Chicago Grains Rise As Trade Positions Itself For Largely Friendly USDA Report
07/08/15 -- Soycomplex: Beans closed with strong gains, jumping back up above the $10/bushel mark on front month Aug 15. Strong processor demand and the fact that the US has now already exported more soybeans than the most recent USDA forecast for the entire season is supporting the old crop. Ideas that the USDA will cut US 2015 plantings by more than a million acres on Wednesday (according to a Reuters survey), due to early season wetness, is supporting the new crop. The trade is also looking for 2015 yields to be cut from the 46 bu/acre estimated a month ago to something in the 44-45 bu/acre region. A Bloomberg survey this week estimated the 2015 US soybean crop at an average 3.742 billion bushels versus the USDA's July forecast of 3.885 billion and down 5.7% on 3.969 billion last year. Linn Group today estimated the US 2015 soybean crop at 3.633 billion bushels using a yield figure of 43.9 bu/acre. A combination of increased 2014/15 exports (and therefore lower carry-in stocks) and lower 2015 production is seen cutting 2015/16 ending stocks to 322 million bushels versus 425 million previously, according to the Bloomberg survey. A Dow Jones survey came up with an even lower 305 million bushel new crop carryout figure. The trade seems to have forgotten, or be ignoring, the fact that such dramatic wholesale changes aren't typically the USDA's style - at least not in their August report. August is regarded as the key yield-determining month so soybeans, so they may judge that it is too early yet to start downgrading this year's crop. For sure, old crop exports should be increased, and some downwards revision in plantings is also envisaged, but considering that the USDA only re-surveyed a relatively small area of the corn belt a more than million acre reduction seems unlikely. In tender news, South Korea's KFA bought 55,000 MT of South American soymeal for Jan shipment. Tonight's commitment of traders report shows managed money cutting their net soybean long to a little over 50k contracts for the week through to Tuesday night. Aug 15 Soybeans closed at $10.09, up 23 1/2 cents; Nov 15 Soybeans closed at $9.63 1/4, up 20 cents; Aug 15 Soybean Meal closed at $352.60, up $2.50; Aug 15 Soybean Oil closed at 30.03, up 40 points. For the week that puts front month beans 28 1/4 cents higher, with meal down $2.00 and oil 5 points higher.
Corn: The market closed about 3 cents higher. French corn condition ratings fell again this week and the crop there is now rated 58% good to very good versus 85% a year ago. "Plummeting corn prospects are directly linked to intensifying drought. Dry conditions in June were followed by an extremely dry July in Europe’s leading corn country. Moisture stress has continued in August, coinciding with the sensitive pollution period. Severe weather stress would cause irreversible damage to the corn yield, shrinking the kernel count. Severe vegetative stress in France is confirmed by remote satellite imagery," said Martell Crop Projections. French corn is now unusually running at a premium to milling wheat, and is also now substantially more expensive than US material, which should give US exporters a chance of picking up some extra business. There's trade talk developing that the corn crop in Ukraine is also now coming under stress. The country may see temperatures as high as 35C (95F) in next 7-10 days, which could hurt yields, according to a report on Bloomberg. "Very small precipitation is expected during this spell of hot weather and that could impact final grain filling for corn, sunflower and soybeans," said Agritel. UkrAgroConsult currently have the 2015 Ukraine corn crop estimated at 24 MMT versus 25.9 MMT a year ago. The Buenos Aires Grains Exchange said that the 2015 Argentine corn harvest is 84.5% complete, producing a crop of 22.5 MMT so far. They stood by their final production estimate of 26 MMT. As with soybeans, the trade is expecting lower production and yield estimates from the USDA next week. Linn Group today estimated the US 2015 corn crop at 13.009 billion bushels, with yields at 160.4 bu/acre. A Bloomberg survey this week estimated the 2015 US corn crop somewhat higher at 13.332 billion bushels, although that's still down versus 13.530 billion from the USDA in July and 6.2% below the record 14.216 produced in 2014. Yields were pegged at an average 164.7 bu/acre versus 166.8 bu/acre a month ago. South Korea's KFA were said to have bought 65,000 MT of optional origin corn for March shipment. The weekly commitment of traders report showed that managed money cut their net long position in corn by 79k contracts in the week through to Tuesday night. They are now net long 164k lots. Sep 15 Corn closed at $3.72 3/4, up 3 cents; Dec 15 Corn closed at $3.83 3/4, up 3 1/4 cents. For the week Sep 15 was up 1 3/4 cents and Dec 15 gained 2 1/2 cents.
Wheat: The market closed around 3-6 cents higher across the three exchanges. Chicago wheat posted double digit gains for the week, but the Kansas and Minneapolis markets only made token advances. The Buenos Aires Grains Exchange said that Argentine wheat planting is complete on 3.7 million hectares, which is 16% lower than the area sown a year ago. They said that around 50% of the crop is tillering. They already note that dryness in northern areas is cutting yield potential. Ideas that increased feed wheat production in the Black Sea area this year might mean that some quality buyers are forced to cast the net a little wider later in the season lend some mild support. Saudi Arabia are tendering for 495,000 MT of hard wheat, with the results expected to be announced over the weekend. "India will import less wheat this year than forecast previously as a tax on shipments from overseas drives up costs for bread and pizza makers," a Bloomberg report said. They are to impose an import duty of 10 percent on wheat which will last until March 31 next year, they said. A poor quality 2015 harvest led to a spate of foreign imports, particularly of Australian wheat, in recent months. French customs data shows that they exported 19.3 MMT of soft wheat in 2014/15, up 1.5% on a year ago and the best sales total since 2010/11. There was a big increase in French sales to Egypt, which were up three-fold. Bangladesh are reported to have rejected a cargo of French wheat because the grain did not match tender specifications. There's some suggestion that the cargo may have been re-directed to India, which is why the Indian government hastily rushed through their new import duty. Next week's USDA report isn't expected to throw up too many shocks for wheat. Production in Europe may be revised upwards from last month's 147.9 MMT in light of recent harvest results and the suggestion that the French crop could hit an all-time high this year. Ukraine's crop was estimated at 24 MMT last month. The Ukraine Ag Ministry there now say that they've harvested 24.3 MMT off 92% of the planned area, although that is a bunker weight tonnage. Russia's 2015 wheat crop was revised 2 MMT higher in July to 57 MMT, but another million could feasibly be added to that this time round. Although private estimates for wheat production in southern hemisphere Argentina and Australia are lower than the USDA's 11.5 MMT and 26 MMT respectively, it may be too soon in the growing season to expect those to be revised downwards just yet. Managed money flipped to a small net short of 14k lots in Chicago wheat for the week through to Tuesday night. Sep 15 CBOT Wheat closed at $5.10 1/2, up 3 1/2 cents; Sep 15 KCBT Wheat closed at $4.93, up 3 1/2 cents; Sep 15 MGEX Wheat closed at $5.25, up 6 1/2 cents. For the week, Chicago wheat put on 11 1/4 cents, Kansas added only 3/4 of a cent and Minneapolis gained 1 1/2 cents.
EU Wheat Little Changed On The Week, But Corn And Rapeseed Post Decent Gains
07/08/15 -- EU grains closed mixed on the day. Wheat was little changed for the week, but corn and rapeseed posted some decent gains on sharply lower production concerns.
At the close Nov 15 London wheat was GBP0.95/tonne higher at GBP119.95/tonne, Sep 15 Paris wheat was down EUR0.50/tonne at EUR179.75/tonne, Aug 15 Paris corn was EUR1.50/tonne higher at EUR183.50/tonne, whilst Aug 15 Paris rapeseed was up EUR1.25/tonne at EUR384.00/tonne.
For the week, London wheat added the princely sum of 10 pence, Paris wheat was 75 cents easier, corn jumped EUR9.50/tonne and rapeseed advanced EUR6.75/tonne.
EU corn production estimates are dropping like stones. France had the 3rd hottest July since 1900, Bloomberg report, with average temperatures 3.6F above normal. Rainfall on average was also more than 40% below normal, they add.
"Summer drought and abnormally hot temperatures have taken a severe toll on the corn crop, which is currently pollinating and filling grain," said Martell Crop Projections.
"After the biggest European corn harvest on record last season, 75 million tonnes, production is set to plunge. New crop corn is expected to make 62.8 million tonnes, based on the median estimate from 8 analysts and traders in a recent Bloomberg survey," they added.
FranceAgriMer today lowered the proportion of the French corn crop rated good to very good by one point from a week ago to 58%. That's down from 85% in mid-June and also this time a year ago.
EU rapeseed production is also expected to tumble this year, from around 24.3 MMT to 21 MMT or less, on a combination of reduced plantings and lower yields.
That's providing support for those two markets, with French corn now running at a premium to milling wheat for the first time in 2-years. It's also noticeable that the price differential between French and US corn has also widened significantly. "As at 13 July the price gap between the two contracts was GBP19.42/tonne and has since increased to GBP31.13/tonne (as at 6 August)," the HGCA pointed out.
The hot and dry weather that's ravaged the French corn crop appears to have come too late to have much of a negative impact on wheat production though, with a record crop now expected.
Harvesting of that was 86% complete as of Monday night, say FranceAgriMer, up from 71% done a week previously and one point ahead of this time last year. Quality is said to be much more consistent than last year. Even spring barley harvesting is now 92% complete, up from 75% a week ago and versus 84% this time last year.
Final data for the 2014/15 marketing year from the French Ministry shows that soft wheat exports last season rose 1.5% to a 4-year high of 19.3 MMT. Exports to Egypt trebled to 2.14 MMT, although shipments to "traditional" homes such as Algeria (-45%) and Morocco (-36%) were sharply lower.
French barley exports in 2014/15 jumped 31% to 6.6 MMT, aided by huge new interest from China who took almost 3 MMT in the recently ended season, up massively from only 102,000 MT in the previous campaign.
At home, the UK barley harvest was 50% done as of August 4, say the HGCA. It's estimated to be 95% complete in both the South East and South West and 80% complete in the Eastern region. "Grain quality is good with high specific weights, low grain nitrogen and low levels of screenings," they say.
They do point out that quality data is skewed in favour of samples from the south, as this is where the harvest is most advanced, but so far estimate average yields at 7.1-7.3 MT/ha versus the 10-year average of only 6.5 MT/ha.
The estimate the UK winter OSR harvest to be 35% complete nationally. "The majority of crops look clean, with low levels of lodging and pod shatter," they say. Average yields are estimated at 3.5-3.7 MT/ha versus the 10-year average of 3.4 MT/ha, with oil content around 43-46%.
Only small areas of winter wheat and spring barley have so far been cut, they add.
Look for choppy trade next week, with the USDA's August WASDE report due out on Wednesday.
US Wheat Rally Attempt Fizzles, Beans And Corn End Lower
06/08/15 -- Soycomplex: Beans closed lower as weekly export sales from the USDA came in below par. Net cancellations of 447,300 MT were a marketing-year low on old crop. Decreases were reported for China (500,000 MT, including 300,000 MT switched to 2015/16) and unknown destinations (43,300 MT). Net sales of just over 1 MMT on new crop weren't too bad though, and were mainly split between unknown destinations (489,500 MT) and China (426,000 MT). Exports of 210,700 MT were up 64 percent from the previous week, taking the total volume shipped out so far this season to 48.68 MMT versus a USDA target for 2014/15 of 48.3 MMT. There's also an additional 1.96 MMT of so far unexecuted sales. The USDA also announced that China had bought 132,000 MT of US beans for 2015/16 delivery under the daily reporting system. The Brazilian real hit a record low versus the USD today, which is seen as bearish for beans. Oil World said that Brazil's July soybean exports were up almost 40% year-on-year at 8.44 MMT. Argentina's exports were 22% higher at 1.55 MMT. US exports were also up, but at that point in the season they were nothing like those coming out of South America at 0.83 MMT. Oil World have the global soybean crop in 2015/16 at 312.7 MMT, down 1.8%. They see the world rapeseed crop falling 7.4% to 63.8 MMT. MDA CropCast raised their forecast for this year's US soybean crop by 54 million bushels to 3.717 billion. They have Argentina at 57 MMT next year and Brazil at a new record 98.3 MMT. Informa estimated Brazil’s 2015/16 soybean crop at 97.5 MMT versus a previous estimate of 97.0 MMT. A Bloomberg survey estimated the 2015 US soybean crop at an average 3.742 billion bushels versus the USDA's July forecast of 3.885 billion and 3.969 billion last year. That had average yields at 44.8 bu/acre, versus 46.0 bu/acre from the USDA last time and the record 47.8 bu/acre hit last year. Ending stocks for 2015/16 were projected at 322 million bushels, from within a range of 210-510 million and versus 425 million previously. The trade is thus looking for lower yields and a revised downwards acreage estimate from the USDA next Wednesday, but I expect any reductions to be smaller than the trade is anticipating, and hence new crop ending stocks could be higher than expected. Aug 15 Soybeans closed at $9.85 1/2, down 6 1/4 cents; Nov 15 Soybeans closed at $9.43 1/4, down 10 cents; Aug 15 Soybean Meal closed at $350.10, down $5.00; Aug 15 Soybean Oil closed at 29.66, up 3 points.
Corn: The corn market closed around 3 cents lower. The weekly export sales report showed net reductions of 2,700 MT on old crop, a marketing-year low. New crop didn't perform much better at 277,000 MT. Trade expectations had been for sales of 250,000-450,000 MT on old crop, and 300,000-500,000 MT on new crop. Actual shipments just about topped 1 MMT, which is around where they've mostly been for quite some time now. On sorghum there were net old crop sales of 56,800 MT along with new crop sales of 223,000 MT and actual shipments for the last week of July of 283,300 MT. All those went to either China or unknown. Debate about the size of this year's US corn harvest revolves largely around one place this summer: Illinois, said Reuters. To indicate just how diverse various analyst forecasts for the state are take a look at these trade forecasts: Allendale estimate the state's corn yield at 168 bu/acre; Lanworth are at 171 bu/acre; FCStone are at 174 bu/acre; Informa are at 180 bu/acre. MDA CropCast cut their forecast for the world 2015/16 corn crop by 1 MMT to 947.6 MMT. They increased US output by 118 million bushels to 13.562 billion, and cut Europe by 1.8 MMT. They also took 2.3 MMT off output in Argentina next year, lowering their crop to 22.7 MMT. There's been much talk of late that both Argentine and Brazilian growers will switch more acres away from corn and into beans next season. The Brazilian real hitting a new low versus the US dollar today will make the cost of growing more input-demanding corn higher compared to soybeans. A Bloomberg survey estimates the 2015 US corn crop at 13.332 billion bushels, from within a range of 13.098-13.660 billion, versus 13.530 billion from the USDA in July and down 6.2% on the record 14.216 produced in 2014. Yields are pegged at an average 164.7 bu/acre, from within a range of 161.5-167.5 bu/acre, 166.8 bu/acre a month ago and the record 171.0 bu/acre achieved last year. US 2015/16 ending stocks are seen at 1.449 billion bushels, down 150 million on last time. Informa estimated the EU 2015/16 corn production at 64.6 MMT versus a previous estimate of 65.8 MMT. They upped Ukraine to 26.5 MMT versus a previous estimate of 26.0 MMT. As with beans, the trade is inclined to think that the USDA is going to cut acres and yields, and thus lower ending stocks next week. I wouldn't be surprised again if any reductions are not of the magnitude that the trade is expecting. I'm not saying that the trade won't ultimately be proved correct, but that they may have to wait for subsequent reports to be vindicated. The USDA are frequently behind the pace when it comes to either increased, or decreased, yield potential. This time last year, for all the talk then of 170+ bu/acre yields (which we now know was correct talk) the USDA only raised potential from 165.3 bu/acre in July to 167.4 bu/acre in Aug. Sep 15 Corn closed at $3.69 3/4, down 3 cents; Dec 15 Corn closed at $3.80 1/2, down 2 3/4 cents.
Wheat: The wheat market closed mostly higher, but off the intra-day highs. It was wheat's weekly export sales that stole the limelight today, it must be a very long time since that was the case. The USDA reported all wheat sales of 838,500 MT, which was not only a marketing-year high, it was the largest total since October 2013, excluding carrover sales in the first week of 2014/15. The biggest taker was unknown destinations (394,600 MT), which unfortunately tells us very little. Trade expectations had been for sales of 400-600 TMT. Exports of 314,500 MT though were less than stellar, being down 14 percent from the previous week and 16 percent below the prior-4 week average. It remains to be seen if the US can continue to build on these sales, or whether this was simply a one-off. I'm inclined to believe that it's likely to be the latter. Intriguingly, the wheat market started to move higher around half an hour before the numbers were released. Did somebody catch a sneaky preview? Regardless, the way the market closed seems to indicate that any rally in US wheat prices is currently being seen as an opportunity to sell. There's stiff competition for US wheat around the globe: Australia, Europe, Russia etc. PentAgNidera increased their forecast for the Australian wheat crop this year from 22-23 MMT to "exceeding 24 MMT" thanks to beneficial El Nino-defying rains. The French harvest should be more or less wrapped up by the weekend, with record production now on the cards judged on various private estimates this week. Reuters reported that Egypt had done a barter deal with Ukraine to supply it with cotton in exchange for wheat. Russia won another clean sweep in yesterday's GASC tender, for which they were inundated with cheap offers despite cutting the maximum moisture requirement to 13%. Ukraine said that their early grains harvest is now 92% complete on 9.4 million ha producing a crop of 33.2 MMT to date, with yields almost identical to a year ago. Wheat accounts for 24.3 MMT of that total. They expect to export a record 36 MMT of grains this season. The Russian grain harvest is 30.3% complete, producing a crop of 45 MMT to date, including 36.1 MMT of wheat. The USDA's FAS in Rabat said that good and timely rains would lift the 2015 Moroccan cereal crop by 69% to a bumper 11.5 MMT, of which 5.6 MMT will be wheat, 2.4 MMT durum and 3.5 MMT barley. That will cut the country's import needs by 20% to 3.1 MMT, including 2.8 MMT of wheat, they added. Japan bought 168,353 MT of wheat from the US, Canada, and Australia for Sept-Oct shipment in their regular weekly tender. Saudi Arabia are in the market for 495,000 MT of optional origin hard wheat for Sept-Nov shipment. Jordan seeks 100,000 MTs of optional origin feed barley for Dec-Jan shipment. Trade estimates have the US all wheat crop around 10 million bushels higher than last month at 2.159 billion in next Wednesday's USDA report. Ending stocks are seen at 869 million bu versus 842 million previously. Sep 15 CBOT Wheat closed at $5.07, up 5 cents; Sep 15 KCBT Wheat closed at $4.89 1/2, unchanged; Sep 15 MGEX Wheat closed at $5.18 1/2, up 3 cents.
EU Grains Suddenly Find A Bit Of Traction
06/08/15 -- EU grains traded both sides today, but soon edged higher, although not before Nov 15 London wheat set another new lifetime contract low of GBP116.50/tonne.
A suddenly firmer US market started adding a bit of support around midday.
I guess that you could still say London wheat is range-bound, it doesn't seem to feel comfortable trading above GBP130/tonne, having only managed to close above that level three times since the first week of January on the continuous chart.
At the close, Nov 15 London wheat was up GBP1.00/tonne to GBP119.00/tonne, Sep 15 Paris wheat was EUR3.75tonne higher at EUR182.00/tonne, Nov 15 Paris corn is up EUR4.50/tonne to EUR182.75/tonne, whilst Nov 15 Paris rapeseed was EUR1.75/tonne firmer at EUR382.50/tonne.
Sharply lower anticipated EU corn production this year means that the front month corn market is now trading at a premium to wheat in Paris for the first time in two years.
Russia won a second clean sweep in yesterday's Egyptian tender, although the cheapest French offer was only a dollar away from matching the winning bids, at least on an FOB basis. That's maybe offering some encouragement to the market.
Recent rouble weakness maybe helped Russia win the Egyptian order yesterday, but it also means that the exporters need to cough up a duty payment of around RUB500/tonne, which is the equivalent of something like $7.80/tonne.
The Russian government appear willing to alter the way that the tax is calculated, although it may be unlikely that they will simply raise the ceiling at which it kicks in to RUB15,000/tonne as the governor of the Stavropol region is requesting. Yesterday's winning Egyptian offers were made at the equivalent of around RUB12,000/tonne.
That also means it's unlikely that the government's freshly announced intervention purchase programme in which it is prepared to pay the princely sum of RUB9,700 for 3rd grade milling wheat will be met with a large queue of willing sellers.
Sticking with Russia, the 2015 grain harvest there is now said to be 30.3% complete on 14.2 million ha producing a crop of 45 MMT to date. Yields continue to slip away, and are now averaging 3.16 MT/ha, down 4.8% on a year ago.
That trend is expected to continue. Average yields in the Central region are only 3.13 MT/ha versus 3.81 MT/ha a year ago. The Volga is running at an average of 1.77 MT/ha compared to 2.13 MT/ha in 2014, and the Far East region is at just 1.67 MT/ha, down from 2.30 MT/ha last year.
Despite this, MDA CropCast today raised their forecast for the Russian wheat crop this year by 1.25 MMT to 56.3 MMT, although that's still a million or two less than where most other analysts line up. They also cut their view on EU-28 corn by 1.8 MMT to 57.2 MMT, which is well below the EU Commission's 65.5 MMT estimate from earlier in the week and the average in a Bloomberg survey of 62.8 MMT.
Significantly less EU corn in 2015/16 should increase demand for other feed grains, which is just as well, with a sharp rise in the percentage of the crop only suitable for feed seen in various eastern European nations, and probably in both Ukraine and Russia too.
At home, the Bank of England surprised nobody by leaving UK interest rates on hold at 0.5% for what is now the 78th month in a row. Concerns over China and Greece meant that although the vote wasn't unanimous, it was 8-1 against a rise.
Most don't expect rates to start to rise until early 2016, and then only very slowly indeed. That's probably enough to underpin sterling against the euro going forward though.
Chicago Grains All End Higher - Even Wheat!
05/08/15 -- Soycomplex: Beans closed with decent gains, especially on the nears. Old crop supply remains tight, with US exporters having already shipped more beans than the USDA has them down to for the entire season. Trade estimates for tomorrow's weekly export sales are between zero and 200 TMT on old crop beans and 350,000-700,000 MT on new crop. Various private analysts are all pegging US yields and production this year at a little below the USDA. Informa raised their 2015 US soybean yield estimate from 45.1 bu/acre to 45.4 bu/acre, although that's still 0.6 bu/acre below the USDA. They see production this year at 3.789 billion bushels, with the USDA at 3.885 billion. Farm Futures Magazine pegged yields at 45.7 bu/acre with production at 3.768 billion bushels. FCStone were at 45.0 bu/acre and 3.797 billion bushels yesterday. A Lanworth crop tour ended today, with the results expected shortly. On the US weather front "Strong showers this week in the Great Plains may give way to hotter and drier weather ahead. A busy Midwest weather pattern expected in the next few days, as waves of showers ripple across the Upper Midwest, redeveloping in the Great Lakes states. Approximately 75% of Midwest corn and soybeans farms expect a heavy soaking rain. Very hot temperatures are also predicted, the first heat wave of the summer season. Maximum temperatures are expected to exceed 100F, reaching 105-107 F in Texas and Oklahoma, starting Friday and continuing at least through Monday. Midwest corn and soybeans would mostly avoid the extreme heat. Maximum temperatures are expected to be low to mid 80's F in the upcoming week, which is close to average for early August," said Martell Crop Projections. Aug 15 Soybeans closed at $9.91 3/4, up 15 3/4 cents; Nov 15 Soybeans closed at $9.53 1/4, up 11 cents; Aug 15 Soybean Meal closed at $355.10, up $4.40; Aug 15 Soybean Oil closed at 29.63, down 20 points.
Corn: The corn market closed around 4-5 cents firmer. As with beans, various analysts are not quite so bullish on 2015 US corn production prospects as the USDA. Farm Futures Magazine estimated yields this year at 166.3 bushels/acre, down from the record 171 bushels set last year, and below the 166.8 bu/acre forecast by the USDA. They see production at 13.366 billion bushels versus the USDA's 13.53 billion estimate. Informa see production at 13.412 billion bushels, with an average yield of 165.4 bu/acre. FCStone estimated the 2015 US corn crop at 13.381 billion bushels yesterday, with an average yield of 165.0 bu/acre. "Hotter temperatures are predicted next week,potentially affecting corn and soybeans in Kansas, Nebraska and South Dakota," said Martell Crop Projections. The crop in Europe appears to be in serious trouble this year. Bloomberg carried one report saying that the French crop is "simply fried" with the director general of Maiz’Europ’ saying that he'd spent the last 3 weeks surveying crops damaged by heat and drought, and that the French crop is in the worst condition that he has seen in 12 years. A Bloomberg survey pegged French production at an average 14.1 MMT, down 24% on last year. The Italian crop is also in trouble, estimated at an average 7.1 MMT, which is 23% lower than a year ago. The Romanian crop, Europe's second largest producer, is seen 19% lower at 9.8 MMT. They didn't canvass for production estimates in Hungary, which is Europe's third largest producing nation, but output there is also seen sharply lower this year. Coceral had that down 15% at 7.7 MMT back in June, and it's probably lower than that now. Bloomberg did ask for trade estimates on total EU-28 corn production and the average guess for that was 62.8 MMT, down 19% on a year ago, although one estimate was as low as 59 MMT. Ukraine said that they'd exported almost 1 MMT of corn between Jul 1 and Aug 4. Trade estimates for the weekly export sales report tomorrow are 250,000-450,000 MT on old crop, and 300,000-500,000 MT on new crop. Sep 15 Corn closed at $3.72 3/4, up 4 cents; Dec 15 Corn closed at $3.83 1/4, up 4 1/2 cents.
Wheat: The wheat market closed higher for a change, with Chicago leading the way. I guess you could call this a minor correction. As of last night's close Chicago wheat was down by almost 20% since the last day of June. Informa projected a US HRW wheat crop of 877 million bushels versus the USDA's 866 million estimate. They have the US 2015 all wheat crop at 2.159 billion bushels versus the USDA's 2.148 billion estimate. Egypt bought two cargoes of Russian wheat for Sep 11-20 shipment at prices that were miles below the best US offer. French, Romanian and Ukraine wheat offers were also snubbed. Both Agritel and ODA estimated this year's French soft wheat crop at a record high 38.9 MMT and 39.4 MMT respectively. Agritel said that harvesting of that crop could be complete by the weekend. There are one or two whispers of there being more feed grade wheat around in northern France this year. In Ukraine around 50-60% of the crop is said to only be of feed grade, with similar results in Romania and Bulgaria. India said that it's 2015 wheat harvest fell to 90.78 MMT from 95.85 MMT a year ago. The Indian government said that they'd already bought 28.1 MMT of domestic wheat for their state-owned stockpile. Argentine analysts Agritrend were said to have estimated the 2015/16 wheat crop there at only 10.0-10.5 MMT versus 13.9 MMT in 2014/15. Planting of that is now just about complete. Farmers have fallen out of love with wheat due to low prices and the regular government imposition of export quotas and are switching into other crops such as barley. That could provide a long range goal to export some US wheat to Brazil in 2016. Russia said that their 2015 grain harvest was 29.3% complete on 13.7 million ha producing a crop of 43.7 MMT to date. Yields are averaging 3.19 MT/ha versus 3.34 MT/ha this time last year. The wheat harvest is 38.9% complete on 10.4 million ha with production at 35.4 MMT and yields down from 3.61 MT/ha a year ago to an average of 3.42 MT/ha this time round. Belarus said that their 2015 grain harvest is 49% complete at 4 MMT, with yields averaging 3.61 MT/ha versus 3.98 MT/ha a year ago. Trade estimates for tomorrow's weekly export sales report are around 400,000-600,000 MT. Sep 15 CBOT Wheat closed at $5.02, up 8 1/2 cents; Sep 15 KCBT Wheat closed at $4.89 1/2, up 4 1/2 cents; Sep 15 MGEX Wheat closed at $5.15 1/2, up 1 3/4 cents.
Nov 15 London Wheat Hits New All-Time Low, French Crop Seen At Record High This Year
05/08/15 -- EU grains finished mostly higher, French wheat reversed early losses despite forecasts for a record crop there this year. Rapeseed and corn gained on ideas that EU production this year would be sharply lower.
At the close Nov 15 London wheat was unchanged at GBP118.00/tonne, Sep 15 Paris wheat was EUR0.50/tonne firmer at EUR178.75tonne, Aug 15 Paris corn was up EUR2.00/tonne to EUR177.00/tonne, whilst Nov 15 Paris rapeseed was EUR2.25/tonne higher at EUR381.00/tonne.
The EU Commission this week estimated the rapeseed crop here this year at 20.7 MMT, down almost 15% on a year ago.
A Bloomberg report said that this year's French corn crop was "simply fried" with crops in many areas only half the height that they would normally be.
A survey of theirs put the French corn crop down 24% at 14.1 MMT - the lowest since 2003.
The Italian corn crop was seen down 23% at 7.1 MMT, and production in Romania expected to drop 19% to 9.8 MMT.
The overall EU corn crop was predicted to fall 19% to 62.8 MMT, although the lowest hat in the ring had production below 60 MMT versus 77.8 MMT a year ago.
That could lean friendly for feed wheat, although you wouldn't know it from today's price action, Nov 15 London wheat set a new lifetime contract low of GBP116.80/tonne today, and even the Nov 16 contract came within GBP1.00/tonne of it's lowest ever.
The gap between the two is now more than GBP10/tonne, and incidentally there's a further GBP6.35/tonne on offer to carry your about to be harvested 2015 wheat crop all the way to 2017!
The French wheat market initially traded lower on harvest pressure, with Agritel saying that the wheat harvest there is progressing quickly and should be all done by the weekend.
They forecast the 2015 French soft wheat crop at a record 38.9 MMT, and ODA went even higher at 39.4 MMT. The crop appears to have escaped May/June heat/dryness relatively unscathed. Plantings this year were the largest since 1936, contributing to the anticipated record output.
Egypt was inundated with cheap offers in it's latest wheat tender, finally booking two cargoes of Russian material at less than $199/tonne including freight. That was around $6/tonne less than their previous purchase a fortnight ago, and said the be the cheapest level in years.
Russian offers were probably helped by the rouble being sharply lower than it was at the time of the last tender.
The 2015 grain harvest there is now 29.3% complete on 13.7 million ha producing a crop of 43.7 MMT to date. Yields continue to fall as the harvest progresses into some of the less productive areas away from the south of the country. Nationally these now average 3.19 MT/ha, down 4.5% on a year ago.
Average yields in the Central region, where the harvest is 30.4% complete, are down 18.3%, the Volga region sees them down 16.4% and in the Far Eastern region where the harvest is less than 10% done they're down 27.5%.
As these areas progress I'd expect the national average to continue to fall away compared to last year.
Meanwhile, there are now media reports emerging of the worst locust plague in 30 years hitting some farmland in the south of Russia. The wheat harvest is probably mostly wrapped up here, but the corn crop is still out there being eaten.
Ukraine are busy finishing off the early grain harvest and exporting as fast as they can, as per any other year really. If it isn't nailed down, put it on a ship as quickly as possible and turn it into dollars is their typical philosophy.
The Ukraine Ag Ministry said that the country has now exported 2.624 MMT of grains since the new season began little more than a month ago, including 784 TMT of wheat, 992 TMT of corn and 846 TMT of barley.
Chicago Grains Closing Comments - Tuesday
04/08/15 -- Soycomplex: Beans closed mixed amidst a general lack of fresh news. FCStone estimated this year's US crop at 3.797 billion bushels with an average yield of 45.0 bu/acre. The USDA were at 3.885 billion bushels and a yield of 46.0 bu/acre last month. Informa are due out with their crop production estimates sometime this week. The USDA are out with theirs next Wednesday. A Lanworth crop tour ends tomorrow. The Pro Farmer annual crop tour takes place August 16-20. Soybean demand could get a boost from falling world rapeseed production this year. Strategie Grains cut their forecast for the EU-28 rapeseed crop from 21.78 MMT to 21.4 MMT. The EU Commission cut their view from 21.7 MMT to 20.7 MMT. The USDA were at 21.4 MMT last month and pegged the 2014 crop at 24.3 MMT. Oil World forecast the world rapeseed crop down 7.4% to 63.8 MMT. They also trimmed global soybean output by 1% from their previous forecast and by 1.8% from a year ago to 312.7 MMT. Customs data shows that Brazil exported 8.4 MMT of soybeans in July, an increase of almost 40% versus July 2014. Aug 15 Soybeans closed at $9.76, down 1 1/2 cents; Nov 15 Soybeans closed at $9.42 1/4, up 6 3/4 cents; Aug 15 Soybean Meal closed at $350.70, down $0.70; Aug 15 Soybean Oil closed at 29.83, down 2 points.
Corn: The corn market closed a couple of cents or so higher. FCStone estimated the 2015 US corn crop at 13.381 billion bushels, with an average yield of 165.0 bu/acre. The USDA were at 13.530 billion bushels, with a yield of 166.8 bu/acre last month. The EU corn crop appears to be shrinking. The EU Commission cut their crop forecast by almost 3 MMT to 65.5 MMT, a fall of nearly 16% on 77.8 MMT a year ago. A Bloomberg survey estimated the EU-28 corn crop even lower at an average 62.5 MMT. The French crop was pegged at an average of 13.9 MMT. MaizEurop told Bloomberg that the French crop (excluding corn for seed) may fall to only 12.0-12.5 MMT this year. Irrigated corn yields may fall 10%-15%, and non-irrigated corn yields in the East of France could drop 20%-50%, they said. The French corn crop was in the worst condition since 2003 when production fell to 12 MMT, they added. Meanwhile, one Serbian analyst told Bloomberg that the corn harvest there is estimated to drop to 5 MMT “at best” versus 7.95 MMT last. Large production declines are also seen in Hungary and Romania. Taiwan bought 130,000 MT of Brazilian corn for Dec-Jan shipment. South Korea's MFG bought 134,000 MT of optional origin corn for Jan-Feb shipment. CME Group has finally lifted its declaration of force majeure at all Illinois River terminals. Sep 15 Corn closed at $3.68 3/4, up 2 1/4 cents; Dec 15 Corn closed at $3.78 3/4, up 2 1/4 cents.
Wheat: The market closed lower, there was no "Turnaround Tuesday" for wheat. Hopes for a bumper 2015 spring wheat harvest, at a time when US wheat is already struggling to compete internationally weigh. Egypt tendered for wheat for Sep 11-20 shipment. Few expect US wheat to feature, if anyone bothers to offer it at all. In their last tender the prices paid (a little over $205/tonne including freight) were around $20/tonne below US FOB levels, and that was on a delivered basis! That was for all Russian material. The most interesting thing about the results of tomorrow's tender will be to see what Russian wheat is offered at, as the rouble has fallen considerably since then, and given Russian exporter disquiet over the current floating export duty on wheat. Russia said that they will begin buying grain for the domestic intervention fund on Aug 11, which is said to be the earliest date on record. They began buying for the fund on Sep 30 last year. The prices on the table don't look very attractive though, at the equivalent of around $154/tonne for 3rd grade milling wheat in the European part of Russia. Iran said they they are our of the wheat market until April. Japan seeks 168,353 MT of food wheat from the US, Canada and Australia for Sept–Oct shipment in their regular weekly tender. Ukraine said that its wheat harvest was 86% complete on 5.9 million ha producing a crop of 22 MMT to date. Russia's wheat harvest is said to be 37.7% complete on over 10 million ha producing a crop of 34.6 MMT so far. Sep 15 CBOT Wheat closed at $4.93 1/2, down 5 1/2 cents; Sep 15 KCBT Wheat closed at $4.85, down 4 cents; Sep 15 MGEX Wheat closed at $5.13 3/4, down 3 1/4 cents.
EU Attempts Modest "Turnaround Tuesday"
04/08/15 -- EU grains closed mostly a little higher, in a modest "turnaround Tuesday" style reversal of some of Monday's losses.
At the close Nov 15 London wheat was GBP0.30/tonne easier at GBP118.00/tonne, Sep 15 Paris wheat was unchanged at EUR178.25/tonne, Aug 15 Paris corn was EUR1.00/tonne higher at EUR175.00/tonne, whilst Aug 15 Paris rapeseed was up EUR2.25/tonne at EUR378.75/tonne.
Harvest pressure and strong competition from the Black Sea are capping any potential price rises, at least for now. News that Russia might be considering changes to the current floating export duty on wheat leans a bit bearish, although you can never quite be 100% sure with the Russians.
The governor of the Stavropol region has appealed to the Russian PM to raise the figure at which the more than nominal RUB50/tonne duty kicks in from RUB11,000/tonne to RUB15,000/tonne.
He notes that the RUB/USD exchange rate was around RUB51 when the duty was announced. It's now around RUB62. This explains why Russian shippers exported the smallest July wheat volume since 2009 last month.
RUB11,000 is the equivalent of around USD175, or GBP112 at today's rates, which is well below where Russian FOB offers sit. A hike to RUB15,000 would take that up to around USD238.50/tonne, or GBP153/tonne, which is well above world market price, allowing Russian milling wheat to flood onto the global market without restriction.
The government did say when the duty was introduced that if it proved to be unworkable than they would consider changing the formula. We can only now wait and see what they do next.
The Russians announced today that they will begin intervention purchasing on Aug 11. The price they are looking to pay in the European part of the country is RUB9,700/tonne for so-called 3rd grade milling wheat, and RUB9,500/tonne in the more remote Asian part of the country.
That's the equivalent of around USD154/tonne, or just GBP99/tonne in European Russia and USD151/tonne, or GBP97/tonne in the Asian part. For 12.5% milling wheat! No wonder then that farmers and exporters alike are asking for changes to the duty.
The 2015 Russian grain harvest meanwhile is 27.9% complete on 13 million ha, producing 42.2 MMT of grain to date, with yields averaging 3.24 MT/ha, down 4.7% on 3.40 MT/ha a year ago.
There are clear signs that the gap between the average yield this year and last is staring to widen as the harvest progresses, despite government assurances that a total grain crop of at least 100 MMT is on the cards this year.
Across the border (there is still a border there isn't there?), Ukraine say that their early grain harvest is 85% complete on 8.7 million ha producing a crop of 30.1 MMT to date. Yields here are averaging 3.46 MT/ha.
That includes a wheat harvest of 22 MMT that is 86% complete, and a barley harvest that's 90% done producing 7.4 MMT so far. They've also harvested 91% of their 2015 rapeseed crop producing 1.6 MMT to date.
The Ukraine Ag Ministry say that they country will export a record 36 MMT of grains this season, up from the previous all time high 34.6 MMT set in 2014/15.
They've already hit the ground running, exporting 2.5 MMT of grains in July.
The EU Commission have cut 2.9 MMT off their EU-28 corn production forecast, taking that down from 68.4 MMT to 65.5 MMT, as that crop bears the brunt of recent heat and dryness on the continent.
They've also trimmed down their EU-28 rapeseed production estimate by 1 MMT to 20.7 MMT. The USDA were at 21.4 MMT for that last month versus 24.3 MMT a year ago. Soft wheat production was also cut 1 MMT to 139.5 MMT.
Iran said that they are out of the international wheat import market until the spring of 2016 following a good harvest there, and allowing for existing purchases.
At home, the Farmers' Weekly report that the UK wheat harvest has begun, with one Herts farmer cutting Gallant 2nd wheat over the weekend and achieving a nice yield of 10.5 MT/ha. For any American readers out there, that's 156 bu/acre!
Chicago Grains End Lower To Start The Week
03/08/15 -- Soycomplex: Beans, meal and oil all closed lower to start the week. Whilst July is usually the key yield determining month for corn, for beans it's August. The US crop therefore isn't "home and hosed" yet, but the weather outlook through to the middle of the month looks largely favourable. Any hotter than normal temperatures are largely confined to the south east, and moisture is there, but not excessively so. The USDA raised soybean good to excellent ratings by one point from a week ago to 63%, in line with trade expectations if still 8 points behind a year ago. The proportion of the crop at the blooming stage was up 10 points on a week ago to 81% versus 83% for the 5-year average. The proportion of the crop setting pods was up 20 points to 54% versus 49% for the 5-year average. The USDA's FAS in Argentina said that high levels of inflation and the weak peso will encourage a shift from corn and wheat plantings into even more soybeans for the 2016 harvest. Planting of that usually begins in October. Weekly export inspections came in at 148,498 MT, up 22% on a week ago. South Korea's NOFI were said to have cancelled a tender for 55,000 MT of South American soymeal for October/November shipment due to high prices. Aug 15 Soybeans closed at $9.77 1/2, down 3 1/4 cents; Nov 15 Soybeans closed at $9.35 1/2, down 4 3/4 cents; Aug 15 Soybean Meal closed at $351.40, down $3.20; Aug 15 Soybean Oil closed at 29.85, down 13 points.
Corn: The corn market closed around 4-5 cents lower. "Cool July temperatures in the critical corn pollination stage is as influential in boosting yields as heavy rainfall," said Martell Crop Projections. US corn got both this year. The trade is therefore thinking that some very good yields could be on the cards again this year, even if they can't quite match last year's record 171 bu/acre. Fund money is now caught heavily on the wrong side. They dumped nearly 37k lots of their length in the week through to Tuesday night, but are still net long the best part of 250k contracts according to Friday's Commitment of Traders report. Further liquidation could therefore lie ahead. Crude oil closing not much better than $45/barrel didn't help today either. The USDA held steady with their corn crop ratings at 70% good to excellent, although there was a small switch of one point from the former into the latter. There's continued talk of Brazilian corn being shipped/sold into the US. South Korea's KFA bought 65,000 MT of optional origin corn for Jan shipment and the country's MFG seeks 70,000 MT of the same. The USDA's FAS in South Korea estimated the country's corn import needs at 9.8 MMT in 2015/16, down slightly on 10.0 MMT in 2014/15. They said that they expect the US to increase it's market share of that business from 36% to 41%. The USDA's FAS in Argentine said that corn plantings there for next year's harvest could fall 15%, with production down 21% to 21 MMT. The official USDA estimate is currently 25 MMT. Exports next season could drop to a 7-year low of only 11.5 MMT versus the USDA's current 15 MMT, they added. Weekly US export inspections of 920,708 MT were down 17% on a week ago. Sep 15 Corn closed at $3.66 1/2, down 4 1/2 cents; Dec 15 Corn closed at $3.76 1/2, down 4 3/4 cents.
Wheat: The wheat market closed mostly lower across the three exchanges. Weekly export inspections of only 298,048 MT were down by a third on a week ago, setting the tone. The USDA pegged the 2015 US winter wheat harvest at 93% complete versus 85% for the 5-year average. Spring wheat harvesting was put at 8% done, up 6 points on last week, but 3 points behind the norm. Spring wheat ratings were cut one point to 70% good to excellent, and are now exactly the same as a year ago. A good crop is expected there. Russia said that their 2015 wheat harvest was 32.6% complete on 8.7 million ha producing a crop of 30.8 MMT to date. Yields have now slipped below last year's 3.62 MT/ha at this stage and are said to be averaging 3.55 MT/ha. There's talk of the Russian government being asked to make changes to the current wheat export duty, following the rouble sliding to a 7-month low against the US dollar today. They are said to have ordered the preparation of proposals to do so, without giving any indication as to what these might be. A Bloomberg report said that the Moscow-based Institute for Agricultural Market Studies estimated Russia's July wheat exports at 1.3 MMT, the worst start to a new marketing year since 2009. The Russian Ag Minister forecast this year's wheat harvest at 58 MMT. SovEcon today increased their estimate by 1.5 MMT to 57.5 MMT. The USDA's FAS in South Korea estimated the country's 2015/16 wheat import needs at 4 MMT, the same as a year ago. Around 2.5 MMT of that would be milling wheat and 1.5 MMT feed wheat, they said. The USDA's FAS in Argentina said that the country's 2015/16 wheat crop would fall to 10.2 MMT versus the USDA's own official estimate of 11.5 MMT. Exports in 2015/16 would drop to 5 MMT versus the USDA's 6.2 MMT, they added. Sep 15 CBOT Wheat closed at $4.99, down 1/4 cent; Sep 15 KCBT Wheat closed at $4.89, down 3 1/4 cents; Sep 15 MGEX Wheat closed at $5.17, down 6 1/2 cents.
EU Grains Start Week In The Red On Harvest Pressure
03/08/15 -- EU grains began the week in much the same style as the previous week, and in fact the one before that - on the slide.
At the close of play, Nov 15 London wheat was down GBP1.55/tonne to GBP118.30/tonne, Sep 15 Paris wheat fell a EUR2.25/tonne to EUR178.25/tonne, Aug 15 Paris corn was down EUR0.25/tonne to EUR174.00/tonne, whilst Nov 15 Paris rapeseed was EUR0.75/tonne lower at EUR376.50/tonne.
Just when you thought things couldn't get any worse for the wheat market, Senalia, announced that they were suspending the intake of wheat at their Rouen facility (again) due to the rapid post-harvest delivery rate, weak demand for milling wheat cargoes and strong demand for French barley shipments.
Senalia's operation is the largest one of the only two silos in Rouen that are an approved delivery point against the Paris milling wheat futures contract.
The French wheat harvest was 70% complete as of a week ago, FranceAgriMer reported on Friday.
The harvest is throwing up generally good to very good yields, with only a limited impact from the water deficit experienced in May and June, say Agritel.
The same might not be true for corn though. MDA cut their forecast for the French corn crop by 670,000 MT from a week ago to 14.57 MMT, Bloomberg report. Some other trade estimates are closer to 14 MMT. Output was 17 MMT in 2014.
The fact that this year's French crop is a better and more consistent quality than last year's, and the sharp drop in corn production there and elsewhere in Europe this year, should help wheat exports in the long run. The consistently weak euro won't do any harm either.
That still leaves sterling-based London feed wheat paddling it's own canoe though, and the waters that lie ahead look pretty choppy.
We see the pound hovering around a 7-year high versus the euro, large carryover stocks from last year and harvest pressure just around the corner.
And all that comes at a time when we've got one bioethanol refinery with it's doors firmly shut, and another beset by various problems that's said to only be running at only around 25% of capacity.
Nov 15 London wheat dipped below GBP118.00/tonne at one point today, within sight of the lifetime contract low of GBP117.25/tonne set in May. I wouldn't rule out a test of that level again at some point this week.
Meanwhile Ukraine are exporting at a rapid pace. APK Inform said that seaports there shipped out an impressive 707.6 TMT of grains last week, up from 581.3 TMT the previous week. That included 302.3 TMT of wheat, 159.3 TMT of barley and 246 TMT of corn.
Ukraine's July grain exports totalled 2.5 MMT, of which almost 700 TMT was wheat, 976 TMT was corn and 819 TMT was barley. There was a further 283 TMT of grains loaded waiting to go at the end of the month too.
Russia's export effort has been less impressive. How much of this is due to the new floating export tax on wheat and how much is simply down to the delayed harvest is unclear.
They shipped out 1.6 MMT of grains in July, a 43.5% decrease versus the same month in 2014, according to data from the Ag Ministry. Most of what was shipped out was wheat (almost 1.2 MMT), which may suggest that exports will pick up as the harvest advances.
The Russian grain harvest is only 28% complete so far on 13 million ha, which is 8.5% less than this time a year ago.
Bloomberg report that the governor of the large grain producing Stavropol region has asked the Russian PM to increase the level at which the floating export duty on wheat kicks in from RUB11,000/tonne to RUB15,500/tonne.
Such requests usually fall on deaf ears. The rouble hit a new 5-month low versus the US dollar today.
Intriguingly, Reuters and some other new agencies report that the Russian PM has ordered the preparation of (new) proposals on a grain export duty. It's unclear if the aim is supposed to boost exports or restrict them.
With the PM standing by his estimate for a Russian grain harvest of 100 MMT this year (domestic consumption is typically around 70-72 MMT) and unusually large carryover stocks held over from last year following the previous export duty that was in place from February through to May, it should be the aim to try to boost foreign sales you would have thought.
