesting there had been rapid, due to warm and dry weather, saying that winter wheat yields could be the highest on record for independent Ukraine. The weather conditions may be harming corn crop development though, they added.
The Russian Ag Ministry said that they'd exported 2.827 TMT of grains in the period Jul 1-30, a 17.5% increase on the same period in 2013. Wheat accounted for 2.436 MMT of that total, and barley a further 331 TMT.
They also said that Russia had now harvested 52.3 MMT of grain off 33.6% of the planned area, with yields up more than 20% at 3.34 MT/ha. That total includes 44% of the anticipated wheat area, producing a crop of 40.2 MMT to date. Yields are said to be averaging 3.61 MT/ha, a near 19% rise on last year at this time.
In addition the country has harvested 6.6 MMT of barley (off 24.4% of plan) and almost 419 TMT of rapeseed (off nearly 20% of the planned area).
IKAR today raised their estimate for the 2014 Russian wheat crop from 57.5 MMT to 58.5 MMT (a 6-year high), which is now sightly higher than what looked like a highball estimate of 58.2 MMT from ProZerno last week. With 40.2 MMT already cut off less than half the planned area, even that estimate may still prove to be too low.
