Chicago Corn And Soybeans Rally On Lower Planting Figures
19/02/15 -- Soycomplex: Beans closed higher, with front month Mar 15 back up above the magical $10/bushel mark. News from the USDA's Outlook Forum that US farmers might only plant 83.5 million acres of soybeans this spring was the catalyst. That's actually 200,000 acres below year ago levels. The average trade estimate was around 86 million, according to a Bloomberg survey - and some forecasts were as high as 88 million. It should be noted however, that despite a double digit rally, beans actually ended around 10 cents off the intra-day highs. Clearly some still see anything above $10/bu as a sell. The USDA also forecast the average US soybean price in 2015/16 at $9.00/bu. The Argentine 2015 crop certainly seems to be getting bigger. The Rosario Grain Exchange said that the bulk of the crop there has now passed the critical period for determining yields well, and said that yields could be up to 20% higher than a year ago. The same can't be said for production prospects in Brazil, although a record crop is still expected. "Very stressful January weather in the tropics has reduced soybean potential in Brazil," said Martell Crop Projections. The Mato Grosso bean harvest is said to be around 30% complete, some 10 points behind normal for this time. Nationally, the crop is said to be around 15-20% complete. Truckers are striking in Mato Grosso state. It will soon be the strike season in Argentina too. Mar 15 Soybeans closed at $10.07 1/4, up 11 1/2 cents; May 15 Soybeans closed at $10.11 1/4, up 12 cents; Mar 15 Soybean Meal closed at $347.50, up $8.90; Mar 15 Soybean Oil closed at 31.83, down 18 points.
Corn: The corn market closed around 5-6 cents higher. The USDA Outlook Forum estimated US corn plantings this spring at 89 million acres, which is in line with the average trade guess according to a Bloomberg survey. It would also be the lowest area in 5 years and fall 1.6 million below last year's level. They predict an average US corn price of $3.50/bu in 2015/16. The Energy Dept reported US weekly ethanol production up 3,000 barrels/day from a week ago to 964,000 bpd. Stocks fell slightly to 21.1 million barrels, but are still up sharply on year ago levels of 17.2 million. "The report could be considered slightly bullish as weekly stocks managed to decline for the first time since the week of December 12th on nominally unchanged production. Demand remains steady and plants continue to grind at an aggressive rate even in a weak margin environment," said Benson Quinn Commodities. The Buenos Aires Grain Exchange said that rain is hampering the corn harvest in Argentina, which is now only 1.1% complete. They see production down 16.6% on a year ago at 22.5 MMT. Brussels announced that it had granted 239 TMT worth of EU corn import licences, taking the season to date total to 5.9 MMT, which is 27% down on this time last year. Agritel increased their forecast for the Ukraine corn crop to 28 MMT, pegging exports at 17.5 MMT versus 15.5 MMT previously. The USDA estimate Ukraine's corn exports a little higher at 18 MMT, whilst the ever optimistic Ukraine Ministry of Agriculture go for 20 MMT. Agritel also raised their figure for the 2014/15 Russian corn crop slightly to 11.3 MMT, forecasting exports at 3.0 MMT. Mar 15 Corn closed at $3.89 3/4, up 6 cents; May 15 Corn closed at $3.97 3/4, up 5 3/4 cents.
Wheat: The wheat market closed mostly lower. News that EU offers today came in more than $60/tonne cheaper than the best US price in yesterday's passed on exclusively US wheat tender did most of the damage. An attempt to rally on the back of firmer corn and soybean markets failed to hold and fizzled out towards the end of the session. US wheat is simply not competitive with other global offers, especially those out of Europe. The US dollar is strong and the euro is weak, further hurting US export hopes and ambitions. The USDA Outlook Forum suggested a US all wheat area for the 2015 harvest (winter and spring wheat) at 55.5 million acres. which is half a million below the "baseline" projection and 1.3 million down on last year. They predict an average US wheat price of $5.10/bushel in 2015/16. Japan bought 101,128 MT of milling wheat for March-April shipment, of mostly US origin, in a routine tender. Algeria were reported to have bought 400,000 MT of what is expected to be EU, and most likely French, wheat for June shipment. Tunisia are in the market for 59,000 MT of optional origin durum wheat for March-April shipment. I'm hearing that the Russian Ag Ministry said that winter grain production there might fall to 28-30 MMT, down sharply from 48 MMT a year ago due to poor establishment in the autumn and winterkill. Winter crops in the South and Central regions are said to be rated 29% in poor condition. Another report I read from a company in the Rostov region says that as much as a third of winter crops in the area failed to emerge, and around half the planted area may have to be resown in the spring. If producers have the money to do so that is. Mar 15 CBOT Wheat closed at $5.27 3/4, unchanged; Mar 15 KCBT Wheat closed at $5.44 1/2, down 3 1/2 cents; Mar 15 MGEX Wheat closed at $5.74, down 8 cents.
EU Grains Rise On Bullish Export News
19/02/15 -- EU grains closed mostly higher. News that Egypt's GASC dismissed all offers in a tender to buy US wheat as too expensive, immediately re-tendering for a mixture of EU/US/Canadian/Australian and/or FSU origin wheat was supportive to the European market, with EU wheat having won a clean sweep in each of the last two such tenders.
At the finish, Mar 15 London wheat was up GBP1.05/tonne to GBP121.07/tonne; Mar 15 Paris wheat was EUR1.50/tonne higher at EUR187.50/tonne; Mar 15 Paris corn was EUR0.25/tonne firmer at EUR153.00/tonne; May 15 Paris rapeseed was also EUR0.25/tonne higher at EUR357.50/tonne.
After the markets closed, news emerged that the cheapest French wheat offer in the GASC tender was under $225/tonne, miles below the best US offer yesterday of $287/tonne, re-affirming the competitiveness of EU wheat. And these offers don't even take into account the extra cost of shipping wheat from the US.
Late in the day it was announced that Egypt in the end had bought 240 TMT of wheat, all of EU origin, split 180 TMT of French and 60 TMT from Romania.
Other supportive news came from Brussels, which released almost 900 TMT of soft wheat export licences this past week. That takes the season to date total to 19.9 MMT, a 3.1% advance on this time last year - which was of course a record pace.
Algeria said that it had bought 400 TMT of wheat for June shipment in a tender, with French origin the most likely victor. Jordan said that it had bought 100 TMT of optional origin feed barley for August shipment. Tunisia seeks 59,000 MT of optional origin durum wheat for March-April shipment.
The Russian Ag Ministry said that they might adjust the new export duty on wheat next month, depending on export data from February.
Agritel raised their forecast for Russian wheat exports in 2014/15 from 18 MMT to 19.5 MMT, lowering ending stocks by a corresponding amount to 10.32 MMT.
In Ukraine, they increased their barley export estimate from 3.5 MMT to 4.0 MMT, and raised their outlook on corn exports from 15.5 MMT to 17.5 MMT.
Oil World said that the EU exported 489 TMT of OSR to non-EU homes in the first half of 2014/15 (Jul-Dec), more than double the volume shipped out 12 months previously. The top home was Turkey taking 194 TMT, followed by Pakistan (142 TMT) and the UAE (86 TMT).
Back to Europe, prospects for wheat production this year are not as good as they were 12 months ago, say Martell Crop Projections:
"Europe produced a record large wheat harvest last season 155.9 MMT, but the new crop outlook is reduced due to erratic planting rains in the fall.
"Excellent wheat establishment in fall of 2013 contributed to the very productive wheat yields. Rainfall was rather evenly distributed across the vast wheat belt, encouraging favourable growth and development. Moderate temperatures further contributed to a productive crop, reducing evaporation and conserving ground moisture.
"By contrast, fall growing conditions this year were either too dry (northern Europe) or too wet (southern Europe) interfering with wheat establishment. Furthermore developing wheat was hampered by unseasonable heat, compared to 2013 when fall temperatures were moderate.
"A fall satellite vegetation image, obtained from the STAR Global Satellite Applications and Research, valid in late November, confirmed worse wheat conditions than the year earlier.
"If wheat is poorly established in the fall, the chances for a productive yield are much reduced. Based on this concept, the 2015 wheat harvest in Europe is expected to finish below last year's bumper crop," they conclude.
Chicago Markets End Lower, USDA Acreage Figures Awaited
18/02/15 -- Soycomplex: Beans closed lower, as trade above $10/bushel triggered selling once South American farmers and traders returned to their desks following a two-day holiday. Many Asian traders are also now on holiday ahead of the Chinese Lunar New Year celebrations. That makes the market pretty thin. The USDA Outlook Forum starts tomorrow and concludes on Friday. That will give us some preliminary idea on US spring plantings for 2015, although these numbers aren't held in the same regard as the March Planting Intentions estimates due at the end of next month. I've read that the acreage numbers are due on Friday, but I'm sure that was the case a year ago, and in fact they were released on the Thursday in 2014. The trade is looking for a soybean area of somewhere between 84-88 million acres, up from 83.4 million a year ago and versus the USDA's "baseline" projection of 84 million. (Last year incidentally the figure at the Feb Outlook Forum was "only" 79.3 million, so they were more than 4 million on the low side back then, so whatever number they come out with, there's plenty of time for that to change between now and the end of June/early July when planting concludes). They should also give us some idea on 2015/16 US soybean ending stocks. Mar 15 Soybeans closed at $9.95 3/4, down 12 cents; May 15 Soybeans closed at $9.99 1/4, down 12 1/2 cents; Mar 15 Soybean Meal closed at $338.60, down $3.70; Mar 15 Soybean Oil closed at 32.01, down 31 points.
Corn: The corn market closed around 5-6 cents lower, in part of a general sell-off in the grains sector. The regular weekly US ethanol production data that usually comes out on a Wednesday is delayed a day due to the President's Day holiday on Monday. Asia is closed, or are closing, for a week, keeping things quiet. A Bloomberg survey estimates US corn plantings in 2015 at 89.09 million acres, down 1.7% versus last year and the lowest in 5 years. The USDA's January "baseline" projection was 88 million acres. Last year's Outlook Forum forecast was 92 million and the final area estimated last month was 90.6 million, so they weren't too far out a year ago. In other news, FranceAgriMer estimated French 2014/15 corn ending stocks at 4.15 MMT versus a previous estimate of 3.99 MMT. Ukraine said that they'd exported more than 10 MMT of corn already this season and would finish 2014/15 shipping out 20 MMT. That would match last season's record volume and also beat the current USDA estimate which was raised to 18 MMT earlier this month. Ag Canada estimated the Canadian corn crop at 12.2 MMT in 2015, up from 11.5 MMT a year ago. They see exports in 2015/16 at 700,000 MT and ending stocks at 800,000 MT. South American crop weather leans favourable. Mar 15 Corn closed at $3.83 3/4, down 5 3/4 cents; May 15 Corn closed at $3.92, down 5 3/4 cents.
Wheat: The wheat market closed lower on disappointment that a tender by Egypt's GASC to buy US only wheat failed to ignite a lot of interest, with GASC dismissing the offers put up as too expensive. That shouldn't really have surprised too many people, but apparently it did. What the US wheat market now doesn't need is another set of poor weekly export sales this week. These are delayed a day until Friday, due to Monday's holiday. The firm US dollar continues to be a problem for US exports which are missing out to cheaper offers from various sellers, but particularly Europe helped by the weakness of the single currency. The trade is more interested in what the USDA's Outlook Forum will say with regards to US 2015 corn and soybean plantings than they are for wheat. The winter wheat crop is after all already in the ground, whereas corn and soybean sowings are not. Last year's Forum all wheat estimated area was 55.5 million acres and the final area reported in January was 56.8 million. The Indian government forecast this year's wheat crop (harvesting of which will start next month) at 95.76 MMT versus 95.85 MMT a year ago. Ukraine estimated that they will export the maximum allowed 12.8 MMT of wheat this season. Mar 15 CBOT Wheat closed at $5.27 3/4, down 7 cents; Mar 15 KCBT Wheat closed at $5.48, down 14 1/4 cents; Mar 15 MGEX Wheat closed at $5.82, down 6 3/4 cents.
EU Grains Drift Mostly Lower, Ukraine Forecast Record Exports
18/02/15 -- EU grains closed mixed but mostly lower on the day. A firmer sterling was a hindrance to London wheat.
At the close, Mar 15 London wheat was GBP2.45/tonne easier at GBP120.65/tonne, Mar 15 Paris wheat was EUR2.25/tonne lower at EUR185.75/tonne, Mar 15 Paris corn was down EUR0.25/tonne at EUR152.75/tonne and May 15 Paris rapeseed rose EUR0.50/tonne to EUR357.25/tonne.
The market is looking for direction. Maybe the upcoming USDA Outlook Forum on Thursday and Friday might provide it, but I wouldn't hold your breath.
Winter crops are still largely dormant, and it may take until spring arrives and these can be fully assessed for condition before we really do get some clear market direction. The state of play with crops in Russia and Ukraine will be top of my watch-list.
Meanwhile, closer to home, FranceAgriMer reported French winter wheat plantings up 2.7% at 5.4 million hectares, with winter OSR sowings down 2% to 1.39 million ha, and the winter barley area up 3.1% to 1.27 million ha.
They estimated French 2014/15 soft wheat exports outside the EU at 9.8 MMT versus a previous estimate of 8.8 MMT. That extra export interest now helps lower soft wheat ending stocks to 3.63 MMT versus a previous estimate of 4.34 MMT.
French barley ending stocks are now seen higher at 1.74 MMT versus a previous estimate of 1.49 MMT, and corn ending stocks are also forecast higher than previously at 4.15 MMT versus 3.99 MMT a month ago.
Ukraine said that they'd exported almost 23.4 MMT of grains so far this season (to Feb 17), including just over 9 MMT of wheat, 3.8 MMT of barley and 10.3 MMT of corn.
The Ukraine Ministry of Economic Development raised their forecast for 2014/15 total grain exports to a record 37.9 MMT, including 12.8 MMT of wheat, 4.2 MMT of barley and 20.2 MMT of corn. These numbers match the export limits said to have been agreed between the Ag Ministry and traders in late January.
Let them export it all now, the smaller Ukraine's carryover stocks at the end of the current season the better, for those hoping for higher prices to come going forward.
Russia's intervention purchasing isn't going well at all. Today they only managed to pick up 675 MT, taking the total bought since Sep 30 to less than 355 TMT out of a government target of 2.5-3.0 MMT.
Jordan bought 100,000 MT of feed barley of optional origin for August shipment. Egypt's GASC cancelled a tender to buy US only wheat due to the high prices on offer.
Chicago Grains Comments - Tuesday
17/02/15 -- Soycomplex: Beans and meal trade higher, but off the highs. Mar 15 beans hit $9.99 3/4 but couldn't quite breach the $10 mark by around 17.00 GMT. The trade is expecting the USDA to suggest 2015 US soybean plantings to increase somewhere between 2-4 million acres this year to all time highs in their Outlook Forum at the end of the week. Safras said that Brazilian farmers are only 38% sold on their anticipated record soybean crop this year. That's down from 58% sold a year ago and 54% on average at this time. It's also only up 6 points from a week ago. Soybean farmers in Brazil's largest producing Mato Grosso state are 55% sold versus 69% on average. The harvest there is now 25% complete, they said. In the second top producer, Parana, farmers are 23% sold versus 41% normally and the harvest is 17% complete. Dr Cordonnier estimated the Brazilian soybean crop at 93 MMT, a record, although unchanged from a week ago. Some had suggested earlier in the season that production could come close to hitting the magic 100 MMT mark, but dry weather in January put paid to that. Dr Cordonnnier upped his forecast for Argentina by 1 MMT to a new record 57 MMT.
Corn: The corn market slipped back from higher overnight trade to modestly lower once the daytime session began. A weaker look to wheat, which had posted double digit gains at one stage overnight, may have been a contributory factor. The trade is expecting the USDA to indicate that US growers may plant 3-4 million fewer corn acres in 2015 at this week's Outlook Conference. It's early days yet to be talking of an emerging weather problem for US corn in 2015. Martell Crop Projections however say that "strong drying in the US heartland has increased moisture stress in hard red winter wheat also causing concerns for spring corn planting in the Midwest." Dr Cordonnier raised his forecast for this year's Argentine corn crop by 1 MMT to 23 MMT. He was unchanged on his outlook for Brazil at 74 MMT. Brazil's safrinha corn crop is said to be only 23% planted versus around 50% normally. UkrAgroConsult said that they expect Ukraine farmers to reduce corn plantings this year by 5-7% due to increased costs. Rosstat said that Russia's Feb 1 corn stocks were up 13.3% on a year ago. The Russian Deputy PM said that the country will subsidise the Russian sector to the tune of RUB35.7 billion, some of which will go to help farmers get cheap (ish) loans to help with spring plantings.
Wheat: The wheat market gave up most of it's early gains, which ran into double digits at one stage overnight, once the daytime session opened. Early strength was probably tied to news that the fighting in eastern Ukraine goes on, despite last week's "ceasefire" and also concerns of possible damage to US winter wheat due to bitter cold across large parts of the country. "The jet stream has begun to carve out a deep, cold trough over the Midwest and eastern United States. Arctic air began spilling into the heartland this morning. February temperatures have been persistently cold averaging 15-20 F in the Upper Midwest, 20-30 F in the southern half of the corn belt. The new Midwest forecast is very cold calling for temperatures more than 15 F below average," said Martell Crop Projections. SovEcon said that Russia may still export 21 MMT of wheat this season, despite the new export duty. That probably gives them around 2 MMT to export in the Feb/Jun period. Russian grain stocks were up 15.4% as of Feb 1, with wheat stocks 22.7% higher, according to Rosstat. Argentina approved a further 1 MMT of wheat for export in 2014/15. Japan tendered for 101,128 MT of a combination of US and Australian wheat for Mar/Apr shipment. Algeria are tendering for 50 TMT of optional origin milling wheat for June shipment.
EU Grains Trade Mostly Higher As US Markets Awaken
17/02/15 -- EU grains trade mostly higher, with May 15 London wheat up GBP1.30/tonne at GBP126.70/tonne at around noon, Mar 15 Paris wheat is up EUR2.00/tonne at EUR190.75/tonne, Mar 15 Paris corn up EUR1.25/tonne to EUR154.00/tonne and May 15 Paris rapeseed unchanged at EUR356.25/tonne.
News that UK inflation fell to its lowest level on record in January (0.3%) seemed to make little difference to sterling, which was up a tad against the dollar, and a bit lower versus the euro.
US markets re-opened on a firmer footing following yesterday's holiday.
The situation remains tense in Ukraine with both sides blaming the other for failing to adhere to the fragile ceasefire, and neither complying with the Monday night deadline to start withdrawing heavy weaponry from the front line.
UkrAgroConsult said that 20% of Ukraine's winter rapeseed crops are in a poor state, which is four times more than this time last year. The Ukraine Ag Ministry say that 18% of winter grains are in a similar condition.
Given the fact that the domestic currency has fallen from around 8 versus the US dollar to something like 26 in the last 12 months, inflation running at around 25% and forecast to go higher, and the fighting in the east of the country, there has to be significant doubts over 2015 crop production prospects in the country.
I read today of one Ukraine agri company in the Kharkiv region (to the north of the main fighting and rebel held area) saying that they expect to sharply reduce their spring plantings this year due to "significant difficulties purchasing raw materials and technical resources". Their spring barley are will more than halve and corn plantings will be down by more than two thirds.
Similar comments about Ukraine continue to apply to Russia, despite the Ministry of Economic Development forecasting 2015 grain production to only drop 4.5% to 100.5 MMT this year. Around 21% of winter grains in Russia are in an "unsatisfactory" condition, they say.
The Russian government say that they are allocating RUB35.7 billion (around $567 million) to subsidise agricultural producers across all sectors of the industry this year. Where that money will come from, and if it really is readily available is unclear.
Currency weakness and inflation are problems here too, discouraging Russian farmers from selling what they have left of the 2014 harvest.
The Russian government only picked up 1,215 MT of grains at today's intervention purchase round, taking the total bought so far to only 354 TMT out of an intended target of 2.5-3.0 MMT.
Algeria announced a tender for milling wheat for June shipment. Bangladesh cancelled their tender to purchase wheat on a technicality, but are expected to re-tender again in the next few days. French wheat won their business last time they bought and is expected to figure again.
The Morning Vibe - Tuesday
17/02/15 -- US markets were closed for Washington's Birthday on Monday. (Can you imagine us having a Bank Holiday for say Tony Blair's birthday? It's any excuse for a day off over there it seems!)
The overnight markets are open though, and are currently green across the board, with beans up around 6-7 cents, meal $2-3 firmer, corn is up a couple of cents and wheat 5-7 cents higher.
The Russian Deputy PM has said that the government will provide agricultural producers with RUB35.7 billion worth of subsidies this year (around $567 million), without saying exactly where the money will come from.
Rosstat said that last year's Russian grain harvest was 103.8 MMT, versus the government's number of 105.3 MMT, a 12.3% rise versus 2013.
The Russian Ministry of Economic Development say that grain production in 2015 will fall, but not by too much, to 100.5 MMT. They estimate that around 21% of Russian winter grains (approximately 3.6 million hectares) are in "unsatisfactory" condition.
They could ultimately prove to be far too optimistic there methinks.
Mind you, they also say that 2014/15 ending stocks will rise 30% year-on-year, which does have a ring of truth to it following last year's bumper production, lower exports than originally expected, and farmer reluctance to sell due to the falling rouble and rising inflation.
UkrAgroConsult say that 20% of Ukraine's winter rapeseed crop is in weak/poor condition, up from 5% a year ago, report the HGCA.
Ukraine grain stocks as at Feb 1 were up 14% at 22.3 MMT, according to the State Stats Service. That includes 6.9 MMT of wheat, 1.7 MMT of barley and 12.7 MMT of corn.
Right, that's me done for the day. It's Michael Foot Day, haven't you heard?
EU Grains Mixed, Fresh News Lacking With US Markets Closed
16/02/15 -- EU grains were mixed. With US markets closed for the President's Day holiday this was never likely to be an active, high volume session. The only real impetus coming from Friday night's double digit gains in Chicago and Minneapolis wheat.
At the finish, Mar 15 London wheat was up GBP0.80/tonne to GBP123.55/tonne; Mar 15 Paris wheat was EUR2.00/tonne higher at EUR189.00/tonne; Mar 15 Paris corn was EUR0.25/tonne lower at EUR152.75/tonne; May 15 Paris rapeseed was down EUR0.75/tonne to EUR356.50/tonne.
Fresh news was generally lacking. As well as US markets being closed, they are on holiday in Brazil and Argentina, and the Chinese Lunar New Year celebrations begin later this week.
The pound was ultimately a bit firmer again against the euro, hitting a new 7-year high after talks between EU finance ministers and Greece failed to reach an agreement.
Following the introduction of the new Russian export duty on wheat, the country's Ag Ministry said that they'd shipped out 296 TMT of grains in the Feb 1-11 period, including only 87 TMT of wheat. The bulk of those exports were barley at 136 TMT, and also included 51 TMT of corn.
That takes Russia's season to date grain exports to 23.62 MMT, a 31.6% rise on this time last year. Wheat accounts for 18.56 MMT of that, along with 3.47 MMT of barley and 1.27 MMT of corn.
APK Inform however reported some figures for Russian exports via seaports for the latest week (Feb 9-15), and these look less bearish with regards to wheat at 401.6 TMT of grain, of which 326 TMT, or 80%, was wheat.
Ukraine seaports meanwhile shipped out 547.8 TMT of grains last week, down from 837.9 TMT the previous week, they said.
At 457.3 TMT, corn accounted for 80% of last week's exported volume versus 86% the previous week.
Canada said that their wheat exports (excluding durum) for the season so far to Feb 8 were up 5% on a year ago at 8.4 MMT. Durum wheat exports were up 8% at 2.7 MMT and those of canola also 8% higher at 4.3 MMT.
Whilst northern hemisphere grain prices remain in the doldrums, South African corn is hitting contract highs on heat and dryness damage, Agrimoney reported. The USDA currently forecasts their 2014/15 corn exports at 2 MMT, a similar figure to last season.
