EU Grains Grind Mostly Lower For The Week

22/01/16 -- EU grains closed mixed, but mostly a touch higher. It was London wheat's turn to fall today, with the pound consolidating from earlier in the week nerves to close steadier against both the euro and US dollar.

At the finish, new front month Mar 16 London wheat was down GBP0.45/tonne at GBP110.30/tonne, Mar 16 Paris wheat was up EUR0.25/tonne to EUR164.25/tonne, Mar 16 corn rose EUR1.00/tonne to EUR156.00/tonne and Feb 16 rapeseed jumped EUR3.25/tonne to EUR359.75/tonne.

For the week, that puts London wheat GBP1.30/tonne lower, with Paris wheat and corn both down a euro, and rapeseed up EUR2.50/tonne.

On the old crop/new crop spread, May16/Nov16 wheat closed at GBP9.00/tonne versus GBP8.50/tonne a week ago and GBP7.65/tonne the week before that.

So, we have a market still grinding lower, rather than on that appears to be in free fall.

Brussels confirmed that they'd released 511 TMT worth of EU soft wheat export licences this past week, a 32% decline versus a week ago. France picked up 36% of that total.

Season to date export licences now stand at 14.02 MMT (with French wheat getting 29% of that), some 13% down compared with a year ago.

Barley export licences this past week were 155 TMT, a 5.5% fall compared with last week and season to date licences of 5.92 MMT are up 24% versus 12 months ago.

A notable "eyebrow raiser" this week is that corn import licences totalled 941 TMT this week - almost double the volume of soft wheat exports approved. That takes the season so far total to 8.11 MMT, up 62% compared to this time a year ago.

The size of EU wheat exports, and the pressure of large corn imports then are two areas that are concerning the market. Meanwhile lurking in the background is the spectre of very large wheat carryover stocks all over Europe and the world.

Slightly lower world wheat production in 2016/17 seems for now to be more than compensated for by record large 2015/16 ending stocks.

Global demand is good, but buyers can afford to be choosy.

Following yesterday's tender, Egypt's GASC said that they now had enough wheat bought to last them through to May 11. Such announcements are routine, and certainly don't rule them out of tendering again soon, although they appear to have a few problems of their own to iron out first.

They may be the world's largest wheat buyer, but they aren't necessarily the most desirable name to have on your books. Argentina appear to really only have feed wheat to sell now. Having struck a clean sweep in the previous GASC tender, they didn't even put up an offer yesterday.

The oil-led weakness of the Russian rouble is an interesting 2-sided influence for Russian wheat exports. On the one hand it make the rouble-based export prices look quite attractive, but on the other it also raises the export duty payable on the sale (to around $12/tonne based on the rouble falling below 80 to the US dollar this week, according to Agritel).

Jordan cancelled a tender for 100,000 MT of hard wheat and immediately re-tendered for the same, Tunisia are said to be in the market for 92,000 MT of soft wheat and 50,000 MT of feed barley, both of optional origin.

Chicago Grains End Mostly Higher, Save For Corn

21/10/15 -- Soycomplex: Beans closed a touch higher, recovering around half of yesterday's losses. A Bloomberg survey into trader/analyst sentiment in beans found 4 bulls, 16 bears and 7 neutrals. The Argentine government said that growers there were almost 83.5% sold on old crop beans (versus 77% a year ago) and 5.3% done on new crop (versus 4.8% a year ago). The Buenos Aires Exchange estimate 2016 soybean production there at 58 MMT versus 61 MMT last year. MDA CropCast raised their view on Argentina by 1 MMT to 60.6 MMT. The IGC added 1 MMT to the global 2015/16 soybean crop, taking that up to 322 MMT, some 3 MMT above the USDA. They added 2 MMT to consumption though and cut carryover by 3 MMT. They also now have Argentina at 60 MMT, with Brazil trimmed from 99.5 MMT to 99 MMT. They left Chinese imports unchanged at 81 MMT. Exports continue to pour out of Brazil. The port of Paranagua said that they'd exported 7.8 MMT of soybeans in 2015, a 21% increase versus a year previously. They also shipped out 4.8 MMT of soymeal/pellets. Trade estimates for tomorrow's weekly export sales report for beans are between 700,000 MT and 1.0 MMT. Mar 16 Soybeans settled at $8.78 1/2, up 4 1/2 cents; May 16 Soybeans settled at $8.79, up 4 1/4 cents; Mar 16 Soybean Meal settled at $272.20, up $2.40; Mar 16 Soybean Oil settled at 29.94, up 13 points.

Corn: The corn market closed around 1-2 cents easier. A Bloomberg survey into trader/analyst sentiment in corn found 9 bulls, 12 bears, 6 neutrals. The Argentine government said that growers there were over 92% sold on old crop corn (versus 97% a year ago) and 12.73% done on new crop (versus 19.7% a year ago). They increased their planting estimate from 5.4 million ha to 5.69 million, concurring with the view that the Macri election victory spurred some late seeding. The US Energy Dept had weekly US ethanol production at 983,000 barrels/day, down 20,000 barrels/day from the previous week. The IGC wiped 8 MMT off their global corn production estimate for 2015/16, taking that down to 659 MMT. The USDA are at 968 MMT. The IGC did however cut world corn consumption by 6 MMT to 968 MMT. Carryover stocks were pegged 4 MMT lower than a month ago at 196 MMT. The reduced level of world output came "mainly because of poorer harvests in South Africa and India." For South Africa the IGC went for 7.5 MMT. MDA CropCast cut their forecast for the South African corn crop to 7.8 MMT. Trade estimates for tomorrow's weekly export sales report are 600,000 to 900,000 MT. Some media reports suggest that troubled Spanish biofuel producer Abengoa may be looking at selling their entire bioenergy division for $1 billion, including all of their US corn ethanol assets. Mar 16 Corn settled at $3.67, down 1 3/4 cents; May 16 Corn settled at $3.71 3/4, down 1 1/2 cents.

Wheat: The market closed around 4-5 cents firmer. A Bloomberg survey into trader/analyst sentiment in wheat found only 3 bulls, 14 bears, 10 neutrals. The fewest bulls since September. Nothing especially bullish emerged today, the large fund short position simply continues to provide support to the market with farmers reluctant to sell at these levels. The Argentine government said that growers there were 22.2% sold on their 2015/16 wheat versus 46.5% committed a year ago. The Buenos Aires Exchange raised their forecast for the Argentine wheat crop from 10.1 MMT to 10.3 MMT, an annual decline of only 3.8%. If weather conditions permit, the harvest could be concluded in the coming days, after the few remaining paintings collected over southern agricultural region are cleared, they said. That's a far better result than was being talked about a few months ago. The IGC raised world wheat production by 5 MMT from their previous forecast to 731 MMT, and added a similar amount to carryover stocks, taking them up to 213 MMT. MDA CropCast cut their forecast for the global wheat crop in 2016/17 citing reduced acres in the US and dryness in India. The latter was cut 1.52 MMT from a week ago to 87.1 MMT. Egypt bought 235,000 MT of Russian, Romanian and French wheat in a tender. Trade ideas for tomorrow's weekly export sale report for wheat are only in the region of 200 to 400,000 MT. May 16 CBOT Wheat settled at $4.79 3/4, up 4 cents; May 16 KCBT Wheat settled at $4.81 3/4, up 4 1/4 cents; May 16 MGEX Wheat settled at $5.05 1/2, up 5 3/4 cents.

EU Grains Mixed, Glass Half Full Or Half Empty?

21/01/16 -- EU grains finished mixed, but mostly a touch lower. It was the turn of Paris grains to get a little currency boost from a weaker euro today, with the pound popping back up above the 1.30 level versus the single currency.

At the close of trading, Jan 16 London wheat was down GBP0.45/tonne at GBP109.05/tonne. In Paris, Mar 16 wheat rose EUR0.50/tonne at EUR164.00/tonne, Mar 16 corn was up EUR0.75/tonne at EUR155.00/tonne and Feb 16 rapeseed was up EUR2.00/tonne to EUR356.50/tonne.

There were one or two little nuggets of bullish information out there, but they were neither large in their magnitude, nor abundant enough to put off the wave of bearish sentiment that engulfs the market at the moment.

These included a downgrade of around 500,000 MT to the EU-28's projected 2016 soft wheat crop from Strategie Grains - now seen at 143.1 MMT - down approaching 5% on a year previously. The drop is mainly due to a slightly lower planted area, plus crop damage caused by cold weather in some Eastern European countries like Latvia, Lithuania and Poland. These are the same areas of concern flagged up by the EU Commission's MARS unit at the end of 2015. EU soft wheat production of 143.1 MMT would be the smallest crop since 2013 and the first annual drop in output since 2012.

The French analysts also released their first forecast for EU soft wheat exports next season, pegging those at 28.9 MMT. Whilst that's a near 3% increase on 28.1 MMT this season, it's still well below the record 33.34 MMT that was exported in 2013/14.

In terms of EU soft wheat stocks, it was also a case of "is the glass half full or half empty?" For the current season these were reduced by 1.5 MMT, but still very large at 16.9 MMT. Reduced production and increased exports will see these fall again in 2016/17 to 14.2 MMT. Again, a step in the right direction, but not one that is sufficiently large to be a game changer.

The extra export business picked up in 2016/17 will come partly due to lower output in Ukraine this year, they suggest. This could well be true, although we could do with the euro getting back to it's "losing ways" to help those exports along. It will also still prove to be the case that Ukraine are as active as ever early next season, it may only be later on that Europe really starts to see the benefit.

In other news, the IGC added 5 MMT to their global 2015/16 wheat crop estimate, although at 731 MMT they are still more than 4 MMT below the USDA. In addition they also raised carryover stocks by 5 MMT, but again their new forecast of 213 MMT is well below 232 MMT from Washington.

"While conditions for 2016/17 winter wheat have not been entirely ideal in some regions, global harvest prospects remain mostly favourable. With only a small drop in all wheat area and average yields predicted, world production is tentatively projected 3% down y/y, at 706 MMT. Because of lower anticipated feed demand, a marginal decline in consumption is expected. Some contraction is possible in end-2016/17 stocks, but inventories could still be the second highest ever," they said.

Egypt's GASC bought 235,000 MT of Romanian, French and Russian wheat in their latest tender, paying the cheapest levels since September.

Agrimoney noted that activity in the tender was "muted, as concerns persist about the potential for disruptions in shipments to Egypt, thanks to stringent quality rules and some trade finance disruptions."

Having won a clean sweep last time, interestingly Argentine wheat wasn't even offered this time round.

Meanwhile, EU and UK pig prices have recently hit multi-year lows, say the HGCA. That could have a negative effect on feed demand in 2016.

Chicago Grains End Mostly Lower, Save For Corn

20/01/16 -- Soycomplex: Beans closed lower, kicked on the way by weak outside markets like crude oil and equities. Yet, despite the much quoted "concerns over Chinese soybean demand" things in that direction are going pretty well (even if it isn't just the US that they are buying from). CNGOIC estimated China's 2015/16 soybean imports at a record 85 MMT, way above the USDA's projected 80.5 MMT forecast. China has already physically taken 3.5 MMT more in Q1 of 2015/16 than it did last year. Brazil and Argentina are however well placed to service this need, with bumper/record crops of their own on the way, a more relaxed attitude to exports and acutely weak domestic currencies. Mar 16 Soybeans settled at $8.74, down 9 1/2 cents; May 16 Soybeans settled at $8.74 3/4, down 8 1/4 cents; Mar 16 Soybean Meal settled at $269.80, down $1.50; Mar 16 Soybean Oil settled at 29.81, down 22 points.

Corn: Corn closed around a cent of so higher on the day. Crude oil and heating oil set new lows. South Korea is buying Argentine feed wheat, possibly in preference to corn. The USDA reported the sale of 243,100 MT of US corn to Mexico for 2015/16 under the daily reporting system. Fund money was estimated as ending the session an overall net modest buyer. They have established a record short position in recent weeks, so bouts of short-covering are always likely, and possibly can occur with little tangible reason to explain them. The USDA's regular weekly export sales numbers will be delayed a day to Friday due to Monday's Martin Luther King holiday. Mar 16 Corn settled at $3.68 3/4, up 1 cent; May 16 Corn settled at $3.73 1/4, up 1 1/4 cents.

Wheat: The wheat market closed a few cents lower. US wheat remains largely too expensive to export to all but non-traditional homes. Argentine feed wheat is heading to the US. Egypt decided to test the water again and tendered for wheat tonight with the results expected tomorrow. Recall that they've held up 3 vessels of French wheat since their last tender due to problems with letters of credit. They've also been tinkering with the terms of their tenders. Doubtless they will still find eager sellers though. Japan is tendering for US wheat. Weakness in crude is keeping the Russian rouble under pressure, helping them to maintain a competitive edge. May 16 CBOT Wheat settled at $4.75 3/4, down 3 1/4 cents; May 16 KCBT Wheat settled at $4.77 1/2, down 5 1/4 cents; May 16 MGEX Wheat settled at $4.99 3/4, down 2 1/2 cents.

EU Grains Fall Again Pressured By Outside Markets, Strong Competition, Currencies

20/01/16 -- EU grains finished the day lower, with the French markets under particular pressure due to the suddenly weaker sterling. Outside markets took another pumelling, with crude falling to fresh lows around $27/barrel on both sides of the Atlantic, marking around a 75% drop since mid-2014.

EU stock markets ending the day around 3-3.5% lower as the bad news just keeps coming for the state of the global economy.

At the finish, Jan 16 London wheat was down GBP0.20/tonne at GBP109.50/tonne, Mar 16 Paris wheat was down EUR2.00/tonne to EUR163.50/tonne, Mar 16 corn fell EUR2.25/tonne to EUR154.25/tonne and Feb 16 rapeseed slumped EUR4.25/tonne to EUR354.50/tonne.

Since the last day of 2015, we've now seen London wheat drop 4% versus a Paris wheat market that's down almost 5.8%. The pound falling from around 1.3550 to below 1.30 today during this time is certainly a contributory factor in this - even if ultimately both markets are lower.

The Russian rouble, so closely tied to the value of crude oil, fell to 80 versus the US dollar and close to an all-time low today. That potentially also makes Russian wheat more competitive on the world export stage, at a time when the EU needs to be picking up as many foreign sales as possible.

Argentina's Rosario Grain Exchange confirmed yesterday that the reported 2 cargoes of wheat loading for the US there are feed grade, and said that they currently have the best part of 500,000 MT of wheat scheduled to load for foreign climbs across the next two weeks - their busiest wheat export programme in years.

South Korea's MFG confirmed today that they'd bought 55,000 MT of Argentine feed wheat at $181/tonne C&F for Mar/Apr shipment. The country's NOFI also said today that they'd purchased a 69,000 MT cargo of optional origin feed wheat. This could ultimately also prove to be Argentine material as the old South American powerhouse re-awakens and flexes its wheat export muscles once again.

All this competition comes at a time when Europe is still groaning under the weight of it's own 2015 record wheat crop which it as attempting valiantly to sell. Nevertheless, French wheat stocks are estimated at a 16-year high at the end of the current season.

Tomorrow then would not be a good day to see weekly export licence totals drop off out of Brussels, as the market will currently be very sensitive to any suggestion that these might be starting to slip (they're already down 12% on a year ago).

Soft wheat export licences last week were 754 TMT.

Agritel reported that Russia's winter wheat crop is rated 63% good, 26% fair and 11% poor - which is worse than the recent 5-year average.

Any possible concerns over production prospects there, or in Ukraine, are currently severely outweighed by more imminent considerations and over-supply worries.

Chicago Grains Close - Tuesday

19/01/16 -- Soycomplex: Beans closed around 4 cents higher. Weekly export inspections of 1.395 MT were fairly good. Analysts seem to be paring the top off the size of the Brazilian crop, even if it is still likely to be record large. Agroconsult reduced its 2015/16 Brazilian bean production estimate to 99.2 MMT from 100.6 MMT previously. Rains in Mato Grosso over the weekend were reported to have bee "far lighter" than expected. Having had a persistently wet growing season so far, the weather in the south of the country may also be turning the other way. "The soybeans in Rio Grande do Sul are now flowering and starting to fill pods just as the weather has turned dryer. There is no rain in the forecast until sometime next week and in the meantime, temperatures are expected to be in the mid-90F range," said Dr Cordonnier. Any price rallies will simply encourage more soybean plantings going forward though. Informa now estimate US 2016 soybean plantings at a new record 85.23 million acres versus a previous estimate at 84.54 million and 82.7 million a year ago. Mar 16 Soybeans closed at $8.83 1/2, up 4 1/2 cents; Mar 16 Soybean Meal closed at $271.30, up $0.60; Mar 16 Soybean Oil settled at 30.03, up 38 points.

Corn: The corn market closed around 4 cents higher. Weekly export sales of 581,479 MT were average. Season to date inspections are down more than 20% on this time last year. Informa estimated US 2016 corn plantings at 88.869 million acres versus a previous estimate of 88.93 million and 88 million in 2015. Agroconsult pegged its Brazilian corn production estimate at 85.6 MMT, down from its previous forecast of 88.5 MMT. The USDA reported 110,500 MT of US corn sold to unknown destinations for 2015/16 delivery under the daily reporting system. Ukraine are indicating that the country might see a 22% jump in spring barley plantings due to reduced winter grain sowings and possible heightened levels of winter-kill. It's possible that a similar scenario might pan out for Ukraine corn this year too. They seem to now be majoring on corn exports, with APK Inform saying that more than 89% of last week's grain exports via Ukraine seaports were corn. Mar 16 Corn settled at $3.67 3/4, up 4 1/2 cents; May 16 Corn settled at $3.72, up 4 1/2 cents.

Wheat: The wheat market closed little changed. Weekly export inspections of 340,842 MT were in line with market expectations. Season to date inspections are more than 10% lower than a year ago. Informa estimated US wheat plantings for the 2016 harvest at 51.1 million acres, down 6.4% versus 54.6 million from the USDA last year. It's said that the two cargoes of Argentine wheat sailing/expected to sail to the US port of Wilmington are carrying feed wheat and are replacing US corn as a feed ingredient. Argentina has also stepped up it's sales of milling wheat to Brazil in the past week weeks by all accounts. Japan is in the market for it's regular weekly US wheat tender this week, with the results due on Thursday. Substantial snow is said to be on the way for southern Russia and Ukraine, which may slow up shipments of wheat from that direction a little. Europe will be only too glad to pick up any spot orders that are around. May 16 CBOT Wheat settled at $4.79, up 1/2 cent; May 16 KCBT Wheat settled at $4.82 3/4, down 1 1/4 cents; May 16 MGEX Wheat settled at $5.02 1/4, down 1 1/4 cents.

EU Grains Nudge Tentatively Higher

19/01/16 -- EU grains closed mostly a touch higher. US markets re-opened following yesterday's Martin Luther King Day holiday, but activity was light.

China continues to unsettle the markets. News today that economic growth of 6.9% there in 2015, whilst stellar just about everywhere else around the globe, was actually the slowest rate of increase in 25 years. It was still however in line with expectations of "around 7%" although 0.4 points down versus 2014. Is the glass half full or half empty?

The news out of China, plus weaker than expected UK growth, had BoE governor Carney retracting his words of 2015, and indicating that a UK interest rates rise was now probably way off. Some analysts are now saying this won't now happen until 2017, contrary to the widespread belief that Q1, or Q2 at the latest, of 2016 was the most likely time that we'd see rates here finally start to rise from their historic low.

That had the pound under pressure again, lending a little bit of underlying support to London wheat. The pound was trading below 1.30 against the euro as EU grains closed.

There's precious little evidence yet that sterling weakness is stimulating export interest that much, and UK stocks are still at historically very high levels. Lucky then that the old crop/new crop spread continues to provide enough of a financial incentive for that situation to remain in place. At least for now.

At the finish, Jan 16 London wheat was GBP0.50/tonne higher at GBP109.70/tonne. In Paris, Mar 16 wheat was flat at EUR165.50/tonne, Mar 16 corn rose EUR1.50/tonne to EUR156.50/tonne and Feb 16 rapeseed was EUR0.75/tonne higher at EUR358.75/tonne.

Ukraine said that they might increase spring barley plantings by 22% this year, following lower than anticipated winter sowings and a possible rise in winter crop losses. That would take the spring barley area up to 2.2 million ha.

It's business as usual for Ukraine's grain exports, which totalled 478.6 TMT last week. That included only 51 TMT of wheat,. The remainding 427.6 TMT was corn, as they now seemingly concentrate their efforts on the latter grain.

Ukraine's barley export effort for 2015/16 is pretty much already done, it would seem. That may provide a mini boost for EU barley exports now for the remainder of the season, and these are already up 29% compared to 12 months ago.

Russia's grain exports were a bit more restricted, hampered by bad weather and their prolonged holiday hangover. Their seaports only shipped out 310.2 TMT of grain last week, of which 255.4 TMT was wheat, 17.3 TMT was corn and 31.7 TMT was barley.

Russia's total grain exports this month might fall to only around 1.5 MMT, according to Rusagrotrans. That will include around 1.0 MMT of wheat, they said. The reason for dip is given as the extended holidays and the current freeze, but "normal service" is expected to be resumed before long, especially with the value of the Russian rouble so closely tied to that of crude oil. Brent set a new 12-year low today.

EU Grains Mostly Higher, Although Fresh News Scarce

18/01/16 -- EU grains finished mixed, but mostly a touch higher, with little in the way of fresh inputs with US markets closed for Martin Luther King Day.

At the close of trading, Jan 16 London wheat was down GBP0.50/tonne at GBP109.10/tonne. In Paris, Mar 16 wheat rose EUR0.25/tonne at EUR165.50/tonne, Mar 16 corn was unchanged at EUR155.00/tonne and Feb 16 rapeseed was up EUR0.75/tonne to EUR358.00/tonne.

Brent crude did little to calm market nerves, dipping below $28/barrel for a new 12-year low as Iran welcoming back to the fold threatens to add yet more crude oversupply to the market.

The pound was firmer for a change, although that did little to help London wheat today.

Even so, Credit Suisse became the latest analyst to do an about turn on their forecasts for sterling, saying that the threat of a Brexit (and a referendum on such) could see the EUR/GBP hit 0.70 within the next 3 months. They'd previously been forecasting 0.77, so this represents significant a 10% change of heart.

On the international tender front, Thailand were said to have bought 50,000 MT of US spring wheat for March shipment, Indonesia booked 55,000 MT of Australian wheat also for March delivery and South Korea's NOFI purchased 13,000 MT of optional origin feed wheat for Feb/Mar. The latter were also said to have passed on a tender for 50,000 MT of feed wheat citing high prices.

India said that they'd planted 28.9 million ha of wheat for their 2016 harvest, which is 5% down on year ago due to heat/dryness.

Russia said that their 2015 grain harvest ended up at 104.3 MMT, which is only 1 MMT down on a year ago. Wheat accounted for 61.8 MMT of that, up 3.5% compared to 2014. Corn came in at a record 12.7 MMT versus 11.3 MMT in 2014 on a combination of increased plantings and a sharp rise in yields.

The Russians also produced a record 2.6 MMT soybean crop in 2015, and increased sunflower output by 8.2% to 9.2 MMT.

Spanish analysts AgroMarketInfo estimated the 2016 soft wheat crop there at 5.585 MMT versus 5.161 MMT last year. They see imports falling from 4.075 MMT to 3.825 MMT.

Likewise, they estimate the Spanish barley crop to rise from 6.796 MMT to 7.431 MMT, and imports falling from 795 TMT to 550 TMT.

Ditto, Spanish corn production will increase from 10.404 MMT to 10.927 MMT, and imports drop from 6.25 MMT to 5.80 MMT, they add.

US Markets Closed

18/01/15 -- US grain markets are closed today for observance of the Martin Luther King Day holiday. Trading resumes as normal in the overnight global session at midnight tonight London time.