Nogger's Blog

Chicago Markets Higher On The Day, But Lower For The Week

05/09/14 -- Soycomplex: Beans closed sharply higher. Weekly export sales came in at net reductions of 87,700 MT on old crop and net sales of 869,000 MT on the new crop. These were in line with trade forecasts. As per usual, China (338,300 MT) and unknown destinations (293,100 MT) were the largest buyers on the new crop. Talk of a possible upcoming frost threat for the Northern Plains and Upper Midwest got a few people excited, and certainly may have prompted some short-covering ahead of the weekend. At this exact moment few see any serious damage being done to beans however. Informa Economica raised their forecast for the 2014 US soybean crop to 3.876 billion bushels versus 3.7 billion previously, with yields up to 46.1 bu/acre from 44.5 bu/acre. Whilst being above the USDA's 3.812 billion bushels and 45.4 bu/acre August forecasts, they are maybe not as high as they might have been. Lanworth, FCStone and Allendale have all been above those levels this week. Continuing with the "bearish, but not as bearish as expected" theme, Stats Canada pegged Canadian canola stocks on Jul 31 at 2.4 MMT. That's up sharply from only 0.59 MMT a year ago, but below the average trade guess of 3.0 MMT. The acute weakness of the Argentine peso following the country's July debt default means that Argentine farmers continue to hoard beans. The Argentine Ministry said that growers there have only sold 56.5% of their 2013/14 soybean crop versus 65.3% a year ago. Sep 14 Soybeans closed at $10.85 1/2, up 21 1/4 cents; Nov 14 Soybeans closed at $10.21 1/2, up 18 1/4 cents; Sep 14 Soybean Meal closed at $436.10, up $4.70; Sep 14 Soybean Oil closed at 32.35, up 38 points. For the week that puts old crop Sep 14 beans 4 cents lower, with new crop Nov 14 down 2 3/4 cents. Sep 14 meal fell $3.40 during the course of the week, with Sep 14 oil up 31 points.

Corn: The corn market closed with good gains to end the week, but as with soybeans was still lower overall compared with last Friday. Weekly export sales came in at negative 7,500 MT on old crop and 525,600 MT on new crop - the latter being at the low end of trade estimates. Nevertheless, it was the frost talk that probably was mostly responsible for the day's gains. The US corn crop is behind on the maturity front, and possibly stands to be harder hit than beans IF the frost talk verifies. Certainly the threat will have been enough to encourage some to book their profits and square up a few positions ahead of the weekend. As with beans, Informa raised their crop production estimates, but not as much as many of the other forecasts that have been around this week. They put the 2014 US corn crop at 14.281 billion bushels, versus a previous estimate of 13.988 billion bushels. They raised their corn yield estimate to 170.3 bu/acre from 168.0 bu/acre last month. The USDA were at a fraction over 14 billion bushels, and with yields at 167.4 bu/acre back in August. Other estimates this week have been in the 14.4-14.6 billion bushels region with yields at around 172-174 bu/acre. The USDA release their September forecasts next Thursday. The Buenos Aires Grain Exchange said that the Argentine 2013/14 corn harvest is almost across the line at 99% complete. They increased their forecast for production from 25.0 MMT to 25.2 MMT. The Argentine Ag Ministry indicated that it's not just soybeans that growers there are hanging onto as a hedge against raging inflation and the weak peso. They've only sold 65.5% of this year's crop versus 74.1% a year ago. The EU said that they'd issued 2 MMT worth of corn import licences so far this season, up sharply from 815 TMT this time last year. Europe is only expected to import 11 MMT of corn this season, down from 15.5 MMT a year ago, according to current USDA estimates. The pace of imports may drop off a little once the EU 2014 corn harvest begins. Sep 14 Corn closed at $3.46 1/2, up 10 3/4 cents; Dec 14 Corn closed at $3.56, up 9 1/2 cents. For the week Sep 14 corn still lost 12 1/2 cents.

Wheat: The wheat market closed higher on the day, but still lower in Chicago and Kansas for the week. The Minneapolis market gained on the week on the back of significant delays to the US spring wheat harvest, mixed with quality concerns following persistently wet conditions. The upcoming frost forecast could be a further threat for spring wheat on the northern Plains, and certainly on the Canadian Prairies. "Frost is predicted in the Canadian Prairies and as far south as northern North Dakota and Montana. Saskatoon, a key spring wheat area, is subject to frost or freezing conditions on 3 successive days September 9-11," said Martell Crop Projections. Early strength in wheat was also linked to reports that Russia may consider a grain export ban if shipments reached 26.9 MMT this season. The reports were essentially denied. Weekly export sales were extremely lacklustre at only 168,800 MT. That fell below the modest trade expectations of 250-500 TMT. The Rosario Grain Exchange said that Argentine wheat is in generally good condition, although dryness in some areas and a frost last week were an issue. Rain is in the forecast today and tomorrow though, which should alleviate the dryness concerns. They said that 38% of the crop is at the tillering stage, with 29% at stem elongation. The Buenos Aires Grain Exchange held steady with their estimate that Argentine farmers had planted 4.1 million hectares of wheat this year, up more than 13% on last year. They are said to have only currently sold 68% of their 2013/14 season harvest versus 99.7% this time a year ago. EU wheat exports are currently slightly ahead of last year at 4.6 MMT, despite the USDA forecasting a 20% year-on-year decline in 2014/15. Stats Canada estimated Canadian all wheat stocks as at Jul 31 at 9.8 MMT. That's up sharply from 5.02 MMT a year ago, and the largest in 20 years. It is however less than the market expected, with the average pre-report trade guess at 10.7 MMT. Sep 14 CBOT Wheat closed at $5.31 1/2, up 6 1/4 cents; Sep 14 KCBT Wheat closed at $6.19 3/4, up 11 1/2 cents; Sep 14 MGEX Wheat closed at $6.26 1/4, up 4 cents. For the week that places Chicago wheat 18 3/4 cents lower, with Kansas down 6 1/2 cents and the Minneapolis market up 11 1/4 cents.

EU Grains Market Weekly Closing Comments

05/09/14 -- EU grains closed mostly a little higher to end the week, although wheat and corn still finished as losers overall versus last Friday.

The day ended with Nov 14 London wheat up GBP0.30//tonne to GBP119.00/tonne, Nov 14 Paris wheat closed EUR1.25/tonne firmer at EUR172.00/tonne, Nov 14 Paris corn was up EUR0.50/tonne at EUR149.00/tonne, whilst Nov 14 Paris rapeseed was EUR2.00/tonne higher at EUR325.25/tonne.

For the week that puts London wheat GBP2.80/tonne lower, with Paris wheat falling a net EUR2.25/tonne and corn down EUR2.75/tonne. Paris rapeseed managed a EUR1.50/tonne gain versus last Friday.

Initial support today appeared to stem from reports that Russia might consider an export ban if grain shipments in 2014/15 reached 26.9 MMT, with many private analysts estimates being already well over this figure. Reports later in the day played down these rumours, with the Russian Deputy PM saying that the issue is not on the agenda. The Ag Ministry said that they did not send the alleged letter, but not that one didn't exist - Reuters say that they have seen a copy of it.

The uproar caused in the global grain markets by the 2010 Russian export ban is still pretty fresh in everybody's minds. The Russians have subsequently insisted that in future they will let the market regulate itself, and I believe that on this occasion that is exactly what they will do. It seems bizarre to be even discussing the possibility of a Russian export ban in a year where grain production is expected to be close to a post-Soviet era record. Demand however is also strong this year, especially for high protein milling wheat given the problems in France and elsewhere.

Brussels said that they'd issued 852 TMT worth of soft wheat export licences this past week, taking the season to date total to 4.6 MMT. That's slightly ahead of the 4.5 MMT granted this time a year ago. That's interesting as the USDA currently has the EU down to export more than 20% less wheat in 2014/15 than it did last season.

The majority of what has been released for export is likely to be milling wheat, which continues to point to a further widening of it's premium over feed wheat in the second half of the season. This doesn't necessarily mean though that feed wheat price have bottomed. The arrival of a potentially record large global 2014 corn crop is a major obstacle to overcome for that. Ukraine new crop corn offers are today said to be down to $174/tonne FOB the Black Sea, a $9/tonne drop on the week, and the sterling equivalent of around GBP106.50/tonne.

Back to Brussels, they've also issued 2 MMT of EU corn import licences so far this year, more than double the volume granted this time a year ago (815 TMT). Barley export licences issued currently stand at 1.6 MMT, which is down by more than a third on a year ago.

In addition they also confirmed that the 18,614 MT balance of a special duty-free quota granted to Ukraine to export up to 950 TMT of wheat to the EU have now been fully subscribed. Ukraine's wheat crop is also said to be short on quality this year. They've exported a strong 5.37 MMT of grains so far this season, including a little under 3 MMT of wheat and nearly 2 MMT of barley.

France said that it's wheat harvest was 99% complete as of Monday, the same figure as a week ago. Corn crop conditions were unchanged at 88% good to very good versus only 55% this time last year.

Dollar strength and/or sterling and euro weakness has also been a feature this week. The pound is down by almost 3 cents, or 1.6%, against the dollar versus last Friday, with the euro falling by around one and three quarter cents, or 1.3%. Sterling has now lost almost 5% of its value against the dollar since its early July peak of over 1.7150.

In theory this should at least provide EU milling wheat with a competitive edge against US origin material on the export front.

Paris wheat is down 20% versus Chicago wheat's 27% decline from their 2014 peaks set in late April/early May. Paris corn is also down 20% during this time-frame versus a 33% decline in its Chicago equivalent.

London feed wheat incidentally has lost 30% of its value in that period.

The developing theme here seems to be lots of cheap corn and barley competing with a large EU feed wheat crop in the animal feed market, but with an evolving shortage of milling wheat later in the season.

What's Going On With Wheat This Morning?

05/09/14 -- I nearly had to do a double take when I powered up the old laptop earlier. US wheat futures in the green? Putting on more gains that corn, soybeans or anything else on the screen. What on earth is that all about, I wondered. Has it all kicked off in Ukraine again overnight?

It would seem not. "Ukraine's President Petro Poroshenko has raised hopes that a deal could be struck with Russia to end fighting in the east of his country," say the BBC this morning.

What else could it be then? The only explanation I can proffer is a report on Reuters, citing the Russian news agency Interfax, citing a letter, citing the Russian Ag Ministry sending it and the Russian PM "taking it" if you get my drift. The letter apparently said that Russia could consider restricting grain exports in 2014/15 should they exceed (a very precise sounding) 26.9 MMT.

The Reuters report says that the Ag Ministry declined to comment and that the government weren't picking up the phone. So I immediately think, yeah right. Why would they want to do that with more grain than they can shake a shitty AK47 at? There's 105 MMT of the stuff on the way according to ProZerno yesterday. The Ag Ministry say that they've already harvested nearly 79 MMT off only 61% of the planned area.

The headline to the story actually includes the words Russia, grain, export and (most evocatively) BAN. Could there be any truth in it at all? Let's face it, we don't believe anything that our own goverment(s) tell us, so why should we buy into this story?

Well, Russian domestic grain use is currently around 70 MMT annually, give or take. A 105 MMT crop, should they get it, is approximately a 100 MMT crop after cleaning. So that leaves 30 MMT left over for export.

Yet IKAR and ProZerno are both currently forecasting exports of 33 MMT this season, maybe this is what's getting the government jittery as it already says it intends to buy 4-5 MMT for state reserves this season. The latter is a plausible aim as their intervention purchase programme didn't go very well at all last season. Government stocks were reduced quite significantly in the drought year of 2012/13, so it seems logical that this current season's "time of plenty" is a good opportunity for these to be replenished.

Russia has after all suffered 2 bad drought years in the last 5, why export everything you've got at cheap money now, when you could bank a little for a rainy (or in this case droughty) day?

Of course, it could all be bollocks, but maybe there is something in the logic of this story after all?

Chicago Beans And Corn Sink To New Lows

04/09/14 -- Soycomplex: Beans sunk to new lows for the second day running, and we are now at levels not seen on a front month since October 2010. The outlook for a impending record US crop, followed by the potential for further records to be broken in South America early next year is behind the move. A stronger dollar isn't helping either. MDA CropCast raised their forecast for this year's US soybean crop by 71 million bushels from last week to 3.775 billion bu on improved late season conditions. Many other estimates are even higher, some pushing the 4 billion mark. Informa are due to release their latest thoughts tomorrow. FCStone joined in with other recent analyst's forecasts for increased Brazilian plantings, and higher and record soybean production in 2014/15, coming out with an estimate of 93 MMT. They see plantings at 31.0 million ha, up 5% from a year ago. Planting in some parts of the country will begin very soon. Dr Cordonnier said that many growers are looking at planting fast maturing, short cycle beans this year as a way of saving money as they require fewer fungicide and insecticide applications. This might take the top off some of these production estimates (Lanworth were as high as 98 MMT the other day), although it would also mean more beans coming onto the market earlier. Trade estimates for tomorrow's one day delayed weekly export sales report for beans are zero to net cancellations of 200 TMT on old crop and 800 TMT to 1.1 MMT on new crop. Sep 14 Soybeans closed at $10.64 1/4, down 16 1/2 cents; Nov 14 Soybeans closed at $10.03 1/4, down 16 3/4 cents; Sep 14 Soybean Meal closed at $431.40, down $15.80; Sep 14 Soybean Oil closed at 31.97, up 24 points.

Corn: The corn market closed around 5-6 cents lower. The same factors dragging soybeans down are being replicated in the corn market. The potential for the USDA to significantly raise projected US corn production in next week's WASDE report, non-threatening weather, reports of bumper yields in early harvested corn in the south and a strong dollar all see US corn prices also at 4-year lows. MDA CropCast left their US corn production estimate unchanged at 14.427 billion bushels. That puts them in the same ballpark as many other analysts who almost all now line up around the 14.4-14.6 billion range versus the USDA's August estimate of "only" 14 billion. Informa are expected to raise their forecast from a fraction under 14 billion tomorrow. FC Stone estimated Brazil’s 2014/15 total corn crop at 76.84 MMT, which is only marginally down on last year despite a near 5% drop in plantings. Lanworth yesterday said 79.0 MMT versus 78.6 MMT a year ago. Celeres earlier in the week said that Brazil would still produce a record 85.1 MMT of corn in 2014/15. "The sharp increase in the value of the US dollar..by default cheapens global (corn) offers," said Benson Quinn Commodities. Ukraine new crop corn offers are now said to be down to $176/tonne versus bids now at only $172/tonne on a FOB the Black Sea basis. A week ago those offers were at $183/tonne. South Korea's KFA bought 63,000 MT of Brazilian corn for Feb shipment. The USDA today announced 120,000 MT of corn sold to unknown for 2014/15 shipment. Trade estimates for tomorrow's weekly export sales report for corn are in the region of around zero on old crop and 600-800 TMT on new crop. Sep 14 Corn closed at $3.35 3/4, down 5 1/2 cents; Dec 14 Corn closed at $3.46 1/2, down 5 1/2 cents.

Wheat: The wheat market closed mixed across the three exchanges. Japan bought 110,146 MT of milling wheat for Oct-Nov shipment in their usual mix of US, Canadian and Australian origin. South Korea's CJ bought 26,100 MT of US wheat for Jan shipment. Russian analysts ProZerno forecast the grain crop there at 105 MMT, a near 14% rise on last year. That total includes 59.7 MMT of wheat, a near 15% rise, with wheat exports at 23.5 MMT in 2014/15 - an increase of over 28%. IKAR estimated Russia’s 2014/15 grain exports at 33.0 MMT, including 23.0 MMT of wheat. This year's Russian grain harvest is currently 61% complete at 78.8 MMT, according to the Ag Ministry. Wheat accounts for 49.3 MMT of that total so far, with barley adding an additional 18 MMT. The Ministry said that Russia may start buying grains for state reserves in October. MDA CropCast cut their forecast for the 2014/15 Australian wheat crop by 280 TMT from last week to 24.04 MMT, a 10.6% fall on a year ago due to dryness in the east of the country. The Saskatchewan weekly crop report said that cool and wet weather continues to delay harvest there. Stats Canada are due out tomorrow with their Jul 31 stocks numbers. Due to last year's record harvest, and early season logistical problems, these are expected to be very large. The trade is anticipating Canadian all wheat stocks at 10.7 MMT, more than double those of a year ago and a 20 year high. Trade estimates for tomorrow's weekly export sales report are around 250-500 TMT. Sep 14 CBOT Wheat closed at $5.25 1/4, up 1 3/4 cents; Sep 14 KCBT Wheat closed at $6.08 1/4, up 7 1/2 cents; Sep 14 MGEX Wheat closed at $6.22 1/4, down 1 3/4 cents.

EU Grains Mostly Slide Further, Lower ECB Interest Rates Add Some Support

04/09/14 -- EU grains closed mostly lower, extending the recent slide and slumping to new historic lows for the move, although a weak euro did manage to support Paris futures a little.

The day ended with Nov 14 London wheat down GBP0.80/tonne at GBP118.70/tonne, Nov 14 Paris wheat fell EUR0.25/tonne to EUR170.75/tonne, Nov 14 Paris corn was down EUR1.50/tonne to EUR148.50/tonne and Nov 14 Paris rapeseed was EUR0.25/tonne higher at EUR323.25/tonne.

The reason for the weak euro was the ECB unexpectedly cutting their refi (borrowing) rate from 0.15% to 0.05%, along with reducing the deposit rate from the already minus 0.1% to a new minus 0.2%. The idea is to encourage bank lending and stimulate the economy in the Eurozone.

The pound rose above 1.26 against the single currency on the news.

The BOE meanwhile left UK interest rates on hold at 0.5%, with the minutes of their meeting expected next week. Last month's minutes showed that two members of the committee voted for a rise for the first time in three years. A similar vote this time round, or even an increase in the numbers advocating one, could further support the pound in the weeks ahead.

Defra said that the UK had milled 514 TMT of wheat in the 4 weeks to Jul 26, a volume that was virtually unchanged on a year ago. The proportion of home grown wheat used in the grist has increased from 63% to 75% year on year though.

They also said that wheat usage in compound feed in July was down almost 15% year on year, whilst barley inclusion was up 40%.

The HGCA now estimate that 85% of the total UK combinable crop area was harvested as at 2 September, including 90% of the wheat area. "Yields remain above average while quality remains good, although there are signs that quality of later harvested crops is starting to decline where continued rainfall has delayed harvest progress," they said. Wheat yields remain above the 10-year average of 7.7 MT/ha at 8.4-8.6 MT/ha, they added. This continues to point to a final production number of around 16 MMT or more versus only 11.9 MMT a year ago.

The details of last night's Egyptian GASC tender reveal that the one winning French bid of $240.40/tonne FOB was well below the rest of the offers from the same origin, which were in the $246-248/tonne region. When freight is added on that puts the unsuccessful French bids at around $263.50-265.50/tonne C&F versus the other winning Romanian bid of $257.98/tonne.

IKAR estimated Russia’s 2014/15 grain exports at 33.0 MMT, including 23.0 MMT of wheat, 4.5 MMT of barley, and 4.3 MMT of corn. ProZerno are in the same ballpark at 32.7 MMT, including 23.5 MMT of wheat, 3.6 MMT of barley and 4.5 MMT of corn.

These are big numbers. Last year's exports (which were already large enough to depress the market) were 19.5 MMT of wheat, 2.7 MMT of barley and 4 MMT of corn according to the USDA.

Russia's Ag Ministry said that their 2014 wheat harvest is now 60% done at 48.4 MMT.

The Ukraine Ministry said that they had exported over 5 MMT of grains so far this season, including 2.75 MMT of wheat, 1.9 MMT of barley and 377 TMT of corn.

Stats Canada are due out tomorrow with their Jul 31 grain stocks estimates, with some big numbers expected due to the large volume of carryover left from last year's record crops. The trade is anticipating Canadian all wheat stocks at 10.7 MMT, more than double those of a year ago and a 20 year high. Barley stocks are also forecast more than twice last year's 0.98 MMT at 2 MMT and canola inventories are expected to come in at 3 MMT versus only 0.6 MMT a year ago.

EU Rapemeal Prices

04/09/14 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session. For your own personal interest, I've also convert these to approximate sterling equivalent values too:

What's That Coming Over The Hill?

03/09/14 -- Soycomplex: Beans closed lower on the outlook for a huge US crop now being just around the corner. Even the recently well supported Sep 14 sunk to a new near 4-year closing low for a front month. Brazilian growers will also begin planting what is expected to be a record 2014/15 crop of their own within a matter of weeks. The USDA are expected to revise upwards their US soybean production forecast next week. They were at 3.812 billion bushels with yields at 45.4 bu/acre in August. Today we had Allendale peg yields a bushel/acre higher with production at 3.884 billion bushels. Lanworth put yields at 46.7 bu/acre and production at 3.852 billion bushels. FCStone last night said 47.6 bu/acre with production at 4 billion bushels. Lanworth today also estimated Brazil’s 2014/15 bean crop at a record 98.0 MMT, a sharp 14% jump versus 85.7 MMT a year ago, and far higher even than Celeres' recent 91.3 MMT and the UDSA's current 91 MMT forecasts. These are monster numbers, especially when you consider that the entire global soybean demand side of the balance sheet is dominated by just one country - China. They are expected to account for two thirds of all world soybean trade in 2014/15. That leaves the market extremely vulnerable to any sign of a let up in demand from them. Bird flu? Credit problems? GMO? Nah, it couldn't happen, could it? And consider that prices at 4-year lows means that every tonne that China has already got bought for 2014/15 is now bought expensive. The temptation to default will be going through some Chinese minds right now. Sep 14 Soybeans closed at $10.80 3/4, down 16 1/2 cents; Nov 14 Soybeans closed at $10.20, down 12 cents; Sep 14 Soybean Meal closed at $447.20, down $2.90; Sep 14 Soybean Oil closed at 31.73, down 28 points.

Corn: The corn market closed at fresh more than 4-year low, so as not to leave soybeans feeling lonely. As with beans, the estimates for this year's crop are flooding in, and they are all lining up well above the USDA's current 167.4 bu/acre yield figure and production of a fraction over 14 billion bushels. FCStone set the tone after the close last night, with their estimate of production at a record 14.595 billion bushels, with yields averaging an all time high 174.1 bu/acre. Today we had Allendale saying 14.409 billion and 171.9 bu/acre. Lanworth chipped in with a production figure even higher than FCStone, 14.649 billion bushels using a yield estimate of 173.7 bu/acre. Lanworth also estimated Brazil’s 2014/15 corn crop at 79.0 MMT versus 78.6 MMT a year ago. Celeres yesterday put that at a record 85.1 MMT. Unlike soybeans, at least the world isn't totally dependent on China to take the bulk of global exports (if it was the US would be in trouble already as they still haven't resolved the MIR 162 dispute). They are only seen importing 3 MMT of corn in 2014/15, which puts them about on the same rung on the global import ladder as Saudi Arabia. In other news, South Korea's NOFI bought 129,000 MT of optional origin corn for Jan–Feb shipment. South Korea's KFA are tendering for 60,000 MT of optional origin corn for Feb shipment. The USDA attaché in Russia estimated the 2014/15 corn crop there at 13 MMT which is up 12% from a year ago. Harvesting of that is already underway, and they are likely to be their usual aggressive early season sellers. Sep 14 Corn closed at $3.41 1/4, down 14 1/2 cents; Dec 14 Corn closed at $3.52, down 11 3/4 cents.

Wheat: The wheat market closed lower, led by Chicago which finished the day down 20 cents. News of a deal, or sorts, between Russia and Ukraine to halt the fighting in the east of the latter was viewed as bearish. The USDA attaché in Russia estimated the country's 2014/15 grain crop at 99.0 MMT versus a previous estimate of 94.0 MMT. That includes 56 MMT of wheat and 17.5 MMT of barley. They put Russia's 2014/15 grain exports at 28.0 MMT versus a previous estimate of 26.0 MMT. Egypt's GASC bought one cargo each of French and Romanian wheat. Some were surprised at the number of French offers, as well as the prices put up. This may suggest that there's a bit more confidence in the quality of this year's harvest, now that it's over, than was previously thought. US wheat wasn't even offered. Neither was Ukraine origin, which may more likely be down to a lack of quality amongst this year's crop rather than concerns about the ability to ship. Exports out of the country have been brisk during the first two months of the marketing year. UkrAgroConsult said that Ukraine exported 2.74 MMT of grain in August, mostly wheat and barley. South Korea's CJ are tendering for 51,300 MT of US wheat for Jan shipment. Japan bought 40,210 MT of feed wheat and 34,340 MT of feed barley in a tender for Dec-Jan shipment. Sep 14 CBOT Wheat closed at $5.23 1/2, down 20 cents; Sep 14 KCBT Wheat closed at $6.00 3/4, down 16 3/4 cents; Sep 14 MGEX Wheat closed at $6.15, down 3 3/4 cents.

London Wheat Closes Below GBP120 For First Time In More Than 4 Years

03/09/14 -- EU grains closed mostly lower as news of a ceasefire agreement between Ukraine and Russia broke.

The day ended with Nov 14 London wheat down GBP1.50/tonne to GBP119.50/tonne, Nov 14 Paris wheat was EUR2.50/tonne lower at EUR171.00/tonne, Nov 14 Paris corn was down EUR1.25/tonne EUR150.00/tonne and Nov 14 Paris rapeseed was EUR3.50/tonne easier at EUR323.00/tonne. This was the first sub-GBP120/tonne close for a front month on London wheat since July 2010.

The initial statement put out regarding the ceasefire in Ukraine was subsequently re-worded, with Russia appearing to want to maintain it's insistence that it couldn't agree to a ceasefire unless it was part of the conflict, and that it isn't.

Ukraine's President Poroshenko then said that steps towards a "ceasefire process" were what was agreed. Reuters then reported that Putin's spokesman said that the two leaders had agreed on steps towards peace but not a ceasefire in the conflict. The BBC later said that Putin is hoping for a peace agreement to be reached by Friday.

This may simply all be an attempt to stop Russia losing too much face over it's constant denial that it had any involvement in backing the rebels, only time will tell. At the very least it is at least the first positive move in months, and one which today saw some of the "risk premium" that's been added into the wheat market taken away again, even though exports from both countries have been continuing at a frenetic pace.

Some might argue that an easing of tensions that a ceasefire would bring, would also calm shippers nerves and remove some of the urgency to "get it out whilst we can" and that the pace of exports out of the region might now start to slow down a little.

The bear camp would contend that Ukraine's export pace might yet increase further once the 2014 corn harvest gets underway in earnest.

The Ukraine Ministry today said that the country had harvested 35.7 MMT of grains, off 66% of the planned area. Corn accounts for only 73 TMT of that total so far. There are whispers that yields are down noticeably this year among this early harvested material, although it's too early to say that this will be replicated across the entire crop it does seem to be a possibility.

Regardless of that, much of this new crop corn will be put onto the market the minute it is harvested, potentially putting further downwards pressure on that particular market. Don't forget that the EU too is expecting a large corn harvest of it's own this year, and it also has significantly more feed wheat than normal to find a home for.

Ukraine new crop corn for Nov shipment was reported to have traded at $177/tonne FOB yesterday, the equivalent of little more than GBP107/tonne before shipping costs are added.

Other news out of Ukraine says that the winter oilseed rape crop for next year's harvest is now 60% planted on 514k ha. Much of the country could do with rain to help that germinate and get off to a good start before the winter arrives, although there's precious little of that in the forecast for the next 2 weeks. That at least should speed up the corn harvest and cut out any drying costs that the Ukraine farmer can ill afford to pay at the moment.

In other news, Rabobank noted that the current price ratio in Chicago of wheat being 1.5 times the value of corn is an upside price limiting factor for wheat.

They also suggested that the USDA's next WASDE report, due for release on Sep 11, could be "pivotal" for corn prices as it will be the first to include actual weights from field samples. Despite currently predicting a record 2014 corn yield of 167.4 bu/acre, the USDA are actually still significantly below the 170-175 bu/acre camp where virtually the rest of the trade currently reside.

Should they decide to "bite the bullet" and come up with a yield estimate in the rest of the trade ballpark than that would significantly increase their production estimate from the current figure of a fraction over 14 billion bushels. Note that FCStone yesterday forecast production close to 14.6 billion bushels (and Lanworth Inc today agreed with them), more than 4% above the USDA's August estimate. A figure of that magnitude next Thursday would provide the market with something of a "supply shock" that could send prices sharply lower.

Late in the day, news that Egypt's GASC had bought one cargo each of French and Romanian wheat - the former being it's first purchase of French wheat for almost 8 months was interesting. Russian wheat was apparently priced out for the first time on months.

Chicago Corn And Wheat Lower, Beans Higher On SDS Talk

02/09/14 -- Soycomplex: Beans closed around 6-7 cents firmer as more talk of Sudden Death Syndrome in parts of the US did the rounds again. The effects of SDS are not necessarily devastating as the name indicates. "The amount of damage caused by SDS can vary from slight to severe depending on the soybean variety and the stage of maturity of the soybeans when the disease appeared and how widespread the disease is in a specific field," says Dr Cordonnier. Benson Quinn meanwhile described early soybean yields in the Mississippi Delta as "phenomenal", although noting that the harvest there isn't refilling the supply pipeline as fast as US crushers would like. Commodity Weather Group estimated US 2014 soybean yields at a record 46.9 bu/acre versus a previous estimate of 46.1 bu/acre. After the close FCStone estimated US soybean yields this year even higher at 47.6 bu/acre with production at an all-time high of 4 billion bushels, up from a previous forecast of 3.865 billion. Also after the close the USDA raised the proportion of this year's US soybean crop rated good to excellent by two points from last week to 72%. That compares favourably with only 54% this time last year and is a record high percentage for the end of August. They said that 95% of he crop is setting pods, in line with the 5-year average, and that 5% of the crop was dropping leaves versus 7% for the 5-year average and 3% a year ago. Celeres estimated Brazil’s 2014/15 bean crop at a record 91.3 MMT. Sep 14 Soybeans closed at $10.97 1/4, up 7 3/4 cents; Nov 14 Soybeans closed at $10.32, up 7 3/4 cents; Sep 14 Soybean Meal closed at $450.10, up $10.60; Sep 14 Soybean Oil closed at 32.01, down 3 points.

Corn: The corn market closed lower on the outlook for bumper US production this year. FCStone pegged that at a record 14.595 billion bushels, with yields averaging an all time high 174.1 bu/acre. Their previous estimates were 14.455 billion bushels and 172.4 bu/acre. The USDA raised their good to excellent ratings by one point from last week to 74%. They said that 90% of the crop is at the dough stage, one point ahead of the 5-year average and that 53% of the crop is at the denting stage versus 59% normally at this time. The crop is rated 8% mature compared to 16% for the 5-year average, highlighting that the cool weather conditions this summer means that maturity is somewhat lagging. What little new crop corn has been harvested so far is said to be displaying impressive yields. "Strong showers continued through the Labor Day weekend in the Midwest. A wide swath of the farm belt received rainfall of 3 inches but 5 inches locally. This included eastern Nebraska, most of Iowa, Iowa, southeastern Minnesota and northwestern Wisconsin. Drenching rains, at least 1 inch, but up to 2 inches, has developed in narrow band of the eastern Midwest also, central Illinois through northwestern Indiana," said Martell Crop Projections. South Korea's NOFI are tendering for 140,000 MT of optional origin corn for Jan-Feb shipment. Israel is looking for 80,000 MT of optional origin corn for Nov-Jan shipment in a tender that looks destined to be won by the Black Sea. Both Russia and Ukraine have now begun harvesting their 2014 corn crops. Celeres estimated Brazil’s 2014/15 corn crop at a record 85.1 MMT. Sep 14 Corn closed at $3.55 3/4, down 3 1/4 cents; Dec 14 Corn closed at $3.63 3/4, down 1 cent.

Wheat: The wheat market closed generally lower in the face of strong competition on the export front from the Black Sea. SovEcon raised their figure for Russian grain exports in August to a record 4.5 MMT, most of which (4.3 MMT) was wheat. Ukraine's Ag Ministry meanwhile said that the country had exported more than 5 MMT of grains in the first two months of the marketing year, up sharply versus 3.3 MMT in the same period in 2013/14. That volume included 2.75 MMT of wheat. Egypt announced a wheat tender with the results expected tomorrow. US wheat is unlikely to feature. The USDA's FAS in Algeria said that the country would import a record 7.5 MMT of wheat in 2014/15. US wheat might stand a better chance of grabbing a share of some of that business due to quality problems from their traditional largest supplier - France. Algeria recently said that they would reject wheat that had been blended to come from more than one country of origin, a move which many see as limiting opportunities for French wheat this year. The USDA cut spring wheat crop conditions by 2 percentage points to 63% good to excellent. That's down compared to 70% this time last year. Harvesting continues to suffer wet weather related delays at 38% complete versus 65% normally. North Dakota is only 20% done versus 60% normally, with South Dakota at 68% versus 96% and Minnesota at 35% versus 78%. Israel seeks 25,000 MT of optional origin feed wheat for Nov–Dec shipment, with the Black Sea the most likely supplier. Jordan seeks 100,000 MT of optional origin feed barley for Jan-Feb shipment. Sep 14 CBOT Wheat closed at $5.43 1/2, down 6 3/4 cents; Sep 14 KCBT Wheat closed at $6.17 1/2, down 8 3/4 cents; Sep 14 MGEX Wheat closed at $6.18 3/4, up 3 3/4 cents.

EU Grains Little Changed In Sluggish Market

02/09/14 -- EU grains closed with little change, in what felt like a repeat performance of yesterday's trade. You would have been forgiven for thinking that US markets were closed again today, let's just say that they were slow to wake up.

The day ended with Nov 14 London wheat down GBP0.55//tonne to GBP121.00/tonne, Nov 14 Paris wheat ended EUR0.25/tonne weaker at EUR173.50/tonne, Nov 14 Paris corn was down EUR0.50/tonne at EUR151.25/tonne, whilst Nov 14 Paris rapeseed was EUR3.00/tonne firmer at EUR326.50/tonne.

Fresh news was relatively thin on the ground. The Russian Ag Ministry said that they'd harvested 26.6 million hectares, or 57.1% of the planted area, producing 75.3 MMT of grain so far. That's up from 62.3 MMT this time last year, with yields averaging 2.83 MT/ha, a 19.4% increase compared to 2013.

Wheat accounts for 47.9 MMT of that total, off 14.7 million ha, which is 57.9% of the planted area. The 2014 Russian barley harvest meanwhile is now 72.8% complete, producing a crop of 17.3 MMT so far.

In addition, the corn harvest is just getting going, with 75k ha cut thus far (2.7% of the planned area), producing 410 TMT to date.

Meanwhile the planting campaign for winter crops for the 2015 harvest is underway in Russia, with 2.5 million ha already sown. That's a little over 15% of the Ag Ministry's intended target.

The 2014 corn harvest in Ukraine is also spluttering into life, with one or two new crop parcels being offered onto the export market for prompt shipment.

The Ag Ministry there are currently forecasting winter plantings at 7.5 million ha, a 4% decline on last year (which of course then included Crimea). They say that plantings have been delayed by rain, and that there is currently little in the forecast for the next two weeks.

It remains to be seen if Ukraine growers get even close to that planting target given the weather, tightness of credit, the weak currency and political turmoil in the region. Not to mention who wants to plant in a war zone?

At home, the promised spell of fine and dry weather appears to have arrived bang on cue with the kids going back to school. That should allow further good progress to be made wrapping up the last of the wheat harvest this week in a very timely manner as well as getting some fieldwork done with regards to our own winter planting.

What those winter planting intentions will be is unclear, with growers generally unhappy with the price of everything at the moment. Overall though I don't see the final winter wheat area being that much different to "normal" at this early stage. We've planted around 1.8-2.0 million hectares of winter wheat every year bar two (when the weather badly intervened) out of the last 20, so I don't really see too much deviation from this again this year, especially in the absence of another viable alternative screaming "plant me!"

Indeed, the unusually large premium (+12%) that currently exists on the Nov 15 future over the Nov 14 contract does offer some encouragement to plant wheat, even if I suspect few growers will fancy selling some of their 2015 production short before the crop is in the ground whilst they're still long (heavily in some cases) of 2014. Note too that Chicago (+10%) and Paris (+8%) wheat futures are also offering healthy premiums for next year's crop over this year's.

EU Grains Little Changed With US Markets Shut

01/09/14 -- As is often the case, with US markets closed for the Labor Day holiday, this was never going to be a thriller - and so it proved with little change either way in thin volume.

The day ended with Nov 14 London wheat down GBP0.25/tonne at GBP121.55/tonne, Nov 14 Paris wheat fell EUR0.50/tonne to EUR173.75/tonne, Nov 14 Paris corn was unchanged at EUR151.75/tonne and Nov 14 Paris rapeseed was EUR0.25/tonne lower at EUR323.50/tonne.

FranceAgriMer told us on Friday that the French early grain harvest was now just about over. As yet, there's little definitive news regarding the quality of this year's wheat crop, save for the fact that it's down on last year.

Meteo France said that the Jul/Aug period was the wettest since 1959, with the country getting 40% more rainfall than normal.

News emerged last week that as well as buying Lithuanian and UK wheat, the French were also importing from Latvia to bolster up the quality of this year's harvest, even if Algeria have already stated that they won't accept wheat of two different origins against any of their tenders.

This still leaves an unusually large volume of French feed wheat to market this year, and unlike UK growers they are keen to find export homes, so French wheat is currently priced well under UK origin material at the moment.

The jury is still out with regards to the quality of this year's German wheat crop, with an estimated 10% or so still to be harvested. The German Ag Ministry seem to think that "rain makes grain" as far as quantity is concerned though, on Friday they raised their estimate for this year's wheat crop to almost 28 MMT, a near 12% rise on last year.

They also forecast a 2014 German winter barley harvest 13.5% higher than a year ago at 9.5 MMT, along with a 7.9% rise in spring barley production to 2.1 MMT and a 4.9% increase in corn output to 4.6 MMT.

In addition they pegged the 2014 German rapeseed crop at 6.2 MMT, a 7.7% rise versus last year.

There's been no improvement in the situation in eastern Ukraine over the weekend, although grain exports from the country remain apparently unhindered. APK Inform said that Ukraine's seaports had exported 664 TMT of grains in the past week, a 13% increase on the week before. That total included 393 TMT of wheat and 271 TMT of barley.

It remains to be seen whether Ukraine growers will plant a normal winter grains area this year, or wait until the spring to see if there's been an improvement in stability in the region.

Russia's harvest juggernaut rolls on. They've now produced 74.3 MMT of grains this harvest, off barely more than half the planned area - 55.6% in fact. Wheat accounts for 47.3 MMT of that total, and barley a further 16.9 MMT. They are just getting going on corn, which is 2.6% harvested producing 385 TMT to date.

SovEcon said that they expect Russia to have exported a record 4.1 MMT of grains in August, most of which (3.7 MMT) will have been wheat. July exports of 3.2 MMT were a record for that particular month as they waste no time in turning what looks like being a very large, possibly post-Soviet era record, harvest into cash. The weak rouble is making domestic prices a bit more palatable.

Turkey are shopping for 200 TMT of milling wheat for Sep/Oct and Oct/Nov shipment, with Russian origin possibly the most likely source.

EU Rapemeal Prices

01/09/14 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session. For your own personal interest, I've convert these to approximate sterling equivalent values too. The values in the sterling change column may not match those in the euro change column due on currency fluctuations:

Chicago Grains Mostly Lower Ahead Of Long Weekend

29/08/14 -- Soycomplex: Beans closed higher on front end Sep 14, but lower on the rest heading into the 3-day weekend with the market closed on Monday for Labor Day. The USDA announced 123,000 MT of US beans sold to unknown for 2014/15 delivery. The International Grains Council made only a few small changes to their 2014/15 global soybean balance sheet. These included a small rise in production for the US, up from 103.4 MMT to 103.8 MMT. "Abundant rains continued to benefit US soybean crops, with output forecast slightly higher, at a new record. While southern hemisphere fields are yet to be seeded, output is also projected to increase in Brazil and Argentina," they said. Sep 14 Soybeans closed at $10.89 1/2, up 15 3/4 cents; Nov 14 Soybeans closed at $10.24 1/4, down 4 1/2 cents; Sep 14 Soybean Meal closed at $439.50, up $6.30; Sep 14 Soybean Oil closed at 32.04, down 60 points. For the week Sep 14 beans were down 76 1/2 cents, with meal gaining $6.20 and oil losing 32 points.

Corn: The corn market closed lower with fund money estimated as selling around a net 7,000 contracts on the day. The IGC increased their forecast for the 2014/15 global corn crop by 4 MMT from last month to 973 MMT. "Northern hemisphere yield prospects continued to improve in August, including in the US, where crops have benefitted from a prolonged period of benign weather," they said. They increased their production estimate for the US by 2 MMT to a record 355 MMT, with Europe up by 1.4 MMT to 67.8 MMT and Ukraine raised by 1 MMT to 27.5 MMT. China's crop was left unchanged at 220 MMT, with imports also unchanged at 3.5 MMT. World corn ending stocks were raised 3 MMT to 190 MMT, which they said was the largest since 1987/88. South Korea's Kocopia bought 55,000 MT of optional origin corn for Jan shipment. Sep 14 Corn closed at $3.59, down 2 3/4 cents; Dec 14 Corn closed at $3.64 3/4, down 4 1/2 cents. For the week Sep 14 corn was down 6 1/2 cents, with Dec 14 falling 6 3/4 cents.

Wheat: The wheat market closed mixed, lower in Chicago and Kansas and firmer in Minneapolis. The IGC raised their forecast for the 2014/15 global wheat crop by 11 MMT to 713 MMT, which would now match last season's record output. Ending stocks also got a hike, up 3 MMT to 59 MMT. The main production increases came from Russia (up 5 MMT from last month to 60 MMT) and Europe (up 3.8 MMT to 150.8 MMT). There was also a small rise in the size of the US all wheat crop, up 0.5 MMT to 55 MMT. "The world harvest will include an above average proportion of low/medium grade supplies," they noted. "While market sentiment remained mostly bearish, concerns about crop quality and the conflict in Ukraine provided underpinning," they added. Iraq are tendering for 180 TMT of feed barley and 120 TMT of corn for Sep/Oct shipment. Sep 14 CBOT Wheat closed at $5.50 1/4, down 6 1/4 cents; Sep 14 KCBT Wheat closed at $6.26 1/4, down 8 3/4 cents; Sep 14 MGEX Wheat closed at $6.15, up 3 cents. For the week that puts Chicago wheat down 1 3/4 cents, with Kansas falling 7 1/4 cents and Minneapolis down 11 3/4 cents.

EU Grains Developing Sideways Trade

29/08/14 -- EU grains closed mostly lower on the day, and little changed for the week, with the trade starting to develop a sideways pattern.

The day ended with Nov 14 London wheat up five pence at GBP121.80/tonne, Nov 14 Paris wheat was EUR0.75/tonne lower at EUR174.25/tonne, Nov 14 Paris corn was down EUR0.50/tonne EUR151.75/tonne and Nov 14 Paris rapeseed was EUR4.75/tonne lower at EUR323.75/tonne.

For the week that puts London wheat 45 pence lower, Paris wheat 50 euro cents higher, and corn and rapeseed both one euro lower.

So, support at GBP120/tonne and EUR170/tonne in London and Paris wheat is still holding, at least for now. The next big test might come when the 2014 EU and corn harvest begins and when the weight of new crop corn offers out of the Black Sea comes around. The corn harvest is just getting going in Ukraine and Russia.

The best hope as far as significant upside potential goes is unfortunately in the hands of Vladimir Putin it would seem.

The world 2014 wheat and corn crops meanwhile keep getting bigger. The International Grains Council today raised their forecast for global wheat output this year by 11 MMT from last month to a 2013 record equalling 713 MMT. They also added 5 MMT to their corn production estimate, pegging this year's crop at 973 MMT.

The rise in wheat production from that forecast last month was largely due to a 5 MMT increase for Russia, where the crop is now seen at 60 MMT, up 15% on last year. There was also a 3.8 MMT hike for production in Europe, taking output this year to 150.8 MMT, a more than 5% rise compared to last year.

Significantly too, Europe's 2014 corn crop was also raised from 66.4 MMT to 67.8 MMT, a near 6% increase on a year ago.

Russia said that it had now harvested 73.8 MMT of grains so far this year off only 55% of the planned area. Yields are up 18.6% versus 12 months ago. Wheat accounts for 47.2 MMT of that total off 56% of the intended area, with barley adding a further 16.7 MMT.

At home, the HGCA said that the 2014 UK harvest was around 80% done, up from 66% complete a week ago. Wheat is around 75% harvested, with yields so far averaging 8.3-8.6 MT/ha. With a planted area of just under 2 million hectares this year, that potentially could take this year's crop close to the 17 MMT mark.

The warm and dry forecast for the week ahead should enable further good harvest progress to be made.

FranceAgriMer said that the French wheat harvest was just about complete at 99% done as of Monday, and that the 2014 spring barley harvest is now over. They left their estimate for corn crop conditions unchanged at 86% good to very good, up sharply from 55% this time last year.