Chicago Grains Close On The Last Day Of 2015
31/12/15 -- Soycomplex: Beans closed lower as weekly export sales disappointed (even if this was for a holiday week). These came in at 478,800 MT for 2015/16, and were down 77 percent from the previous week and 62 percent below the prior 4-week average. Trade expectations were for sales of 750,000 to 850,000 MT and sales a week ago topped 2 MMT. China (who else?) was the top buyer this week taking 280,900 MT (including 181,000 MT switched from unknown destinations) and Germany (149,400 MT). Exports of 1,366,600 MT were down 16 percent from the previous week and 17 percent from the prior 4-week average, but again we have to consider the specific week involved. The primary destination was China (707,900 MT). In Brazil, rains are finally expected to start to build in northern areas this week. MDA CropCast have the Brazilian 2015/16 bean crop at 98.71 MMT, with Argentina at 59.57 MMT, both unchanged from a week ago. Jan 16 Soybeans closed at $8.71 1/4, down 4 1/4 cents; Mar 16 Soybeans closed at $8.64 1/4, down 6 cents; Jan 16 Soybean Meal closed at $264.30, down $1.50; Jan 16 Soybean Oil closed at 30.55, down 29 points. For the week that puts front month beans 4 cents lower, with meal down $4.70 and oil shedding 32 points. Front month beans closed the year almost a dollar and a half below where they began it for a 14.5% loss. Meal fell 27% versus 12 months ago, and oil was down a "mere" 4.4% as the values of the products reconfigured themselves.
Corn: The corn market closed around a cent or so lower. Weekly export sales of 705,200 MT for 2015/16 were down 12 percent from the previous week and 3 percent from the prior 4-week average, but a little above trade guesses in the 600,000 and 650,000 MT region. Increases were reported for Mexico (173,700 MT), unknown destinations (152,900 MT) Japan (130,800 MT) etc. Exports of 556,400 MT were down 32 percent from the previous week, but up 2 percent from the prior 4-week average. MDA CropCast cut their South African corn production estimate by 310,000 MT to 9.3 MMT due to dryness. They have Brazil and Argentina both unchanged on a week ago at 80.3 MMT and 25.4 MMT respectively. The US corn market is nervous now that Argentina has removed both export duties and quotas on corn. Ukraine said that their 2016 spring grains planted area would jump more than 10% to 7.55 million ha. Corn sowings will rise 9.6% to 4.54 million ha, they suggest. Reduced winter grain plantings in Ukraine were always most likely to be largely re-accounted for by corn in UKraine - providing that the weather plays ball in the spring/early summer. The USDA had plantings in 2015 down at 4.00 million ha, but they were 4.63 million ha the year before that. A rebound to 4.5 million in 2016 could drag production back up into the 27-28 MMT region. Mar 16 Corn closed at $3.58 3/4, down 1/4 cent; May 16 Corn closed at $3.64 1/2, down 3/4 cent. For the week that puts Mar 16 down 5 3/4 cents, with May 16 down 6 1/4 cents. On a front month basis corn ended 2015 with losses of 9.6%.
Wheat: The wheat market closed with small gains on the day. Weekly export sales of 363,500 MT for delivery in marketing year 2015/16 were down 2 percent from the previous week, but up 11 percent from the prior 4-week average. Trade expectations were for sales of only 250-300,000 MT so this was a bit better than the market had thought likely. Top buyers were Indonesia (102,200 MT), Italy (57,400 MT), Mexico (42,500 MT), Jamaica (42,000 MT), Tunisia (30,800 MT), Japan (27,000 MT) and Malaysia (22,800 MT). Additionally, net sales of 18,900 MT for 2016/17 were reported for Panama. Exports of 253,800 MT were down 38 percent from the previous week and 25 percent from the prior 4-week average. MDA CropCast cut their view on the Moroccan 2016 wheat crop by 0.74 MMT to 8 MMT. Heavy US rains in the Mississippi Delta and Midwest have resulted in heavy flooding, but drier weather this week will allow flood waters to subside, they said. They cut their forecast for the US 2016/17 all wheat crop to 60.1 MMT from 60.2 MMT a week ago. "December weather has been unseasonably warm in the Midwest and Great Plains, 8-15 F above normal, allowing for slow growth in wheat to continue. The strong El Nino, besides causing heavy rainfall in the heartland, has also brought exceptionally warm weather," said Martell Crop Projections. Mar 16 CBOT Wheat closed at $4.71, up 1 1/4 cents; Mar 16 KCBT Wheat closed at $4.66 3/4, up 1 1/4 cents; Mar 16 MGEX Wheat closed at $4.94, up 1 3/4 cents. For the week that puts the Chicago market up 3 1/2 cents, with Kansas 3/4 of a cent lower and Minneapolis a cent easier. Based on where prices were a year ago, Chicago wheat finishes 2015 with a 20% decline, whilst Kansas wheat is down 30%.
EU Grains Markets Close 2015
31/12/15 -- At the official closes for 2015, Jan 16 London wheat was GBP0.10/tonne higher at GBP114.00/tonne, Mar 16 Paris wheat was EUR1.25/tonne lower at EUR173.50/tonne, Jan 16 Paris corn was down EUR2.25/tonne at EUR144.50/tonne, whilst Feb 16 Paris rapeseed was unchanged at EUR374.00/tonne.
For another holiday shortened week that puts London wheat GBP1.55/tonne higher, with the Paris market down half a euro, corn EUR6.00/tonne lower and rapeseed EUR0.75/tonne weaker. A pretty mixed bag there.
Perhaps more noteworthy is that for the calendar year, this means that London wheat ends it with a net front month loss of GBP19.30/tonne (14.5%). Paris wheat is down EUR26.50/tonne (-13.3%) versus 12 months ago, corn ends 2015 EUR18.00/tonne easier (-11%) and rapeseed is the sole of the sector to advance for the year, closing with a net gain of EUR23.00/tonne (up 6.6%).
It's also worth noting that subsequent to last New Year's Eve's London wheat finish of GBP133.30/tonne, a front month only closed higher than that twice in the entire year! And that was on last Jan 5 and 6!
Paris wheat didn't fare much better. The 2014 close of EUR200.00/tonne proved to be within EUR5.00/tonne of the best finish of the year, although more than EUR50.00/tonne above the bottom of the market. Corn began 2015 at EUR162.50/tonne, but rallied to a high of EUR193.75/tonne as heat and dryness concerns hit in the summer. All those gains had disappeared by the end of the year though, and we end 2015 at the lows of the year.
Only rapeseed managed an annual net gain. Closing 2014 at EUR351.00/tonne, it rose fairly steadily throughout the year - without quite managing a close above EUR400/tonne -and finishes 2015 with an overall net advancement of more than 6%.
Looking at the old crop/new crop market differentials. Twelve months ago today, the new crop Nov London wheat position was a GBP4.50/tonne premium to the nearer-by old crop May position. The very far long Nov - around 18 months hence - offered a further GBP4.90/tonne "carrot" to those looking to lock in a premium. Tonight we see a new crop Nov 16 premium of GBP12.15/tonne and a long Nov 17 premium of GBP18.20/tonne versus front month Jan 16 (and GBP7.65/tonne and GBP13.70/tonne) versus the May 16 position.
A year ago these unusually large carry incentives were enough to encourage high volumes of the 2014 wheat harvest to be stored right through into the 2015/16 marketing year. Today we have a situation where the incentives on offer are at least double what they were this time last year, and in some cases almost 3-times higher.
It looks like what is on the table today can only therefore re-enforce this as a viable strategy once more. Even with the premiums on offer though, many growers will still likely be reluctant to actually commit to fresh forward sales hoping for a turnaround in prices in 2016. "However, the last ten years tells us that pinning hopes on a major rally in the second half of the marketing year has the odds stacked against it," say the HGCA.
Looking at the last old crop month, the July contract in each of the last ten years, for seven of them "the price at the end of the marketing year, and indeed through much of the six month period, was lower than that in early January," observe the HGCA.
"For the three years that did end up above the January price levels (2006, 2007 and 2012), the momentum was driven by relatively tight grain stocks and new crop weather issues. For 2016, it’s clear the world and UK has high stocks, so it will be down largely to weather issues this spring to bring life into to the old crop market," they deduce.
So, it looks like UK growers begin the new year much as they started off the old one: Carrying stocks, not liking the look of prices enough to commit to sales in any position, but comforted somewhat be the large premium being offered to stick with this as a marketing strategy for now (and seeing few other viable alternatives).
Chicago Grains Close - Wednesday
30/12/15 -- Soycomplex: Beans closed around 4-5 cents firmer. The market seems torn between ongoing dryness in Brazil's Mato Grosso and other northern states, and the potential for Argentina to regain some lost ground as far as exports go under the new Macri leadership. "Brazil’s tropical drought has worsened from mid to late December, now affecting the majority of soybeans. Rainfall deficits of 100-200 millimeters (4-8 inches) have accrued in Mato Grosso, the leading soybean state. Bahia, Goias, Tocantins and Minas Gerais have also succumbed to severe drought," say Martell Crop Projections. Daytime highs near 100 F as well as due to reducing showers have less evaporative cooling, they add. Argentina removed export quotas on corn and wheat overnight. There's talk that they may be gearing up to sell old beans aggressively before the 2015/16 Brazilian harvest begins. Trade ideas for tomororrow's weekly export sales report for beans are in the 750,000 to 850,000 MT region. The next monthly USDA crush report is due out on Monday. Jan 16 Soybeans settled at $8.75 1/2, up 5 1/2 cents; Mar 16 Soybeans settled at $8.70 1/4, up 4 1/2 cents; Jan 16 Soybean Meal settled at $265.80, down $2.70; Jan 16 Soybean Oil settled at 30.84, up 32 points.
Corn: The corn market closed around 3 cents or so weaker. The news out of Argentina that not only are export duties on corn now history, but so to are quotas confirmed the market's fears. Ideas are now that the will soon become a very aggressive seller, especially following the demise of the peso since the recent elections. Weekly US ethanol production for Christmas week came in at a respectable 992,000 barrels per day, up 19,000 barrels per day from the week. Ethanol stocks were reported at 20.2 million barrels, down 200,000 barrels from the week before. US flooding is reported to be starting to peak along parts of the Mississippi. South Korea's KFA bought 50,000 MT of South American corn in a tender for 65,000 MT of any origin and were reported to have paid $180.99 C&F. Ukraine say that they will remain a keen corn exporter in 2015/16, despite a much lower crop there this year. Trade ideas for tomororrow's weekly export sales report for beans are in the 600,000 and 650,000 MT region. Sales last week were 803,600 MT.
Mar 16 Corn settled at $3.59, down 3 1/2 cents; May 16 Corn settled at $3.65 1/4, down 3 3/4 cents,
Wheat: The wheat market closed around 5-7 cents lower across the three exchanges. The Russian rouble fell to a new all-time low versus the US dollar today, making US wheat's job of competing even more difficult. The rouble is down around 12% versus the US in the last 2 months. There's some talk of possible winter-kill damage to Russian and Ukraine winter grains, although more seasonal heavier snow cover is now moving into the region. Egypt said that it aims to be 80% self-sufficient in wheat by 2018. Jordan were said to have purchased 100,000 MT of wheat of origin unknown, for $218/ton C&F. The US weather forecast is dry in the upcoming week in most areas of the heartland, a welcome change that would allow flood waters to abate, reported Martell Crop Projections. There's talk of a possible cold snap being on the cards for Eastern Europe across the next couple of weeks. "Winter crops were prevented from gaining frost tolerance due to the mild temperatures in these regions, and are now potentially exposed to frost kill if temperatures abruptly move to seasonal values," MARS recently warned. Weekly export sales of only 250-300,000 MT are expected tomorrow. May 16 CBOT Wheat settled at $4.76 1/2, down 5 1/2 cents; May 16 KCBT Wheat settled at $4.75 1/2, down 7 3/4 cents; May 16 MGEX Wheat settled at $5.01, down 5 3/4 cents.
EU Grains See Modest Gains Heading Into Year-End
30/12/15 -- EU grains finished mostly a little higher on the day, although as the runners and riders approach the finishing line of the marathon that has been 2015, only rapeseed looks like ending the year dearer than it began it.
At the close of trading, Jan 16 London wheat was up GBP0.30/tonne at GBP113.90/tonne. In Paris, Mar 16 wheat was up EUR0.75/tonne at EUR174.75/tonne, Jan 16 corn rose EUR1.75/tonne to EUR146.75/tonne and Feb 16 rapeseed rose EUR0.50/tonne to EUR374.00/tonne.
Argentina announced the official removal of export quotas on wheat and corn today, just a week or two after duties were decreased to zero.
It's the depths of winter, or at least it should be in the northern hemisphere, so it's not unsurprising to hear of one or two areas of concern around the globe concerning winter wheat production.
The US Midwest and Great Plains are wet. "Precipitation the past several weeks has been more than twice the average in the Midwest and 3-4 times normal in the Great Plains," said Martell Crop Projections.
"Rivers in Missouri and Illinois are in “major” flood stage. A host of smaller rivers that feed into the Mississippi have moderate flooding. The influx of water flowing into the Mississippi River is causing it to overflow its banks. This is the main shipping route for corn, soybeans and wheat for export," they say.
Apart from perhaps causing some logistical problems, it is perhaps unlikely at this stage that we can legitimately start to discuss production losses here though.
Most of Europe remains warmer and wetter than normal. Whilst that wetter than normal pattern persists for almost all through the first 14 days of January, some models are now starting to split to a warmer than normal in the west and colder to much colder than normal outlook for countries in the east of Europe.
Again it's very early days, but this will be raising one or two eyebrows: Is winter finally about to bite? Flooding remains a concern at home where it has been excessively wet in the north and west.
The Black Sea is in for a cold snap too. with temperatures falling to -10° and -20° in the coming days, say Agritel. This could possibly cause some crop damage after a very dry autumn, they add.
The Ukraine 2015 grain harvest was estimated at 59.7 MMT, and 2015/16 ending stocks are seen falling from 10.96 MMT to 6.24 MMT as exports (particularly of corn) remain high despite sharply lower production in 2015.
Russia said that they'd exported 2.74 MMT of grains Dec 1-23. The largest buyer was Egypt (22%), followed by Turkey (16%) and Saudi Arabia (9%). Maybe that's why they aren't quite so keen to ban shipments to Turkey over the shooting down of the Russian jet over the Syrian border last month?
The Russian ruble hit a new all time low versus the US dollar today and traded at 73 to the US unit at one point. That says "let's export to whoever wants it and has the dollars to pay" for the time being.
Chicago Grains Comments - Tuesday
29/12/15 -- South American Weather: "Torrential rainfall over the last several weeks have resulted in the worst flooding in over 20 years along the border areas of Brazil, Paraguay, Argentina, and Uruguay," said Dr Cordonnier. "The capital of Paraguay, Asuncion, appears to have been the hardest hit with flooding along the Paraguay River which has displaced over 100,000 people. In Argentina, the floods are impacting the provinces of Entre Rios, Chaco, Corrientes, Formosa, Missiones, and Santa Fe. Most of the flooding is occurring along the region's rivers, but much of the farmland in the region is flat and poorly drained, so some crop losses are expected. This is also the last region in Argentina to plant their summer crops and the heavy rains are expected to delay the end of spring planting," he added.
Soycomplex: Beans closed higher, recovering around half of yesterday's losses. Price falls then were linked to reports that "heavy rains over the weekend in key growing regions, including Mato Grosso, helped to ease concerns about potential yield losses following a period of dry weather," said the HGCA. But as indicated above, elsewhere it's too wet. Far too wet in many places. We have however had similar flooding problems in Argentina in recent years and still emerged with good yields. The newly devalued Argentine peso hangs over the bean market, threatening to unleash a flood of cheap beans onto the market. Concerns over the Chinese economy remain. Midwest flooding is also causing some disruption to movement of grains and beans at terminals on the Mississippi. Jan 16 Soybeans settled at $8.70, up 5 cents; Mar 16 Soybeans settled at $8.65 3/4, up 4 1/2 cents; Jan 16 Soybean Meal settled at $268.50, up $1.20; Jan 16 Soybean Oil settled at 30.52, up 32 points.
Corn: The corn market closed managed small gains, as it too partially reversed some of Monday's thin losses. The weather situation outlined above offers a "6 and two three's" type scenario. Argentine currency weakness offers real bearish potential though. The Buenos Aires Grain Exchange estimated that Argentinean corn plantings are nearly 74% complete. There's still talk of an late eleventh hour push in corn acres due to President Macri's recent election victory. US grower interest in selling at these current levels remains light. Around 85% of the state of Illinois and 50% of Missouri are said to currently be covered by flood warnings. Ukraine are busy exporting corn, bit their crop is sharply lower this year, so they won't be unable to hold that pace for as long as normal. "Very serious drought has developed in South Africa, damaging corn prospects for the second straight year. The current drought this season is the worst since 1992, local sources claim," note Martell Crop Projections. Mar 16 Corn settled at $3.62 1/2, up 1 1/2 cents; May 16 Corn settled at $3.69, up 1 1/4 cents.
Wheat: The wheat market closed with fair gains, possibly more due to year-end short covering/book squaring than anything else. The Argentine wheat harvest is only said to be around 59% done versus 75% normally. They are keen to find buyers though, judged on last week's Egyptian success. New lows for the Russian rouble will keep them coming back for more. They've publicly ruled out export sanctions against Turkey over the downing of the Russian jet over Syria last month. Their 2015/16 wheat exports have set a new record high, and their 2015 wheat crop is said to be around 2 MMT up on a year ago. Morocco are said to have tendered for 360,000 MT of US wheat for May 31 delivery.I wouldn't be surprised to see Egypt back testing Argentina (an others) resolve again next week or even sooner. Winter weather conditions in Russia and Ukraine have finally turned "normal" with snow and colder temperatures moving in. Ukraine say that their winter grains area is the lowest seeded in 10 years. May 16 CBOT Wheat settled at $4.82, up 8 3/4 cents; May 16 KCBT Wheat settled at $4.83 1/4, up 7 cents; May 16 MGEX Wheat settled at $5.06 3/4, up 5 1/2 cents.
EU Grains Rally As London Market Awakes
29/12/15 -- EU grains closed mostly higher, as London wheat awoke from it's holiday slumbers.
At the finish, Jan 16 London wheat was up GBP1.15/tonne at GBP113.60/tonne, Mar 16 Paris wheat was up EUR1.00/tonne to EUR174.00/tonne, Jan 16 corn was flat at EUR145.00/tonne and Feb 16 rapeseed was EUR0125/tonne higher to EUR373.50/tonne.
This wasn't ever going to be a day for fresh ground breaking news, and so it proved.
Choppy Jan 16 Paris corn, which expires next Tuesday had an uneventful day for once. having taken a bit of a technical pasting these past few thin sessions,
A bit of today's strength may have been derived from news and images flashing across the media of widespread flooding in the UK - particularly in northern and central areas.
This may be causing some crop damage and we must also consider the implications for the unusually large volume of old crop grain left on farm from the 2015 harvest.
Russia's Interfax News Agency said that the Ministry there are finalising production numbers for 2015, pegging this year's all important wheat harvest around 2 MMT higher than a year ago at 61.79 MMT.
Russia's 2015 corn crop is seen up 12.3% at 12.69 MMT, and this year's barley crop is being called 14% lower at 17.55 MMT.
The Russian Deputy PM has apparently re-iterated previous comments that the country do not intend to introduce restrictions on wheat sales to Turkey following the Nov 24 downing of a Russian military jet on the Syrian border.
Maybe they are still surprised by Argentina's clean sweep in last week's Egyptian wheat tender and don't want to close too many doors to themselves prematurely?
Wheat currently accounts for around 70% of their post-Soviet era record Jul 1 -Dec 28 grain exports.
Ukraine said that their winter grain harvest in 2016 might only total 20 MMT, as the country is forced to rely more heavily on spring sown crops next year.
Winter grain plantings in Ukraine were said to be the lowest in 10 years due to adverse weather conditions, with around 6 million ha of wheat and only 983k ha of barley going into the ground.
Bangladesh has announced a tender for the purchase of 50,000 MT of optional origin wheat with a closing date of Jan 10, according to Reuters.
India said that as of Christmas Day, wheat plantings there for the 2016 harvest - one of the earliest in the northern hemisphere - had caught up a little and were now 2 million ha behind those of a year ago at 25.94 million ha.
The market continues to meander along it's own sweet way. It looks like we will need to get into the New Year to get some "serious" new direction, but the weight of old crop stocks and fierce competition for new business would seem to point to a renewed downwards trajectory perhaps being more likely at the moment than an upwards one.
Chicago Grains Close - Monday
28/12/15 -- Soycomplex: Beans closed lower, with Jan 16 Soybeans ending at $8.65, down 10 1/4 cents; Mar 16 Soybeans closed at $8.61 1/4, down 11 3/4 cents; Jan 16 Soybean Meal closed at $267.30, down $1.70; Jan 16 Soybean Oil closed at 30.20, down 67 points. Weekly export inspections of 1.403 MMT, were good, down down just 4% from the week before. Heavier rains in the forecast for Mato Grosso were seen as being a bit bearish today.
Corn: The corn market closed around 3 cents easier, with Mar 16 Corn at $3.61, down 3 1/2 cents and May 16 Corn closed at $3.67 3/4, down 3 cents. Weekly export inspections of 570,923 MT were down about 20% from the previous week. Fresh news was lacking and trade was thin, and looks likely to continue that way until next week.
Wheat: The wheat market closed slightly lower. Mar 16 CBOT Wheat closed at $4.66 1/2, down 1 cent; Mar 16 KCBT Wheat closed at $4.66, down 1 1/2 cents; Mar 16 MGEX Wheat closed at $4.91 3/4, down 3 1/4 cents. Weekly export inspections of 305,472 MT were modest, being down nearly 37% from the previous week, although in line with what might be anticipated at this time of year.
EU Grains Jittery Ahead Of New Year
28/12/15 -- London wheat remains closed, and activity is predictably thin and volume light in Paris. Soon to expire Jan 15 Paris corn has extended it's period of "jittery" trade into the last week of the month.
At the close, Mar 16 Paris wheat was EUR1.00/tonne lower at EUR173.00/tonne, Jan 16 Paris corn was down EUR5.50/tonne at EUR145.00/tonne, whilst Feb 16 Paris rapeseed was EUR2.50/tonne weaker at EUR372.25/tonne.
As the year draws to a close, London wheat looks like ending 2015 around 15-16% lower than began it. with Paris wheat is set to close around 13-14% easier, with technical corn down 10-11% and rapeseed up 6% or so.
Continually hampering London wheat all year has the weakness of the euro, which is looking to close 2015 around 5.5% below where it started against sterling. In contrast sterling is down by around 3.6% versus the US dollar compared with 12 months ago.
The Russian Ag Ministry confirmed their 2015 grain harvest at 104.3 MMT. a small 1% fall year-on-year, although small volumes of tail-end corn and sunflowers are still being cut, they said.
That's not a bad result, and one that is far better than was feared/expected last spring, during the height of the troubles in Ukraine and talk of Western Sanctions against them slashing inputs. Yet here were are fully 12 months later wondering if 2016 bring similar results?
APK Inform said that Russian seaports had exported 685.8 TMT of grains last week, a respectable volume for a holiday week, and one that is only marginally down from 700.7 TMT the week before. Wheat accounted for 82% of that total.
Russia said that their total grain exports so far this season (Jul 1 to Dec 28) total 22.22 MMT, of which 70% (15.58 MMT) was wheat. That's a record grain volume for the first half of any post-Soviet era Russian grain export total.
Ukraine's grain exports last week were 652.7 TMT, which was actually up from 563.5 TMT the previous week. Corn accounted for 84% of their total last week an wheat only 32%.
As far as wheat goes, we came perhaps summarise 2015 as the 3rd year of global wheat production in a row (and the second successive year of all time high EU wheat output), combined with world ending stocks also rising for 2 years in a row to levels never seen before.
Early season worries about production problems in the FSU proved to be unfounded, and whilst early summer heat and dryness cut corn production here in Europe quite significantly, it came too last to harm wheat output on our doorstep.
Meanwhile despite euro weakness, the EU is still struggling to keep exports competitive enough to usurp other origins - some of whom (eg Russia and Ukraine) have been aided even more by their own domestic currency weaknesses.
What will 2016 bring? The closing weeks of the old year often bring subdued, sometime technical, trade. The new year often brings with it a new sense of vigour (even if it's downwards vigour!). It might be worth noting that wheat in London, Paris and Chicago all fell 21-22% between Jan and May this year once the bell herllding the arrival of 2015 sounded!
