Chicago Grains End Week In Mixed Fashion
15/01/16 -- Soycomplex: Beans closed around 3-5 cents easier on the day, but higher for the week. The NOPA December crush of 157.7 million bushels came in virtually right at the average trade guess of 157.8 million. Safras lowered their Brazil soybean estimate to 99.8 MMT from 100.4 MMT last month. Still a record though. The weekly commitment iof traders report shows managed money lightening the load with regards to their CBOT soybean short position. They are now short to the tune of 26,507 less contracts that they were a week ago. Their overall net short is now just over -53,000 lots. Mar 16 Soybeans closed at $8.79, down 3 1/4 cents; Mar 16 Soybean Meal closed at $270.70, down $3.50; Mar 16 Soybean Oil closed at $29.65, down 10 points. Mar beans closed the week 13 3/4 cents higher than they began it.
Corn: Corn closed around 4-5 cents higher on the day. Nothing much has changed fundamentally, but a managed money overall net short position in corn of a record -186,831 contracts will be making some nervous, and could lead to some sudden and irrational price moves in the week ahead. Ideas are that Argentine corn plantings are creeping higher at the death. The Buenos Aires Grain Exchange estimated these at 3.1 million ha, up from 2.85 million previously. IMEA said that safrinha corn plantings in Brazil's Mato Gross would increase 2% to 3.38 million ha, but due to late sowings yield could decline 10.6%, taking production down 8.7% to 19.3 MMT (versus 21.2 MMT a year ago). They say that the idea planting window for second crop corn closes on Feb 20, and that growers in the state already average 55% sold due to the weak real (versus only 22% sold a year ago). Mar 16 Corn closed at $3.63 1/4, up 5 1/4 cents; May 16 Corn closed at $3.67 1/2, up 4 3/4 of a cent. For the week, Mar corn was up 6 1/4 cents, and May 16 added 4 3/4 cents.
Wheat: The wheat market closed higher despite reliable reports of 2 Argentine wheat cargoes heading for the US port of Wilmington in February. The Commitment of Traders report shows managed money dumping 25k lots of their Chicago wheat short to leave them a little over 71k short as of Tuesday night. The EU remains awash with wheat to sell. Their weekly export licence total came in at a fair 754 TMT this week, but the season to date total is still down 12% on this time last year. The USDA ultimately forecasts EU-28 all wheat exports only falling by 8.2% this year, so a bit more ground still needs to be made up there. US dollar strength continues to hamper US wheat export ambitions. Ukraine said that they'd exported almost 22.5 MMT of grains already so far this season, a 15% increase compared with the same period a year ago. That includes 10.63 MMT of wheat and 3.92 MMT of barley. Mar 16 CBOT Wheat closed at $4.73 3/4, up 5 cents; Mar 16 KCBT Wheat closed at $4.74, up 5 1/2 cents; Mar 16 MGEX Wheat closed at $4.97 1/4, up 4 3/4 cents. Chicago wheat ended a choppy week 4 3/4 cents lower than it began it, with Kansas up 3 1/4 cents and Minneapolis down 1 1/4 cents.
Sterling Slump Saves London Wheat Friday, But Will It Last?
15/01/16 -- EU grains traded mostly lower, save for London wheat which garnered some support from a weak sterling - briefly falling below 1.30 against the single currency to levels not seen in a year.
At the finish, Jan 16 London wheat was up GBP1.35/tonne at GBP109.60/tonne, Mar 16 Paris wheat was down EUR1.00/tonne to EUR165.25/tonne, Mar 16 corn fell EUR0.75/tonne to EUR155.00/tonne and Feb 16 rapeseed slumped EUR4.50/tonne to EUR357.25/tonne - the lowest on a front month since August.
For the week overall, that puts nearby London wheat GBP1.40/tonne lower, with the Paris market down EUR6.25/tonne, corn losing EUR5.75/tonne and rapeseed working its way EUR9.50/tonne easier.
For the week, the London spreads have firmed, with May16/Nov16 wheat closing at GBP8.50/tonne versus GBP7.65/tonne a week ago.
The pound has worked lower this week, following news that UK industrial output fell 0.7% in November - the largest monthly decline since Jan 2013. Analysts are still divided as to what the future holds for sterling though, with Lloyds suggesting that the GBP is now oversold and that the potential for a recovery back towards 1.40 could be on the cards. One poll of leading banks forecast a GBP/EUR exchange rate close to 1.44 by the end of March, and we're almost 10% lower than that level tonight.
The FTSE 100 fell 2% today, and Brent and NYMEX crude both closed below $30/barrel (and Brent fell under $29/barrel at one stage to 12-year lows), as Chinese jitters continue to unsettle the global economy.
The slump might not be over yet some are still warning, with the West set to ease sanctions against Iran, flooding the international market with yet more crude oil it doesn't want.
Brussels reported that they'd released a respectable 754 TMT worth of soft wheat export licences this past week, with France commanding a 29% share of that total. That takes the season so far total to 13.51 MMT. Whilst that's down 12% compared to this time last year, it's a lot better than it was - export licence totals were 23% lower at the end of November for example.
Barley export licences this week came in at 164 TMT, with 21% of that going to France. Season to date barley licences are now 5.72 MMT, up 29% versus this time last year (versus +17% at the turn of the year).
The EU Commission meanwhile also announced that they'd approved 31% (over 285 TMT) worth of duty free Ukraine wheat imports into the UK out of a special quota to allow 950 TMT of wheat into the Union un-taxed.
Jordan said that they'd bought 50,000 MT of feed barley for Feb shipment in a tender, paying $199/tonne C&F.
Morocco said that they'd decreased wheat imports in 2015 by almost a third due to growers there gathering a record 8 MMT harvest last year.
Ukraine said that they'd exported almost 22.5 MMT of grains already so far this season, a 15% increase compared with the same period a year ago. That includes 10.63 MMT of wheat, 3.92 MMT of barley and 7.81 MMT of corn.
As the frenzy to place wheat on the market increases, there are reports today of two cargoes of Argentine wheat heading for the US port of Wilmington in North Carolina next month following the recent Argentine government's relaxation on export duties and quotas.
Chicago Grains Close - Thursday
14/01/16 -- Soycomplex: Beans closed mixed, but mostly a touch higher. Weekly export sales came in at 1,127,400 MT for 2015/16, up 77 percent from the previous week and 13 percent above the prior 4-week average. That included 775,300 MT for China. Exports of 1,348,000 MT were down 26 percent from the previous week and 14 percent from the prior 4-week average. The primary destinations were China (661,800 MT), the Netherlands (227,100 MT), Japan (96,300 MT), Spain (56,800 MT), France (55,400 MT) and South Korea (51,800 MT). The Argentine Ag Ministry reported growers there to be 81% sold on old crop beans (versus 76% a year ago at this time) and 5% done on new crop (4.6%). Planting of new crop is close to finished, say the Buenos Aires Grain Exchange. Safras says Brazilian farmers have forward sold 49% of their new crop soybeans, 10 points more than at the same time last year. The December NOPA crush numbers come out tomorrow with 157.5 million bushels being what the trade expects versus 165.4 million in November and 156.1 million a year previously. Jan 16 Soybeans closed at $8.96, down 3 cents; Mar 16 Soybeans closed at $8.82 1/4, up 2 1/4 cents; Jan 16 Soybean Meal closed at $267.70, down $3.20; Jan 16 Soybean Oil closed at $29.75, up 21 points.
Corn: The corn market closed around flat to a cent lower. Fresh news was thin. Weekly export sales came in at 669,200 MT for 2015/16, up noticeably from the previous week and 14 percent from the prior 4-week average, and a little above trade ideas of 400-650 TMT. Japan (310,200 MT), Mexico (145,500 MT) and Colombia (119,000 MT) were featured buyers. Exports of 638,200 MT were up 78 percent from the previous week and 14 percent from the prior 4-week average. The primary destinations were Mexico (214,400 MT), Japan (151,600 MT), Colombia (143,500 MT), Peru (56,700 MT), Cuba (25,000 MT) and Guatemala (22,000 MT). Under the daily reporting system the USDA also reported the sale of 102,100 MT of corn for delivery to Mexico during the 2015/16 marketing year. Taiwan said that they'd cancelled a tender for 130 TMT of optional origin corn for Apr/May shipment due to high prices. The Argentine Ag Ministry reported farmers there to be 89% sold on old crop corn (versus 96.6% a year ago) and 11% done on new crop (19% a year ago). The Rosario Exchange were said to have raised their forecast for the 2015/16 Argentine corn crop to 23.8 MMT, up from their last estimate of 20.2 MMT, due to a late planting rush. Mar 16 Corn closed at $3.58, unchanged; May 16 Corn closed at $3.62 3/4, down 1/4 of a cent.
Wheat: The wheat market closed with some fairly steep losses for a second session. Weekly export sales of 274,700 MT for delivery in marketing year 2015/16 were up noticeably from the previous week's paltry effort, but still down 3 percent from the prior 4-week average. Exports of 552,200 MT were also up noticeably from the previous week and 74 percent above the prior 4-week average. Once again though the bar for these has been set very low indeed recently. South Korea's Deahan were reported to have booked 80,600 MMT of Australian wheat for June shipment. Taiwan booked 88,750 TMT of US wheat for Feb/Mar and Japan took 140,700 MT of US, Canadian and Australian wheat in it's regular weekly tender. All routine stuff there pretty much. Russia said it had exported 35.57 MMT of grains in 2015, of which 21.72 MMT was wheat. The Argentine Ag Ministry says that growers there are 19% sold on wheat versus 44.6% a year ago. Their 2015/16 harvest there is now winding to a close. The Rosario Grain Exchange left its wheat production estimate for the country unchanged at 9.6 MMT. Mar 16 CBOT Wheat closed at $4.68 3/4, down 9 1/4 cents; Mar 16 KCBT Wheat closed at $4.68 1/2, down 7 1/2 cents; Mar 16 MGEX Wheat closed at $4.92 1/2, down 7 1/2 cents.
EU Grains Stumble
14/01/16 -- EU grains closed lower across the board. We're only half way through the first month of the new year, but there are already signs of one or two throwing their hands in. Tuesday's mini Chicago wheat rally looks like it provided nothing more than a selling opportunity - and one that passed Europe almost entirely by.
The fact that the US produced just 7.6% of the global wheat crop in 2015 perhaps highlights why the trade should be cautious about using relatively changes to supply and demand factors there as a major influence on the world market. For corn and soybeans the percentages are much higher, and therefore S&D alterations to those two crops are all the more critical.
World 2015/16 wheat ending stocks are now projected at new record levels, European inventories are seen at the highest in 10 years - including French reserves potentially at "more than double last season’s level and the highest volume available to the market in over 20 years," according to the HGCA.
Reduced US winter wheat plantings and therefore supply in 2016 shouldn't therefore appear set to bring the market to it's knees, there are plenty of other willing sellers around the globe looking to take up the slack.
Nidera today lowered their forecast for Australia's 2015/16 wheat exports to 16-17 MMT, citing tough foreign competition and cheap global freight rates. "A drop below the 16.6 MMT recorded last season would see shipments hit a six-year low," noted Agrimoney.
At the close of play in Europe, Jan 16 London wheat was down GBP1.50/tonne at GBP108.25/tonne, Mar 16 Paris wheat was EUR2.00/tonne lower at EUR166.25/tonne, Mar 16 Paris corn was down EUR2.00/tonne at EUR155.75/tonne, whilst Feb 16 Paris rapeseed fell EUR2.50/tonne to EUR361.75/tonne.
It would seem to be getting increasingly important then that we keep a daily eye on old crop/new crop premiums, as these are one of the main factors encouraging growers (UK ones in particular) to feel relatively relaxed about carrying unsold wheat from the 2015 harvest ever closer to that of 2016.
The May 16 - Nov 16 London wheat spread closed at GBP8.75/tonne tonight, down from EUR9.40/tonne last night, but still up from GBP7.65/tonne at on New Year's Eve and still rather hefty.
Is that GBP0.65/tonne lost overnight or GBP1.10/tonne saved in the past fortnight?
Regardless, it's now a differential of 7.8% versus 6.5% at the end of 2015. In Paris tonight, we have the May 16 - Dec 16 wheat spread at EUR8.50/tonne, or 4.9%, so London wheat is still offering a return significantly more attractive that the French market.
Why should that continue to be the case, and what would happen if the premium being paid for Nov 16 London wheat looks like it has now started decrease? Would that encourage more old crop selling (if buyers could be found), or switch producers' attention to new crop before further differential erosion is seen?
In other news, Russian and Ukraine remain busy wheat exporters, aided by the weakness of their domestic currencies. Russia says it exported 688 TMT of grains so far this month (to Jan 12), and that's during a holiday and weather affected period, including 478 TMT worth of wheat. Total 2015/16 grain exports to date are said to be 23.6 MMT, including 18.48 MMT of wheat.
Brent and NYMEX crude oil flirt with falling below $30/barrel as the West look to ease sanctions on Iran, potentially adding further, and unwanted, supply to that market.
Chicago Grains Close Mixed In Aftermath Of USDA Numbers
13/01/16 -- Soycomplex: Beans closed firmer, adding to yesterday's USDA inspired gains. Reduced US and world availability were supportive. IMEA today cut their forecast for the soybean crop in Brazil's Mato Grosso state to 27.82 MMT, down 0.27 MMT from last year, and notably the first year-on-year decline since 2008/09. They see 30-35% of the state's crop rated poor to very poor, 39% average and 32% good to very good. Conab yesterday trimmed their national soybean production forecast from 192.45 MMT to 102.1 MMT, and AgRural went from 99.7 MMT (and 100.2 MMT prior to that) down to 98.7 MMT. These are all still record highs though, simply not quite as large a crop as they might have been. Chinese demand remains robust, despite concerns over the state of their economy. China imported 9.12 MMT of soybeans in December, the second highest monthly level on record and taking total 2015 imports to a record high 81.69 MMT. CNGOIC say that demand is tapering and that 2015/16 imports will be 80 MMT versus 78.4 MMT in 2014/15, up but the slowest rate of increase since 2011/12. The NOPA crush for December comes out on Friday with the trade expecting a figure of 157.8 million bu. Jan 16 Soybeans closed at $8.99, up 8 1/4 cents; Mar 16 Soybeans closed at $8.80, up 5 1/2 cents; Jan 16 Soybean Meal closed at $275.50, down $0.50; Jan 16 Soybean Oil closed at $29.54, up 53 points.
Corn: The corn market closed modestly higher. Weekly ethanol production topped 1 million barrels/day again for only the time on record, and all three of these occasions have been in recent weeks. Brent dipped below $30/barrel today though, for a low of $29.94/barrel. The trade is expecting some fairly modest weekly export sales for corn tomorrow as Argentina continues to flex it's new found muscles in that quarter, and Ukraine also scours the market for business despite a sharply lower crop there this year. The strong US dollar and the weakness if their domestic currencies, the peso and hryvnia, make it a bit of a no-brainer. Brazil is also keen to sell corn too, and similar comments apply in relation to it's currency the real. FCStone say that "Argentina is actively offering corn 21 cents/bu or 8 dollars/mt under equivalent US corn into China which would calculate similarly for our regular importers Japan and Korea. Ukraine is the lowest offer into India for its most recent tender for 290 tmt." They predict weekly US corn sales of only 400-650 TMT tomorrow, although that would still beat last week's total of only 357,820 MT. Mar 16 Corn closed at $3.58, up 1 1/4 cents; May 16 Corn closed at $3.63, up 3/4 of a cent.
Wheat: The wheat market closed lower, giving up some of yesterday's gains. Yesterday's headline grabber for wheat was a more than 7% cut in US winter wheat plantings for the 2016 harvest, the harsh fact of the matter is that the world still has plenty of wheat, both in the US and elsewhere. Yesterday's price action can perhaps best be described as a knee jerk reaction to a US-specific supply situation (and one that is several months away yet). The US provided 7.6% of the world all wheat crop in 2015/16, according to the USDA, and accounted for 13.6% of global wheat trade. That compares to 35.7% of all the corn grown in the world in 20154/16 and 33.9% of global trade, and for beans those figures are 33.5% and 35.4% respectively. At the end of the day then, the US wheat S&D numbers aren't as important on a world level as those for corn and beans. Europe is still awash with wheat, and has already planted a similar crop for 2016 as last year. Stocks here are high, with FranceAgriMer today lowering their export forecasts both within the bloc and outside it for 2015/16, and raising ending stocks by 26% on 2.521 MMT a year previously. Mar 16 CBOT Wheat closed at $4.78, down 3 1/4 cents; Mar 16 KCBT Wheat closed at $4.76, down 2 cents; Mar 16 MGEX Wheat closed at $5.00, down 5 1/2 cents.
EU Grains Back In The Red As Market Decides USDA Report Offers Little Fundamental Support
13/01/16 -- EU grains finished mostly lower, digesting the USDA reports and finding that there was nothing really there for them. Lower than expected US winter wheat plantings for the 2016 harvest doesn't really make for increased EU exports right now does it, and that's what the market needs. To make matters worse, the USDA actually lowered EU wheat exports this season by 1 MMT, hiking ending stocks to a 10-year high.
At the close of trading, Jan 16 London wheat was down GBP1.25/tonne at GBP109.25/tonne. In Paris, Mar 16 wheat fell EUR2.50/tonne at EUR168.50/tonne, Mar 16 corn was EUR1.75/tonne lower to EUR157.75/tonne and Feb 16 rapeseed dropped EUR1.00/tonne to EUR364.25/tonne.
For London wheat this was the lowest close for a front month since May 20. The May 16 - Nov 16 London wheat spread closed at GBP9.40/tonne tonight, up from GBP7.65/tonne at on New Year's Eve.
That seems to be encouraging growers carrying unsold old crop wheat into believing that they are being "insulated" from market downside, as the new crop premium increases. It is still however a fact that they could have sold Nov 16 on the last day of 2015 for GBP126.15/tonne, and now that's only worth GBP124.00/tonne, which still sounds like a loss not a hedge to me, even if it's not as large as the GBP3.90/tonne deficit selling May 16 tonight instead of having bitten the bullet in Dec 31.
FranceAgriMer cut their forecast for French soft wheat exports within the EU to 7.045 MMT from the 7.485 MMT predicted a month ago and down 11.3% versus 7.94 MMT a year previously.
Exports to non-EU homes were estimated at 18.46 MMT versus 19.1 MMT previously and 5% lower than 19.423 MMT in 2014/15. Ending stocks were raised to 3.178 MMT versus 2.615 MMT a month ago and up 26% on 2.521 MMT a year previously.
So the picture being painted here in Europe is one of struggling exports, and increasing stocks, heading into a 2016/17 season when wheat plantings are on a par with last year (when production went on to be record). We will also likely see a strong rebound in EU corn output next year too, all things being equal.
Ukraine remains a genuine area of concern going forward. The Ag Ministry there peg winter wheat plantings (they don't plant very much wheat in the spring at all) at a tad under 7 million ha, along with 983k ha of winter barley and 655k ha of winter OSR (spring seedings of which are also pretty minimal).
The respected APK Inform Agency say that allowing for fairly minimal winter wheat losses of 5%, then they expect a 2016 harvest no better than 18.6 MMT, a 28% decline year-on-year. Winter barley production could also fall by a similar proportion to 2.3 MMT, and winter OSR slipping 30% to 1.2 MMT. Note that in the case of wheat and OSR this would be almost the entire 2016/17 crop.
Even with production down to these sort of levels though, Ukraine would still typically be an aggressive early season exporter, although in the case of rapeseed a crop this small would all mostly be out of the doors in the bulk of Q1, and certainly well gone by Christmas.
The extra land that would be switched into spring plantings would mainly go towards increased corn, soybean and possibly sunflower production. With the domestic Ukraine hryvnia looking like continuing to depreciate, they would probably still be keen wheat exporters for at least the first 4-5 months of the new season.
The state of play in Russia is a bit more uncertain with regards to 2016/17 crop production. It will be a while yet before we have a better handle on this, and the USDA themselves don't generally update us with WASDE numbers for the season ahead until May. That leaves UK growers a fair few months of sitting in their hands to do just yet if that is their intention.
On a separate note it is reported that Egypt's GASC has finally obtained the necessary letters of credit required to get the three vessels sat waiting to load French wheat off the port of Dunkirk get loaded.
Chicago Grains Rise Following USDA Report, But Will It Last?
12/01/16 -- General: A big day, with a deluge of data from the USDA to wade through. Bear in mind also that fund money was sitting on some fairly large open short positions in wheat, corn and beans heading into today's reports, so nervousness may have played a part in a bit of volatility. Crude oil continues the pressure in the outside markets with new lows again today as it seems inextricably drawn to test a fall below the $30/barrel mark.
Soycomplex: US Dec 1 stocks were 2,715 billion bu, which were 27 million below the average pre-report trade estimate. US 2015 harvested acreage came down 600,000 million acres, and yield was reduced to 48.0 bu/acre. That took the US 2015/16 crop down to 106.95 MMT versus the 108.35 MMT forecast a month ago, and now little different compared to 106.88 MMT a year previously. There were no changes to output from Brazil (100 MMT) or Argentina (57 MMT). China's crop was increased to 12 MMT (up 0.5 MMT from last month). Chinese imports were unchanged at a record 80.5 MMT. Brazil's exports were unchanged at 57 MMT, Argentina's were raised from 11.25 MMT to 11.8 MMT and those of the US lowered from 46.68 MMT to just under 46 MMT. World ending stocks were estimated at 79.28 MMT versus 82.58 MMT a month ago and the average trade idea of 82.57 MMT. The change in relationship between beans, meal and oil was noted. "Since reaching a low in September, the share of oil’s value in soybeans has climbed to near 33 percent in December," they said. "While this is still below the 20-year average of 35 percent, it marks the highest value-share for soybean oil since May 2013. Prices for soybean oil, which reached a 10-year low in late 2015, have begun to rise in conjunction with other vegetable oils. Reduced global supplies of rape and sun oil, along with slower growth year-to-year in palm oil production, hold the potential for a tighter market and continued price strengthening for all oils. Demand for soybean oil is particularly keen, in part due to its relative abundance as well as the narrowing of its price premium to palm oil," they noted. Under the daily reporting system the USDA also revealed 140,000 MT of US soybeans sold to unknown destinations for 2015/16. Jan 16 Soybeans closed at $8.90 3/4, up 9 3/4 cents; Mar 16 Soybeans closed at $8.74 1/2, up 13 1/4 cents; Jan 16 Soybean Meal closed at $274.70, up $5.90; Jan 16 Soybean Oil is at $29.01, down 7 points.
Corn: Corn closed around 6-7 cents firmer, helped by a USDA report that can maybe best be described as "not as bearish as it might have been". That appeared to encourage some profit-taking, helped by spillover support from wheat and soybeans. "World corn production for 2015/16 is lower with reductions for India and South Africa more than offsetting the gain for Canada. Global trade is little changed overall. Exports are raised for Brazil and Canada but lowered for the United States and India," was their opening gambit. India's corn crop is now expected to be the smallest since 2009/10 at 21 MMT and is 1.5 MMT below that forecast a month ago and 2.7 MMT under what was produced in 2014/15. Production in Brazil (81.5 MMT) and Argentina (25.6 MMT) was left unchanged from last time. Canadian output was raised by 1.3 MMT to 13.6 MMT, and South Africa's lowered from 12.75 MMT to 12.0 MMT. World 2015/16 ending stocks were almost identical to the 211.9 MMT predicted a month ago at 211.85 MMT. The average trade guess for those were 212.51 MMT. US Dec 1 corn stocks came in 34 million bushels below the average pre-report trade estimate. "Since the release of the November WASDE report, US and Black Sea corn quotes have dropped slightly. U. corn export prices have been pressured by a relative lack of competitiveness. In comparison, Argentine and Brazilian corn quotes are up (and are now above US Gulf prices), supported by continued strong foreign demand and seasonally tightening old crop supplies," they said. Mar 16 Corn closed at $3.56 3/4, up 5 cents; May 16 Corn closed at $3.62 1/4, up 4 3/4 cents.
Wheat: For once wheat led the pack higher. The USDA's winter wheat plantings report, separate to their WASDE report, is what the market focused on. That had US all winter wheat seedings down to the lowest since 2010, including a drop to at least a 30 year low in plantings of HRW wheat, according to Reuters. The total winter wheat area of 36.61 million acres is 7.2% lower than a year ago and more than 2 million under the lowest trade guess. The USDA estimated seedings of HRW wheat, the largest wheat area by class, at 26.5 million acres, the lowest on records going back to 1986/87. SRW acreage was shown at 6.72 million, while the range of estimates was 6.40 to 8.539 million and the average guess 7.166 million. On the flip side, the US Dec 1 wheat stocks figure of 1.738 billion bushels was a five-year high that exceeded market expectations by 40 million bushels. The WASDE report provided the bearish input. "The projected glut in 2015/16 global wheat supplies is pressuring export prices to the lowest level since July 2010. While world production and consumption are forecast at a record and global trade at a near-record, stocks continue to build. Although lower prices are stimulating additional demand, it is not enough to offset burdensome supplies. Exporter stocks are generally available to the world, and are therefore inversely related to global prices," they said. US 2015/16 wheat exports were left unchanged at 22 MMT, with Europe's lowered 1 MMT to 32.5 MMT. Argentina's exports were upped 1 MMT reflecting recent changes in duties and quotas, Canada and Ukraine both got a 500,000 MT increase to their exports in 2015/16 to 21 MMT and 15.5 MMT respectively. World wheat ending stocks were raised from 227.3 MMT to almost 230 MMT. Mar 16 CBOT Wheat closed at $4.81 1/4, up 12 1/4 cents; Mar 16 KCBT Wheat closed at $4.78, up 15 3/4 cents; Mar 16 MGEX Wheat closed at $5.05 1/2, up 10 3/4 cents.
EU Grains Rally Late On USDA Report, Justified Or Not?
12/01/16 -- EU grains traded lower for most of the day heading into the release of various production and stocks data from the USDA due at 17.00 London time. That was a bit late in the EU session to make a dramatic difference to closing levels, but did nevertheless drag things into the green, with the official closes of the day being at, or near, the day's highs.
At the finish, Jan 16 London wheat was up GBP0.80/tonne at GBP111.00/tonne, Mar 16 Paris wheat was EUR1.50/tonne higher at EUR170.75/tonne, Mar 16 corn rose EUR1.00/tonne to EUR159.50/tonne and Feb 16 rapeseed was EUR1.25/tonne firmer to EUR365.25/tonne.
The pound worked lower following news that UK industrial output fell 0.7% in November - the largest monthly decline since Jan 2013. That in theory should aid exports and hinder imports going forward.
Before we have a look at what the USDA had to say late in the say though, the news that the market had to go on prior to that included a background of high EU and UK corn imports so far this season.
EU data shows that Europe has imported 6.93 MMT of corn so far in 2015/16, against the 9.35 MMT shipped in during the whole of last season. Corn imports for the past 5-years average 8.37 MMT, so we certainly look to be on target to in for an above average season this time round.
Meanwhile at home "UK corn imports in November were at their highest monthly level since March 2014 at 259 TMT, according to the latest HMRC data, despite ample supplies of domestic feed wheat this year," said the HGCA.
UK wheat exports in November were substantially less than the volume of corn imported, at 195 TMT, although imports dropped to little more than 82 TMT (with Finland interestingly the largest supplier).
Season to date UK wheat exports are 655 TMT, around 5 TMT less than those of a year ago at this time, with Spain that largest home taking 242 TMT of that total.
Late in the afternoon, the news from Washington was that the USDA have estimated US winter wheat plantings for their 2016 harvest down 7% this year
"At 14.8 million ha, the US winter wheat area is provisionally the smallest since that for harvest 2010 with sharp falls in both the Hard Red Winter (-9%) and Soft Red Winter (-5%) wheat areas," noted the HGCA.
"The year-on-year decline in the winter wheat area is also more than was expected before the report’s release; the largest fall expected in a pre-report poll by Reuters was -3%," they added.
Is the cure for low prices, low prices? Maybe in the States, where the average grower has a few more options open to him than his EU counterpart - where wheat sowings for 2016 are already seen little changed (and with French winter wheat plantings beating even last year's highest since 1936 total to supposedly be the largest in 80 years).
As far as the 2015/16 marketing year goes, the USDA dropped expectations for EU wheat exports by 1 MMT to 32.5 MMT citing the "slower than expected pace and sluggish export licenses" seen so far. Production here in 2015 was tweaked even higher than last time, and is now seen at a record 157.66 MMT. The combined effect of those takes EU 2015/16 ending stocks up to a hefty 18.95 MMT - we haven't seen carryout that high since 2005/06.
Ukraine's wheat exports were boosted 500,000 MT to 15.5 MMT "based upon a significantly faster pace of feed-quality wheat shipments, particularly to Southeast Asia."
Argentina was seen picking up 1 MMT extra worth of wheat export business this season "on the announced elimination of export taxes and quotas by the incoming government." Canada's exports were upped 500,000 MT to 21.0 MMT "on the continued strong pace of trade to date and a larger than anticipated crop."
The morning headlines might read a bit bullish for US wheat, but the fine print doesn't seem to do so as far as the rest of the world is concerned.
Note too that fund money was carrying a sizeable short position in wheat, and also in fact corn and soybeans, into today's reports so a knee-jerk reaction may not have been entirely unexpected.
Chicago Grains Mixed Ahead Of USDA Reports
11/01/16 -- Soycomplex: Beans closed with little change. Weekly export inspections came in at 1.244 MMT, down by a third on the same week a year go. Season to date inspections are 11% smaller than this time last year. The USDA also reported 248,000 MT of US soybeans were sold to unknown destinations, and 120,000 MT to China for 2015/16 shipment under the daily reporting system. The trade waits in eager anticipation for tomorrow's USDA reports, which have a bit of history for providing surprises for the bean market. Dec 1 US soybean stocks are on average estimated to be 2.742 billion bushels. USDA world ending stocks are estimated at 82.57 MMT. Brazilian and Argentinean production is estimated at 99.3 MMT and 57.3 MMT respectively. CONAB are also due out with their Brazilian estimates tomorrow. Jan 16 Soybeans settled at $8.81, up 1 1/2 cents; Mar 16 Soybeans settled at $8.61 1/4, down 4 cents; Jan 16 Soybean Meal settled at $268.80, up $0.90; Jan 16 Soybean Oil settled at 29.08, down 37 points.
Corn: The corn market closed around 5 cents easier. Weekly export inspections of 550,258 MT were in line with trade estimates. YTD inspections are still more than 20% behind where they were this time last year though. The USDA also reported 152,400 MT of US corn was sold to unknown destinations this morning for 2015/16 delivery under the daily reporting system. For tomorrow's USDA report the trade is looking for world ending stocks of 212.51 MMT. The average estimated for the December 1 Grain Stocks report appears to be 11.25 billion bushels. The USDA had Brazil's corn crop at 81.5 MMT last month, and pegged Argentina at 25.6 MMT. There's talk of significant, possibly El Nino-related, crop damage in India. Their state-owned PEC have released a tender to purchase 290 TMT of optional origin corn for Jan/Feb shipment - suggesting that all might not be well with their crop, harvesting of which is taking place now. Mar 16 Corn settled at $3.51 3/4, down 5 1/4 cents; May 16 Corn settled at $3.57 1/2, down 5 1/4 cents.
Wheat: The wheat market closed with sharp losses. Weekly export inspections of 393,688 MT were fair, but YTD inspections are still down 11% on a year ago. For wheat the USDA also gives us some US winter wheat planting estimates tomorrow. For all wheat these are seen at 39.334 million acres. That includes a HRW acreage at 28.802 million acres, SRW at 7.166 million, and White Wheat at 3.367 million. The Argentine wheat crop is 87% harvested and the BAGE raised their estimate for production this year from 9.5 MMT to 10.1 MMT, although still below the USDA's December forecast of 10.5 MMT and 19.2% down on the 12.5 MMT harvested a year ago. Tomorrow's USDA forecast for the Indian wheat crop will be of interest. Ditto if they make any changes to their import requirements. May 16 CBOT Wheat settled at $4.74 1/2, down 9 1/4 cents; May 16 KCBT Wheat settled at $4.72 1/4, down 10 1/4 cents; May 16 MGEX Wheat settled at $5.00 1/2, down 7 1/2 cents.
EU Grains Lower, French Exports Lag But Indian Dryness Flagged
11/01/16 -- EU grains closed lower across the board, with little in the way of support coming from the US once their daytime markets opened in the afternoon.
At the finish, Jan 16 London wheat was down GBP0.80/tonne at GBP110.20/tonne, Mar 16 Paris wheat was EUR2.25/tonne lower at EUR169.25/tonne, Mar 16 Paris corn was down EUR2.00/tonne at EUR158.50/tonne, whilst Feb 16 Paris rapeseed fell EUR2.75/tonne to EUR364.00/tonne.
Fresh news was light, although we can't say that tomorrow with a deluge of data due to be released from Washington and beyond.
What we do know is that EU exports are behind last year's pace and need to improved if we aren't to be left in the position of another very large carryover into the 2016/17 marketing year.
French soft wheat exports to non-EU homes were 628 TMT in November, down 100 TMT on the previous month. Barley exports slowed to 124 TMT in November as the "new" early season demand from China waned.
The top home for French wheat outside the union in November was Algeria taking 226 TMT. Cheaper long-haul freight rates helped the French export wheat to Indonesia for the first time since the 2008/09 season.
French 2015/16 soft wheat exports to non-EU destinations are now 3.3 MMT, down 6% year-on-year. Exports within the EU have fallen 22% to 2.8 MMT, taking total exports to 6.1 MMT, a 14% decrease compared to a year ago.
Reuters also reported that the three vessels awaiting letters of credit from Egypt's GASC to load wheat are still waiting outside the port of Dunkirk.
Shipments out of Ukraine remain strong.
APK Inform said that Ukraine seaports exported 918.8 TMT of grain over the holiday period Dec 28 to Jan 10. That included 394.7 TMT of wheat and 494.1 TMT of corn. Barley shipments in the period were only 30 TMT, adding weight to the theory that these are just about done for the season already.
Russia's exports were less impressive due to the long break - much of the country is closed for the orthodox holidays the first week in January off.
Their grain exports via seaports for the same period totalled 258.4 TMT, including 200.9 TMT of wheat, 12 TMT of corn and 33.1 TMT of barley.
Concerns about dryness issues in India are getting increased amounts of media coverage.
For sure they have huge stockpiles of wheat left over from previous seasons in their government stockpiles, but the quality of much of this grain is highly questionably. Last season's harvest itself was low on quality due to heavy March rains immediately prior to harvesting, causing a rush to import quality Australian wheat for blending early in the season.
The word is that the need to import better quality wheat could be even more urgent than last year, and that the net might need to be cast a bit wider wider than just Australia, although there are phytosanitary hurdles to get over importing wheat from some other countries.
Separately, state-owned PEC have released a tender to purchase 290 TMT of optional origin corn for Jan/Feb shipment - suggesting that all might not be well with that crop, harvesting of which is taking place now.
Chicago Grains End Higher For The Day/Week, Except Corn Which Posts Small Weekly Loss
08/01/16 -- Soycomplex: Beans closed higher on the day and for the week. One or two traders may have been looking to square books a little ahead of Tuesday's WASDE report from the USDA. They gave us Brazilian production of 100 MMT last month. The USDA's ag attache in Brazil now estimates production at 98 MMT. A trade survey has output at 99.29 MMT. For all the talk of China's economy faltering, and the possible impact for soybean demand, there's no sign of a downswing yet. CNGOIC in China bumped up its Chinese soybean import estimate up to 80 MMT this year, up 2 MMT from its previous forecast and now 1.5 MMT above the USDA's December number. Dec 1 US soybean stocks are on average estimated to be 2.742 billion bushels. Brazil is finally turning wetter in the north and centre, although some yield potential will already have been lost. "Brazil’s tropical soybeans have received heavier rainfall recently, slightly easing drought in Mato Grosso’s Centre West and scattered areas of the Northeast tropics. Soybean prospects have brightened somewhat with recent strong showers. The forecast is hopeful for more rain," said Martell Crop Porojections. Nationally the crop is said to be 1% harvested. Argentina is said to be 93% planted. Jan 16 Soybeans settled at $8.79 1/2, up 2 1/2 cents; Mar 16 Soybeans settled at $8.65 1/4, up 3/4 cent; Jan 16 Soybean Meal settled at $267.90, up $1.70; Jan 16 Soybean Oil settled at 29.45, up 1 point. For the week, nearby beans up 8 1/4 cents, with meal $3.60 higher and oil down 110 points.
Corn: The corn market closed around 4 cents higher on the day, but the best part of 2 cents easier for the week. Crude was relatively stable, albeit lower, and whilst the US dollar gave up nearly all of its early gains it still closed at its higher since the summer of 2010 against the British pound. It also remains close to the recent highs versus the euro. Argentina corn planting is said to be 82% complete. Acres are still called 16% lower. Global freight levels are low, which along with the weak Argentine peso, should help them make some inroads into non-traditional homes form corn now that the export tax has ended. The average trade average guess in a Bloomberg survey for the December 1 Grain Stocks report on Tuesday appears to be 11.25 billion bushels. The USDA had Brazil's corn crop at 81.5 MMT last month, and pegged Argentina at 25.6 MMT. Drought could lead South Africa to need to import as much as a record 2.5 MMT of South American white corn, with sowings for the South African crop only halfway done as of the end of the ideal planting window of Dec 31. Total white and yellow corn imports could hit 5 MMT it is thought. A Bloomberg survey of 23 traders/analysts in corn price sentiment found only 4 that were bullish corn, 14 who are bearish, and 5 who are neutral. Mar 16 Corn settled at $3.57, up 4 cents; May 16 Corn settled at $3.62 3/4, up 4 1/4 cents. For the week that places Mar 16 corn 1 3/4 cents lower, with May 16 down a similar amount.
Wheat: The wheat market closed higher on the day and for the week, supported I guess by short-covering ahead of next week's USDA data due on Tuesday. Not only does that include the regular WASDE numbers but we will also get the quarterly stocks figures and US winter wheat seedings area. Trade estimates place that at 39.334 million acres, slightly below last year’s 39.461 million. Fund money is short on wheat, and now might be fretting over possible damage/production losses for Indian wheat. Funds were credited with buying 6,000 contracts of CBOT wheat today, although some estimates are higher. We won't know for sure until a week from now. Today's CTFC report shows managed money increasing their net short position as of the Tuesday night close to close on 120k lots, with 96k of that in Chicago. A Bloomberg survey of trade analysts puts the Dec 1 US wheat inventory average estimate at 1.694 billion bushels. Argentina’s wheat crop is said to be 87% harvested. FSU weather is said to be improving with snow cover increasing in some areas of vulnerable winter wheat. Europe has been mild, but colder to much colder than normal weather is finally on the way there. Snow cover is minimal. A Bloomberg survey into trader/analyst sentiment on US wheat found 5 bullish, 14 bearish, and 4 neutral out of 23 respondents. Mar 16 CBOT Wheat settled at $4.78 1/2, up 10 1/2 cents; Mar 16 KCBT Wheat settled at $4.70 3/4, up 10 cents; Mar 16 MGEX Wheat settled at $4.98 1/2, up 6 1/2 cents. For the week, Chicago wheat added 7 1/2 cents, with Kansas up 4 cents and Minneapolis gaining 4 1/2 cents.
EU Grains Mostly Higher On The Day But Lower For The Week
08/01/16 -- EU grains finished mostly higher on the day, but lower for the week.
At the close of trading, Jan 16 London wheat was up GBP1.20/tonne at GBP111.00/tonne. In Paris, Mar 16 wheat rose EUR2.00/tonne at EUR171.50/tonne, Mar 16 corn was EUR2.50/tonne higher to EUR160.75/tonne and Feb 16 rapeseed fell EUR2.00/tonne to EUR366.75/tonne.
For the week, that puts nearby London wheat GBP3.00/tonne lower (-2.6%), with French wheat EUR2.00/tonne lower (-1.2%), corn down EUR4.00/tonne (-2.5%) and rapeseed down EUR7.25/tonne (-1.9%).
In London wheat, the Jan/Nov 16 spread widened from GBP12.15/tonne a week ago an impressively large GBP13.75/tonne tonight. The premium on offer tonight for Nov 17 versus nearby Jan 16 is GBP19.80/tonne compared to GBP18.20/tonne a week ago.
The notion that the outlook for the GBP/EUR isn't quite as rosy as many were prediction a month or two back appears to be confirming, with sterling closing the week at just under 1.33 against the single currency - the lowest in 11 months.
Will this mean that we will finally start to see UK wheat exports pick up a little relative to those from the continent?
Brussels only released 369 TMT worth of EU soft wheat export licences this past week, That takes the total volume granted so far this season to 12.8 MMT, down 13.5% on this time last year.
Barley exports look like they are stagnating after a very impressive start to the campaign, led by fresh new business from China. Barley export licences this week only totalled 58 TMT, although cumulative licences for the season to date are still up more than 30% on last year at 5.6 MMT.
Corn keeps flooding in, with import licences for that almost matching the export total for soft wheat at 367 TMT. Season to date corn imports are now 6.9 MMT, up more than 68% compared to only 4.1 MMT this time a year ago.
A busy week lies ahead, with the USDA due out on Tuesday with their latest global supply and demand report, as well as US quarterly grain stocks and estimates on US winter wheat seedings for the 2016 harvest.
Concerns about the size of this year's Indian wheat crop keep getting a quiet mention following adverse weather conditions through planting.
"The concern is the 89 MMT crop estimated by the USDA in December is going to shrink enough to require imports of 2-6 MMT. Due to the phytosanitary standards put forward by India the only country that can send wheat
their way is Australia but not with ability to satisfy a 6 MMT call," noted FCStone.
Brazil's CONAB also give us their latest estimates on crop production there this year on Tuesday. It will be interesting to see if the are tempted to revise down somewhat their ideas on corn and soybeans.
