Chicago: Beans Slump, Wheat Soars, Corn Pulled Both Ways!
28/11/14 -- Soycomplex: Beans, meal and oil all closed sharply lower, under pressure from the heavy fall in crude values following OPEC's move to keep production levels unchanged. There may well have been an element of pre-weekend and end of month profit-taking. Traders will also be conscious that year-end is also now not far away. "All three components of the soybean complex are hinting at near term tops have been formed and (need) lower prices before (they) find lasting support," suggested Benson Quinn. The Buenos Aires Grains Exchange said that Argentine soybean planting was now 44.8% complete versus 30.4% a week ago and 48.9% a year ago. The USDA reported strong weekly export sales for beans of almost 1.5 MMT. Meal sales however were disappointing at net cancellations of 22,300 MT. Perhaps the recent hike in meal values has done the job of choking off demand, or at least switching it to South America. Weekly exports of 2,781,100 MT in beans were also strong, even if down 10% on last week's massive total. China took over 2.1 MMT of that total. The IGC cut their forecast for next year's Argentine soy crop from 54 MMT to 53.5 MMT. They also trimmed their exports by a similar amount to 9 MMT. They did however raise US production this year from 106.9 MMT to 107.7 MMT, hiking exports by 0.5 MMT to 46.8 MMT. China's import needs were increased from 73 MMT to 73.5 MMT. Jan 15 Soybeans closed at $10.16, down 31 cents; Mar 15 Soybeans closed at $10.22 1/2, down 30 1/4 cents; Dec 14 Soybean Meal closed at $391.10, down $10.50; Dec 14 Soybean Oil closed at 32.18, down 130 points. For the week front month beans shed 23 cents, meal was up $12.70 and oil 51 points lower.
Corn: The corn market closed a couple of cents lower, seemingly undecided whether to follow soybeans or wheat. Weekly export sales of 944,900 MT were pretty good, and beat trade expectations as they were 59 percent up from the prior 4-week average. However, outside of that the corn market didn’t have much to go on from a fundamental standpoint, said Benson Quinn Commodities. The USDA announced 109,736 MT of US corn sold to Costa Rica for 2014/15 shipment. Ukraine said that they'd harvested 62.7 MMT of grain, off 98% of the planned area, including 26.2 MMT of corn. They also said that they'd exported just over 4 MMT of corn so far this season. The Russian grain harvest is now at 110.3 MMT, including 11.1 MMT of corn. The IGC lowered their forecast for next year's Argentine corn crop by 0.5 MMT to 22.5 MMT, and cut exports by 1 MMT to 14.5 MMT. They raised their outlook on this year's EU crop from 72.9 MMT to 73.4 MMT. China's imports were trimmed from 3 MMT to 2.7 MMT and Japan's reduced from 15.5 MMT to 15.4 MMT. "The bulk of the 2014/15 northern hemisphere crop is now harvested and, with better than average yields in many countries, the world production forecast is increased by 3 MMT from before," they said. At 982 MMT that is now only 2 MMT below last season's record crop, they noted. The Buenos Aires Grains Exchange said that Argentine corn planting was now 41.4% complete, barely higher than 40.2% a week ago, although little different to 42.5% a year ago. Although the market did close lower on the day, it actually finished around 5-6 cents off session lows. This could be viewed as a little supportive. Monday's trade will be interesting, especially as this was a holiday-shortened session, with many players absent and making a long weekend of it. Dec 14 Corn closed at $3.75 3/4, down 2 1/2 cents; Mar 15 Corn closed at $3.88 3/4, down 2 3/4 cents. Dec 14 was 3 cents higher on the week.
Wheat: The wheat market closed with good gains. Weekly export sales of 431,500 MT for delivery in the 2014/15 marketing year were up 19 percent from the previous week and 16 percent above the prior 4-week average. There were also sales of 65,000 MT for 2015/16. Actual shipments of 517,300 MT were also up noticeably from the previous week and from the prior 4-week average. The Buenos Aires Grains Exchange said that the Argentine wheat harvest was 31% complete versus 21.4% a week ago. They left their forecast for this year's crop unchanged at 11.5 MMT. Much of that might end up in Brazil, where rain has cut quality so badly in Rio Grande do Sul that some of this year's crop won't even make animal feed grade, according to Dr Cordonnier. Ukraine said that they'd exported 14.85 MMT of grains so far this season, including 7.35 MMT of wheat. Russia said that they'd harvested 110.3 MMT of grains including 62.3 MMT of wheat (in bunker weight). The IGC cut their forecast for the global wheat crop this year by 1 MMT to a still record 717 MMT. They now see Argentina's crop at 12.5 MMT and Europe's at 154.4 MMT. Kazakh output was reduced from 13.5 MMT to 13.0 MMT, but Ukraine's was raised from 24.0 MMT to 24.9 MMT. The trade is already starting to talk about reduced world wheat production next year though, with Russia potentially being responsible for the largest drop. SovEcon estimated their 2015 grain crop at less than 90 MMT, with wheat output of under 50 MMT earlier in the week. They now suggest that next year's crop could only muster 86 MMT, without apparently putting a specific estimate on wheat. In addition to that, there's talk of reduced Russian exports in 2015 due to new phytosanitary rules and/or the introduction of some form of export tariff. Winter crop conditions in Russia are also said to be "the worst on record" by SovEcon. Today's slump in crude oil prices also sees the Russian rouble at all time lows. Dec 14 CBOT Wheat closed at $5.77 1/4, up 15 1/4 cents; Dec 14 KCBT Wheat closed at $6.37, up 16 cents; Dec 14 MGEX Wheat closed at $6.21, up 22 1/2 cents. For the week Chicago wheat was 30 cents higher, with Kansas up 33 cents and Minneapolis 37 3/4 cents firmer.
EU Wheat Rises, Shaking Off Slumping Crude, Helped By Russian Fears
28/11/14 -- EU grains opened in the red, following a slump in crude oil values, which staged their own "Black Friday" by falling to to 4-year lows after OPEC's decision not to cut production quota's. However, things changed around mid-morning, and by the end of the day wheat and corn were higher, although rapeseed closed mixed.
At the finish Jan 15 London wheat was up GBP2.15/tonne at GBP131.80/tonne, Jan 15 Paris wheat was EUR3.75/tonne higher at EUR184.25/tonne, Jan 15 Paris corn was EUR1.25/tonne firmer at EUR152.25/tonne, whilst Feb 15 Paris rapeseed closed EUR0.75/tonne easier at EUR337.00/tonne.
For the week, nearby London wheat gained GBP3.80/tonne, with the Paris market EUR6.50/tonne higher. Corn was unchanged versus last Friday and rapeseed lost EUR2.00/tonne. For London wheat this was the highest close for a front month since July 17, and for Paris wheat it was the best finish since July 4.
Respected Russian analysts SovEcon, who earlier in the week had said that the country's 2015 grain harvest could fall below 90 MMT, now suggested that a crop of 86 MMT could be on the cards (this year's harvest officially now stands at 110.3 MMT with 2% of the crop still to be cut). Russia's winter planted crops are currently in the worst state on record, they said.
The risk of winterkill is high, with temperatures as low as -15 to -20 C in the Volga and Central regions, coupled with a lack of snow cover, they added.
Meanwhile, a report on Reuters that Russia could consider introducing a floating tariff on grain exports "as a measure of last resort" to defend its domestic grain markets in 2015 also raised a few eyebrows.
Further muddying the Russian waters, a statement by the country's Veterinary and Phytosanitary Surveillance Service (VPSS) that it was introducing a series of new (but unspecified) regulations that could lead to a "significant fall in grain exports" also caused a stir.
Whether the implied threat of some form of grain export restrictions is merely posturing by a government, reeling from Western sanctions against it, is unclear. What is crystal clear however is that the Russian rouble is at all time lows against both the US dollar and the euro.
That is causing inflation, and leading Russian farmers to hold onto their remaining grain stocks as a hedge against both that and the falling domestic currency. With every day that passes, as the rouble declines a little bit more, local prices for wheat rise. This offers little incentive to sell today, when prices are higher tomorrow - at least in rouble terms.
Another thing for the market to ponder about across the long and chilly winter (as we won't really know the extent of winter damage suffered by Russian crops until February or March) is how Russian farmers will be able to fund their spring planting program and the purchase of other inputs. The weakness of the rouble is hiking the cost of these items, and also the lack of access to Western credit means that borrowing money in Russia is now a difficult and very expensive exercise.
Maybe Moscow is starting to think that hanging onto a significant proportion of this year's crop as "insurance" against a potentially much lower harvest in 2015 might not be a bad idea?
Plunging temperatures across Russia are also now beginning to have an effect on logistics, with ice on the Azov Sea starting to cause shipment issues.
All of this could keep international buyers coming back for European wheat. Brussels issued 518 TMT worth of soft wheat export licences this week, taking the cumulative season-to-date total to 12 MMT. That's up on 11.2 MMT a year ago, and yet the EU Commission, the USDA, the IGC and anybody else with an official opinion all have significant declines pencilled in for 2014/15 EU wheat exports versus last season's record total.
Weakness in crude oil values meanwhile, is also potentially bad news for the pound as the UK is a net exporter of oil. That should help exports in theory, although in practise there's little sign of this happening yet it has to be said.
Elsewhere FranceAgriMer said that French winter wheat was now 99% planted versus 90% a year ago. Emergence is at 95% compared to 80% a year ago. They rated the crop at 93% good to very good, unchanged on a week ago and up versus 71% this time last year.
The French corn harvest was 98% complete as of Monday, up 3 points in a week and ahead of only 72% done this time last year, they added.
The IGC appeared to suggest that comments made by Agrii earlier in the week that UK winter rapeseed plantings could be down 10% this year, are representative of what is happening all across Europe - and they're probably right.
Farmer dissatisfaction with current prices, coupled with the new rules on neonicotinoid sprays, mean that the EU-28 rapeseed area will fall to a 3-year low 6.4 million hectares, they said. Yields could also be down next year as the new legislation is leading to "unusually high levels of insect damage," they added.
The IGC also highlighted potential problems with Ukraine's winter OSR crop, which is rated 20% weak/thinned compared to only 5% this time last year.
Ukraine farmers will also face a similar dilemma to their Russian counterparts regarding lack of credit and an acutely weak local currency when they come round to attempting to fund their spring planting/replanting program and their fertiliser/agrochemical purchases.
Russian Rouble At Record Lows, Your Move Putin
Some (poorer) member countries, like Angola, Nigeria and Venezuela, were pressing for a cut in output to arrest the recent sharp decline in world oil prices. NYMEX WTI crude was nudging $107/barrel back in June, this morning it's hit $67.75/barrel, for a fall of more than 36 percent.
Other (richer and more powerful) countries like Saudi Arabia are more relaxed about keeping production high, in an effort to regain demand from the rapidly expanding US shale industry.
This morning I read that Russia's 2015 fiscal budget has been written up on the assumption that crude oil is worth $100/barrel and that the rouble (I insist on spelling it with an "o" - although most people don't seem to do so these days) is worth around 35 to the USD. Right now it's 50 to the USD.
That's that one fcuked then, and as if Putin wasn't in enough trouble already. (As a complete and total aside, did anyone else out there spot Big Bad Vlad playing right back for Everton last night? They put "Hibbert" on the back of his shirt so as not to give the game away completely, but it was Vlad alright: Link)
So, next year's Russian budget is already in tatters, Western sanctions are maybe biting harder than Vlad would like to crack on and access to credit is tighter than a shark's arse at 50 fathoms. What's a deranged, vodka-soaked, homicidal megalomaniac going to do about that? Just accept it, or fight back?
Who knows what he might do next, but I don't see it being the former option do you?
As another aside, or maybe this actually isn't an aside at all, Reuters are running an interesting (and possibly ambiguously worded) story that says that Russia may consider "a floating tariff" on grain exports as a matter of last resort in 2015.
Is the rouble/crude on it's arse, sanctions hitting hard and no credit enough of a last resort? Only time will tell. The wheat market went through the roof in 2010 when Russia introduced an export embargo you will doubtless recall.
Back then Vlad promised the West that he wouldn't do that again, and that next time he'd let the market regulate itself. But that was back then, and this is now. Your move Vlad.
EU Grains Dragged Down By Falling Crude
27/11/14 -- EU grains drifted mostly lower from yesterday's 4-month highs, with a general lack of fresh news in the grain markets on evidence, and US markets closed for Thanksgiving. Weak crude oil prices were however a feature, with OPEC seemingly split over whether to cut production to salvage falling prices or not.
At the close Jan 15 London wheat was down GBP1.60/tonne to GBP129.65/tonne; Jan 15 Paris wheat was EUR1.75/tonne weaker at EUR180.50/tonne; Jan 15 Paris corn also fell EUR1.75/tonne to EUR15.00/tonne; Feb 15 Paris rapeseed ended EUR5.50/tonne lower at EUR337.75/tonne.
The largest UK wheat harvest since 2008 means that the US has a 22% higher wheat availability in 2014/15, approaching 20 MMT, say Defra.
That figure comes even with UK wheat imports this season projected 44% lower at 1.3 MMT.
The better quality of this year's crop means that flour extraction rates will be higher, therefore the milling industry will require less wheat to produce the same volume of flour, they said. Usage within the bioethanol sector will rise though, so overall demand from the H&I sector is seen increasing 5% to 7.8 MMT.
Lower milk and beef prices, and improved availability of forage this season, means that cereal demand from the feed industry will decline 1% year-on-year, they add. Cheaper wheat prices will however mean that more of that is incorporated into the diet (and less imported corn), with wheat usage in feed seen increasing 9% to over 6.7 MMT, they forecast.
The bottom line is that the difference between wheat availability and demand is almost 5 MMT this year. Using their "operating stock requirement" of 1.5 MMT, this still leaves almost 3.5 MMT left over for export in 2014/15.
Given that we exported less than 300 TMT in the first quarter of the season (Jul/Sep) it doesn't look very likely that we will get anywhere near a number like that.
Potentially then, that leaves a much larger than normal carryover into 2015/16, which could make the tail end of the current season quite interesting.
Footnote: In early morning trade on Nov 28, on the synthetic WTI market, NYMEX crude trades around $5/barrel lower and is now below $70/barrel for the first time since May 2010. This will doubtless have a spillover effect on the EU and US grains and oilseed markets when they begin to trade later in the day.
Chicago Closing Comments - Pre-Thanksgiving
26/11/14 -- Soycomplex: Beans broke the trend of generally closing the pre-Thanksgiving Day session higher, by ending around 2-4 cents lower on the day, despite the USDA reporting the sale of 120 TMT of US soybeans to China for 2014/15 delivery. Nearby meal closed sharply higher, and is back up above $400/tonne and now sits at a 5-month high ahead of Friday's first notice day. The Argentine Ag Ministry said that farmers there had only so far committed 70% of their 2013/14 soybean crop and have less than 3% of their 2014/15 production sold. The USDA's attache in Brazil revised their estimate for the 2014/15 soybean crop there to 92 MMT, which is 2 MMT below the official USDA figure. This would still be a record volume, and is up 6% on last year. The reduction is based on a lower national yield than previously expected. Brazilian soybean exports in 2014/15 are seen unchanged from this season, and the attache's previous estimate at 47 MMT. Jan 15 Soybeans closed at $10.47, down 4 cents; Mar 15 Soybeans closed at $10.52 3/4, down 3 1/2 cents; Dec 14 Soybean Meal closed at $401.60, up $11.00; Dec 14 Soybean Oil closed at 33.48, up 6 points.
Corn: The corn market closed around 4 cents higher, helped by the US Energy Dept announcing record weekly ethanol production of 982,000 barrels/day last week, a 12,000 bpd rise on the previous week. "The technical structure of the market hints at higher prices before the corn market is ready to relax," said Benson Quinn Commodities.
The Argentine Ag Ministry said that local farmers had sold 87% of their 2013/14 corn crop and 9% of their 2014/15 crop. Ukraine said that it's 2014 corn harvest was now 95% done at 26.17 MMT. Russia said that it's corn harvest was 93% done at 11.1 MMT. South Korea's MFG bought 126,000 MT of optional origin corn for March shipment. China has launched it's 2014/15 state stockpiling effort. They are said to be offering to pay the equivalent of around $9.35/bushel, so they should find plenty of willing sellers! Some analysts say that they will buy around 40 MMT of home grown corn between now and the end of April. Fund money was estimated as being a net buyer of around 3-4,000 contracts on the day. Dec 14 Corn closed at $3.78 1/4, up 4 cents; Mar 15 Corn closed at $3.91 1/2, up 4 1/4 cents.
Wheat: The wheat market closed higher across the board, with the best gains in Chicago. EU wheat prices rose to 4 month highs, supporting US levels. South Korea's Samyang bought 31,000 MT of US wheat for April-May shipment. Pakistan cancelled a tender for 20,000 MT of wheat. Bangladesh tendered for 50,000 MT of wheat of optional origin for January shipment. Ethiopia tendered for 70,000 MT of optional origin wheat. Russia said that it's 2014 grain harvest had limped to 98% done at 110.2 MMT. That total includes 62.3 MMT of wheat. Siberia is 95% done and the Urals region is now 97% complete, they said. Some question the accuracy of this data. One report I read suggested that 30% of Siberian crops are under 0.5m of snow. Ukraine said that its grain harvest was 98% done at 61.7 MMT. Kazakhstan said that its grain harvest was 96.5% done at 18.3 MMT in bunker weight. They expect a clean weight final harvest of 17.6 MMT, and exports of 7 MMT in 2014/15, the Ag Ministry said. The Argentine Ag Ministry said that local farmers had sold 79% of their 2013/14 wheat crop, along with 24% of their 2014/15 production. Dec 14 CBOT Wheat closed at $5.62, up 10 1/2 cents; Dec 14 KCBT Wheat closed at $6.21, up 3 3/4 cents; Dec 14 MGEX Wheat closed at $5.98 1/2, up 7 3/4 cents.
EU Grains MIxed, FSU Crop Conditions Support
26/11/14 -- EU grains are mixed heading into the close of play. Jan 15 London wheat is currently unchanged at GBP131.00/tonne, Jan 15 Paris wheat is up EUR1.00/tonne at EUR181.50/tonne, Jan 15 Paris corn is down EUR0.50/tonne to EUR152.75/tonne, whilst Feb 15 Paris rapeseed is EUR2.25/tonne lower at EUR342.50/tonne.
Concerns over the state of winter crops in Russia and Ukraine are supporting the market, along with the high level of EU wheat exports. Rusagrotrans today cut their estimate for the 2015 Russian grain crop to 91-98 MMT from 96-104 MMT previously, citing the lack of adequate snow cover and freezing temperatures.
SovEcon meanwhile predict next year's Russian grain crop at less than 90 MMT, including wheat production of under 50 MMT.
Ukraine said that winter grain planting there is more or less complete at 7.7 million hectares, up 2% on a year ago. Crop conditions there are however less than ideal, with the Ag Ministry saying that 18% of what has emerged is in poor condition.
APK Inform said that 2014 Ukraine wheat yields were a record 3.91 MT/ha on average. They predict grain exports this season at 32.2 MMT, including 10.35 MMT of wheat, 3.34 MMT of barley and 18.1 MMT of corn.
Ukraine's grain exports so far this calendar year (Jan/Oct) are 25 MMT, a 45% rise on a year ago.
Kazakhstan said that they've now harvested 18.72 MMT of grains this year, on 14.753 million ha, or 98.4% of the planted area.
Bangladesh are tendering for 50 TMT of optional origin wheat. Pakistan are said to have bought 137 TMT of Canadian/Australian OSR for Jan/Mar shipment in the past few days.
MDA CropCast made no change to their forecast for world wheat production in 2015/16, they see the EU-28 crop at 146.4 MT versus 150 MMT this season.
Serbia's Chamber of Commerce estimated their 2014 corn yields at a record 7.5 MT/ha, with production coming in at 8.5 MMT. That potentially leaves them with an exportable surplus of 3.5 MMT, up from the 1.85 MMT exported in 2013/14.
Chicago Grains Leap In "Turnaround Tuesday" Style
25/11/14 -- Soycomplex: Beans and meal finished with strong gains in "Turnaround Tuesday" style trade. The Congressional Budget Office estimated US soybean plantings at 81 million acres in 2015, which is under the 84.8 million planted this year and also well below current trade forecasts of around 87-88 million. Chinese industry analysts forecast the country's December soybean imports at a large 7.3 MMT versus a previous estimate of 7.0 MMT. They also increased their outlook for January to 6.9 MMT versus 5.8 MMT previously. South Korea's MFG bought 53,000 MT of what was said to be South American origin soymeal for Feb/March shipment. Soybean planting in South America has largely caught up with the normal pace after a slow start. AgRural said that as of Friday Brazilian farmers have planted 76% of their 2014/15 crop, up from 63% a week ago and versus 79% a year ago. Safras e Mercado said that as of Friday Mato Grosso soybean planting was now 95% complete. The Argentine Ag Ministry said that soybean planting there was 36% complete as of Friday versus 44% done a year ago. Oil World estimated global soybean production at a record 309.1 MMT in 2014/15, up from a previous estimate of 307.8 MMT and up sharply compared to the 2013/14 crop of 284.8 MMT even if somewhat lower than the USDA's 312 MMT forecast. Jan 15 Soybeans closed at $10.51, up 17 1/4 cents; Mar 15 Soybeans closed at $10.56 1/4, up 16 1/2 cents; Dec 14 Soybean Meal closed at $390.60, up $15.70; Dec 14 Soybean Oil closed at 33.42, up 22 points.
Corn: The corn market reversed yesterday's losses, closing around 6-7 cents higher. "In addition to short covering, it felt like there was some new money coming into the corn market today," said Benson Quinn Commodities. The Congressional Budget Office suggested 2015 US corn plantings at 90 million acres versus 91.6 million this year. South Korea's NOFI bought 93,000 MT of US corn for February shipment. Russia said that it's 2014 corn harvest was 92.2% complete at 11.0 MMT versus 9.6 MMT this time a year ago. Ag Canada estimated corn production there this year at 11.4 MMT, down from last year's bumper 14.2 MMT. They see 2014/15 corn exports at 1.0 MMT versus 1.9 MMT last season. Argentina said that they'd exported 1.58 MMT of corn in September, a rise of 49% compared with a year previously. Reuters reported yields of a new variety of Chinese "super corn" called Denghai 618 had come in at a record 1,335.8 kg/mu in a 10 mu test plot, and 1,151.6 kg/mu in a 100 mu field. The former figure is the equivalent of around 20 MT/ha, and the latter more than 17 MT/ha. These are bin-busting yields if they could be replicated on a larger scale. The USDA currently has the average Chinese corn yield this year at less than 6 MT/ha. Argentina's Ag Mininstry said that as of Friday Argentine farmers have planted 42% of their 2014/15 corn crop versus 44% a year ago. The US Energy Dept will report on weekly ethanol production tomorrow. Last week's output of 970,000 barrels/day was the second highest on record. Dec 14 Corn closed at $3.74 1/4, up 6 3/4 cents; Mar 15 Corn closed at $3.87 1/4, up 7 cents.
Wheat: The wheat market closed with decent gains, helped by a weaker US dollar. Russian sellers continue to largely stand away from the market despite a large crop there this year. The Russian Ag Ministry said that the country had harvested over 110 MMT of grain so far this season, including 62.2 MMT of wheat. Concerns over the state of newly planted Russian winter gains, mostly wheat, abound. The Russian Ag Ministry said that winter grain planting in the Stavropol region was complete on 1.9 million hectares, and that 93.6% of those crops had emerged. Of that 41.3% was said to be in good condition, 51.7% fair and 7% poor. A year ago emergence was 92.2%, with 39.1% of the crop rated good, 55.8% fair and 4.5% poor. Ukraine said that they'd exported 14.5 MMT of grains so far this season, of which 7.3 MMT was wheat, 3.7 MMT corn and 3.3 MMT barley. Argentina said that they'd exported 126 TMT of wheat in September versus only 10 TMT a year previously. Dec 13/Sep 14 wheat exports are 1.534 MMT, around half of what they were a year ago. The country is currently mid-harvest, with this year's crop expected to come in around 30% higher at 12 MMT. Reuters reported a Chinese wheat variety called "Jimai 22" had attained a yield of 802 kg/mu in trials, the equivalent of around 12 MT/ha compared to the USDA's current estimate for a national Chinese yield of 5.23 MT/ha. Ag Canada estimated this year's Canadian wheat crop (excluding durum) at 27.5 MMT, which is 10 MMT below last year's record output. Dec 14 CBOT Wheat closed at $5.51 1/2, up 9 1/4 cents; Dec 14 KCBT Wheat closed at $6.17 1/4, up 13 cents; Dec 14 MGEX Wheat closed at $5.90 3/4, up 11 3/4 cents.
EU Grains Mostly Higher On Concerns Over Russia/Ukraine
25/11/14 -- EU grains closed mostly higher, with London wheat closing above GBP130/tonne and Paris wheat over EUR180/tonne for the first time on a front month since July.
At the finish Nov 14 London wheat was up GBP1.95/tonne at GBP131.00/tonne, Jan 15 Paris wheat was EUR1.75/tonne higher at EUR180.50/tonne, Jan 15 Paris corn was unchanged at EUR153.25/tonne, whilst Feb 15 Paris rapeseed rose EUR2.75/tonne to EUR344.75/tonne.
EU wheat exports are defying expectations of a fall of around 12-17% in 2014/15 by continuing to run ahead of last season's record pace, aided by the weak euro and strong dollar.
The jungle drums meanwhile are already beating loudly regarding the health, or otherwise, of Russia's newly planted winter wheat crop.
The Russian Ag Ministry say that winter grain planting has now been completed on 16.8 million hectares, around 85% of which is typically wheat. That's a lot better than 12 months ago when only 15.1 million ha had been planted at this time, due to persistent autumn rains.
Too much rain isn't the problem this year though, it's the lack of it, that is why leading Russian analysts SovEcon are currently forecasting a 2015 Russian grain crop of less than 90 MMT, a drop of more than 20 MMT on this year. Wheat production will fall below 50 MMT next year, they estimate.
The Russian Ag Ministry say that the 2014 harvest is 97.3% complete at 110.1 MMT, including 62.2 MMT of wheat off 97.2% of the intended area and 11.0 MMT of corn (off 92.2% of plan). That leaves them in line to harvest the second largest crop in the post Soviet era this year. The acute weakness of the rouble however - down by almost a third against the US dollar since the turn of the year - is encouraging Russian farmers to hold onto their grain, rather than sell it.
The demise of the rouble, and lack of access to credit, may also significantly impact upon farmers' ability to fund the purchase of seed, fertiliser and agrochemicals next spring. Some may resort to planting home-grown seed, with subsequent yield losses. A lack of adequate spraying and fertiliser applications would also have a negative impact on yields.
A similar situation may be replicated in troubled neighbouring Ukraine too. Dryness there means that 18% of winter crops have emerged in poor condition. A further 850-860,000 ha hasn't sprouted at all. The Ukraine hryvnia meanwhile is down by almost 50% against the US dollar this year, making the funding of inputs there also out of many farmers' reach in 2015.
Weather forecasters are now predicting temperatures of -20 C to hit Ukraine by the middle of next month, which could cause further losses amongst crops unprotected by snow.
At home, Agrii estimate UK winter OSR plantings to have fallen 10% this year to around 620,000 ha - a 6 year low. This is partly due to current low prices and also concerns over pest damage due to new EU neonicotinoid pesticide rules.
Similar concerns are thought likely to have cut OSR plantings in France, Germany and Poland too.
Chicago Grains Drift Lower Ahead Of Holiday/Month End
24/11/14 -- Soycomplex: Beans and meal drifted lower, despite strong weekly export inspections (again) for the former of 2.784 MMT and the USDA announcing 235 TMT of US beans sold to China for 2014/15 shipment under the daily reporting system, along with 174 TMT of meal to Thailand. "South American weather was favourable over the weekend with Brazil and Argentina both seeing rains as soybean planting is now seen on normal pace. US weather is mostly a non-factor with strengthening El Nino expected to push milder winter temps into the Midwest, which should keep grain, logistics, rail and trucks moving unimpeded for the most part," said Benson Quinn Commodities. After the close, the USDA reported the 2014 US soybean harvest at 97% complete, up 3 points on a week ago and 1 point behind the 5-year average. Of the major producing states Ohio (95% done versus 99% normally) and Indiana (96% complete versus 99% normally) are the only states that are a little behind schedule. Jan 15 Soybeans closed at $10.33 3/4, down 5 1/4 cents; Mar 15 Soybeans closed at $10.39 3/4, down 6 1/4 cents; Dec 14 Soybean Meal closed at $374.90, down $3.50; Dec 14 Soybean Oil closed at 33.20, up 51 points.
Corn: The corn market closed around 5 cents lower. "While not a surprise, the fact that the COT (report) confirms funds added length in the corn market during the week ending Nov 18th is a negative input. I expect the fund community has and will continue to shift focus towards cleaning up their books ahead of year end," said Benson Quinn's Brian Henry. They were net sellers of around 4,000 lots on the day today. It's possible that we might see further liquidation/book squaring ahead of Thursday's Thanksgiving holiday and also Friday's month end. Trade on Friday is likely to be thin as many traders will make a long weekend of it. Weekly export inspections of 529,801 MT were no better than neutral. At least that was up versus 409,212 MT last week, although down from 769,223 MT a year ago. There were no large US corn sales announced today, but the USDA did report 116,000 MT of grain sorghum sold to unknown for 2014/15 shipment under the daily reporting system. After the close the USDA reported that the 2014 US corn harvest is now 94% complete, up 5 points versus a week ago and now 2 points ahead of the 5-year average. None of the major producing states are notable laggards. Michigan at 69% complete versus 85% normally is the only one that stands out, although traditionally the state only produces around 2% of the national crop. Dec 14 Corn closed at $3.67 1/2, down 5 1/4 cents; Mar 15 Corn closed at $3.80 1/4, down 5 cents.
Wheat: The wheat market closed mostly lower. Weekly export inspections of 447,353 MT were better than last week's miserly 139,351 MT, although they could hardly have been worse. Saudi Arabia bought 345 TMT of hard wheat for Feb/Mar shipment over the weekend with US material an acceptable, if unlikely, origin. "Germany was the odds on favourite to do the bulk of the business," suggested Benson Quinn. They are almost certainly correct in that assumption. The Germans are also shipping large volumes of wheat to Iran. France also continues to do well on the export front, they are currently loading their largest feed wheat shipment in 26 years bound for South Korea, according to Reuters. Rosstat said that Russia had exported 20.57 MMT of grains Jan/Sep, a 78.4% rise compared with a year previously. They said that the majority of that was wheat (15.59 MMT), a 79.2% jump compared to 12 months previously. The USDA reported US winter wheat emergence at 92% versus 87% a week ago and 89% for the 5-year average. Winter wheat crop conditions however fell 2 points from a week ago in the good to excellent category to 58% versus 62% a year ago. Dec 14 CBOT Wheat closed at $5.42 1/4, down 5 cents; Dec 14 KCBT Wheat closed at $6.04 1/4, up 1/4 cent; Dec 14 MGEX Wheat closed at $5.79, down 4 1/4 cents.
EU Grains Rise On Good Export Interest
24/11/14 -- EU grains traded mostly firmer, doing their best to ignore weakness in the overnight US globex markets, possibly in the belief that European wheat prices are already cheap enough with exports currently exceeding last year's record pace by around 900 TMT.
At the close Jan 15 London wheat was up GBP1.05/tonne to GBP129.05/tonne; Jan 15 Paris wheat was EUR1.00/tonne firmer at EUR178.75/tonne; Jan 15 Paris corn gained EUR1.00/tonne to EUR153.25/tonne; Feb 15 Paris rapeseed ended EUR3.00/tonne higher at EUR342.00/tonne.
Saudi Arabia bought 345 TMT of 12.5% hard milling wheat over the weekend for Feb/Mar shipment - at least a proportion of that will probably be of EU (possibly German) origin.
Last week's GASC purchase takes the total volume of wheat that they have bought for shipment in the 2014/15 season to 2.25 MMT, with France being the largest supplier, accounting for 840 TMT (37%) of that total.
The German Stats Office said that the country's Jul/Sep wheat export were 2.1 MMT, up 5% on a year previously. Imports were however also up, rising from 0.9 MMT to 1.1 MMT, in the same period.
The Germans have been a featured seller to Iran of late, now that Western sanctions against them have been eased. The country exported 231 TMT of wheat to Iran in September, the Stats Office reported. That makes them Germany's largest non-EU wheat home so far this season, with exports of 441 TMT Jul/Sep.
Meanwhile Reuters report a 58 TMT cargo of French feed wheat is currently loading in Rouen bound for South Korea, said to be the largest such shipment in 26 years, as they strive to explore all avenues to dispose of this year's much larger than usual lower grade crop.
The EU Commission's MARS unit raised their forecast for EU-28 barley yields in 2014 from 4.59 MT/ha to 4.61 MT/ha, still a 6.1% drop on last year, although 2.5% above the previous 5-year average. They were unchanged on their outlook for wheat, corn and OSR yields from a month ago.
They were also unchanged on their outlook for all UK yields - wheat, barley and OSR - pegging those at 8.24 MT/ha, 5.82 MT/ha and 3.81 MT/ha respectively.
Looking ahead, they said that sowing conditions for winter wheat throughout Europe had been "predominately favourable" - particularly in the major producing countries of France, Germany, the UK and Poland. Here in the UK they said that sowing conditions were "excellent" throughout September and early October.
Things still don't look so rosy in Russia though, where dryness, cold and variable snow cover is a problem. “There was a steep drop in temperatures during the last week of October (5-10 C below average). During the most severe frost events temperatures fell to -5 to -10 C in the Southern District, and between -10 to -15 C in the Central and Volga Districts. This cold spell further delayed crop development," they said.
“Due to soil moisture deficiencies and adverse thermal conditions, winter wheat is generally poorly established….The risk of winter frost kill is high. An early start to the winter season with freezing temperatures and unusual snow cover may cause significant damages to the underdeveloped crops," they added.
APK Inform said that Ukraine grain exports via seaports last week were up 48% week-on-week to 699 TMT. Corn shipments accounted for 481.5 TMT, or 69% of the weekly total versus 70% a week previously. Wheat exports were 181.4 TMT, or 26% versus 28% the week prior.
The Ukraine Ministry said that winter grains have now been planted on 7.65 million ha, or 102% of their original forecast. Wheat accounts for 6.5 million ha of that (104%) and barley 1.0 million ha (94%). They now expect final winter plantings to reach 7.6 million ha.
They estimate that only 89% of what has been planted has emerged so far however, potentially leaving an area of around 850-860,000 ha needing to be replanted in the spring - if growers can afford it that is. The Ministry said that 82% of what has emerged is in good to satisfactory condition.
They also said that around 200k ha of crops sown for the 2014 harvest in the troubled Donetsk and Lughansk region remain unharvested and are likely to do so.
Russia said that they'd exported 2.08 MMT of grains in the Nov 1-19 period, including 1.48 MMT of wheat (71%), 400 TMT of barley (19%) and 153 TMT of corn (7%).
That takes their total exports so far this season to 17.04 MMT, a rise of almost 30% compared with last season. Wheat accounts for 13.8 MMT (81%) of that total, and barley a further 2.34 MMT (14%).
