Kazakhstan Hits Grain Harvest Target
12/10/11 -- Kazakhstan have reached their 25 MMT grain harvest target with 6% of the crop still left to harvest I see.
Having cut 15.1 million hectares, or 93.7% of the planted area, this season's harvest now stands at 25.7 MMT - 89% up on last year. That's a record for the post Soviet era I believe and will leave them well placed to attempt to reach their targeted 10 MMT of exports in 2011/12.
Throw in Ukraine's stated 24 MMT export ambitions for the current season and there's no collective shortage of grains waiting to come out of the FSU - Russian export duties or not.
Me Old China
12/10/11 -- China took advantage of the recent break in prices to buy 1.5 MMT of corn and 700,000 MT of soybeans on the international stage, according to media reports this morning.
State-run grain buyer Sinograin also bought 100,000 MT of soyoil, according to the same reports.
It's unconfirmed if any of this came was of US origin, although it's likely that at least some of the beans and corn were. Argentina is probably the likely favourite supplier of the oil. Some reports on Twitter suggest that "at least 900,000 MT" of the corn was of US origin.
Everybody always seems to get excited when China are in the market, particularly for corn, although before we get too carried away 1.5 MMT is only 1.6% of world trade in corn and less than 0.2% of world production - an amount similar to that imported by Peru.
Morning All - This Russian Thing
12/10/11 -- Well, it's over to you the USDA. Second guessing what they will come up with has proven to be nigh on impossible of late, so I'm not even going to make an attempt.
Instead let's have a look at this Russian export duty thing that emerged from out of the woodwork yesterday. The nitty gritty seems to be this...they wish to cap grain exports at around 24 MMT for the marketing year. The plan seems to be to introduce export duties once that target is met. As they've already shipped 10.7 MMT that leaves 13.3 MMT left to go before that happens.
At current rates that means we will hit that target around the end of February. However that conveniently ignores the fact that Russian shipments normally slow up anyway once the worst of the winter hits.
Deputy PM Zubkov wouldn't be drawn on saying what form any duties would take to restrict exports. If they are meant to effectively cap exports then we can only assume that they would be fairly punitive.
So based on the information we have at the moment it may be fair to assume that Russia could be effectively hanging up the "sold out" sign for the last quarter (Apr/Jun) of 2011/12.
However that assumes that neighbouring Ukraine and Kazakhstan don't steal much in the way of export business from Russia. In the case of the former in particular that seems highly unlikely.
Ukraine have largely sat out of the export market up until now whilst they've been awaiting the removal of export taxes of their own. Now that they have, I think we can expect a much more aggressive showing from them as they try to cram their ambitious export target into what's left of 2011/12.
This announcement will also not have gone unnoticed by Egypt, who may well decide to re-evaluate it's recent stance of putting almost all of it's eggs back into the Russian basket.
Egyptian officials are said to have recently been in Ukraine in an attempt to iron out a three year dispute over grain quality, and Ukraine did undercut even Russia in a recent tender.
The next few Egyptian tenders will certainly be interesting.
Kazakhstan meanwhile have recently announced their intention to export 1.0-1.2 MMT per month of their potentially post-Soviet era record grain crop for what's left of 2011/12 too.
All in all I don't see that the Russian news is much of a game-changer, we just might start to see a few more different names on the score sheet in the second half of the season.
Chicago Close
11/10/11 -- Soybeans: Nov 11 Soybeans closed at USD12.35 1/2, up 58 cents; Jan 12 Soybeans closed at USD12.46 1/4, up 57 1/2 cents; Oct 11 Soybean Meal closed at USD316.90, up USD12.20; Oct 11 Soybean Oil closed at 51.95, up 209 points. Heavy fund buying ahead of tomorrow's USDA report was a major feature with them adding an estimated 25,000 contracts in what was said to be a record volume day for beans. European debt optimism and a weaker dollar helped the cause. Estimates for tomorrow peg the US soybean crop at 3.102 billion bushels with 2011/12 ending stocks increasing to around 185 million bushels. After the close the USDA said that soybean harvesting was 51% complete.
Corn: Dec 11 Corn closed at USD6.45, up the daily 40 cent limit; Mar 12 Corn closed at USD6.57 1/2, also up 40 cents. Funds were said to have bought 30,000 contracts in the run-up to tomorrow's USDA report. Private exporters announced the sale of 261,200 MT of corn to Mexico and harvest progress was pegged at 33% complete after the close, up from 21% a week ago. Trade estimates for tomorrow put the US corn crop at 12.479 billion bushels with yields at 148.73 bpa. US ending stocks for 2011/12 are estimated around 805 million bushels, with world ending stocks at 120 MMT.
Wheat: Dec 11 CBOT Wheat closed at USD6.60 3/4, up 49 1/4 cents; Dec 11 KCBT Wheat closed at USD7.29 3/4, up 43 3/4 cents; Dec 11 MGEX Wheat closed at USD9.36 1/2, up 2 1/4 cents. The large open short position in Chicago was always going to leave the market vulnerable to a rally like this ahead of a major USDA report I guess. Not that tomorrow is likely to throw up any major surprises for wheat, but it might do for corn. Funds were said to have bought 7-8,000 CBOT contracts on the day. Reports of the possible imposition of export duties on Russian grain exports added to the bullish tone. Tomorrow's USDA report is expected to show US ending stocks of 733 million bushels and world stocks at 194.6 MMT.
EU Wheat Close
11/10/11 -- EU grains finished sharply higher with Nov London wheat up GBP3.65/tonne to GBP151.00/tonne and Nov Paris wheat climbing EUR7.75/tonne to EUR191.75/tonne.
Grains were lower to narrowly mixed for much of the day but jumped into the close on news out of the blue that Russia was considering introducing export duties on grains.
Short-covering ahead of tomorrow's USDA reports also seemed to be a factor.
The word out of Russia late in the day was that they may decide to introduce some sort of export levy system due to the frenetic pace of foreign sales so far during the 2011/12 marketing year.
They've certainly been an aggressive adversary as far as EU and US wheat is concerned, although it should be noted that Ukraine may be only too willing to step into the void, if one should appear, having just got it's own export duties scrapped in order to compete with it's neighbour. Kazakhstan too would be eager to seize any advantage offered to it by virtue of limits on Russian sales.
Other news suggests that a deal has been done between the EU/IMF and ECB to allow Greece to get it's next tranche of bailout funds in early November and thus avoid an imminent default. The market is still awaiting news from Slovakia as to whether they will pass or veto proposals to approve the guarantee of EUR7.7 billion toward the EFSF bailout fund.
Elsewhere French grains institute Arvalis say that record corn yields this year are "guaranteed" at a minimum of 10 MT/ha with around 40% of the crop in the bin.
The Morning Rant
11/10/11 -- Back from a weekend away on the lash I wouldn't so much say I'm refreshed as destroyed. Driving around North Yorks at the weekend I have to say that young wheat and OSR crops are by and large looking really rather good, thanks no doubt to the recent rains.
The general mood amongst my mixed bunch of compatriots wasn't good and these are guys across a broad section of industry from construction to computers. Job losses, lack of funding, cut backs, short time at work, there wasn't a lot of optimism out there.
Surprising then that the vibe in the financial markets yesterday seemed to be one of cautious optimism (when IS this market going to learn), but the jitters seem to be back this morning ahead of a Slovakian vote later this afternoon on whether they'd like to join the rest of the eurozone by having a whip-round for EUR7.7 billion to chuck into the EU bailout fund.
Elsewhere I see that the Australian wheat crop is getting bigger according to the Commonwealth Bank of Australia, although I've also been hearing of reports of frost damage. Spoke to my brother in Melbourne this morning and he says it's "pretty nippy" over there comparing it to March back home in Blightly.
Ukraine's grain harvest is 86% done at 43.67 MMT, with corn harvesting not yet at the halfway point. They're still harvesting in Kazakhstan too, with almost 10% of the planted area left to be cut they've brought in a grain crop of 24.1 MMT.
A woman in the US ran the Chicago marathon at the weekend, went home for a sandwich and then straight to hospital to have a baby, report the BBC. No doubt leaving her distraught husband to do the dishes and put her running kit on a "smelly synthetics" wash - the lazy cow.
Chicago Close
10/10/11 -- Soybeans: Nov 11 Soybeans closed at USD11.77 1/2, up 19 1/4 cents; Jan 12 Soybeans closed at USD11.88 3/4, up 18 3/4 cents; Oct 11 Soybean Meal closed at USD304.70, up USD4.60; Oct 11 Soybean Oil closed at 49.86, up 79 points. The USDA's usual Monday crop progress report is delayed a day due to Columbus Day. Soybean harvesting is expected to be around 50% complete. There wasn't a lot of fresh news to go on. Hopes that EU leaders are close to sorting out a credible rescue package for Greece and recapitalising ailing EU banks in general lent support with funds coming in to buy an estimated 8,000 soybean contracts on the day. Traders are expecting 3.102 billion bushels for US soybean production from the USDA on Wednesday with a small increase in ending stocks for 2011/12 to around 185 million.
Corn: Dec 11 Corn closed at USD6.05, up 5 cents; Mar 12 Corn closed at USD6.17 1/2, up 4 3/4 cents. Corn closed in positive territory but off session highs. Optimism for something positive to come out of a weekend meeting between France and Germany to finally resolve the ongoing European debt crisis was maybe tempered by a degree of scepticism that we've seen all this hot air come to nothing concrete on more than one occasion before. Still, funds were said to have bought 5-7,000 contracts on the day. In Wednesday's USDA report the trade is looking for a US corn production number of 12.479 billion bushels, with an average yield estimate of 148.7 bu/acre.
Wheat: Dec 11 CBOT Wheat closed at USD6.11 1/2, up 4 cents; Dec 11 KCBT Wheat closed at USD6.86, up 1 1/2 cents; Dec 11 MGEX Wheat closed at USD9.34 1/4, up 14 3/4 cents. Wheat also slid from early highs with funds given credit for buying around 2,000 CBOT contracts on the day. Minneapolis continues to lead the way establishing a more than USD3/bu premium over Chicago. Beneficial rains arrived for much of the HRW areas in the southern Plains over the weekend. Wednesday's USDA report is expected to show US ending stocks for 2011/12 at 733 million bushels. World ending stocks are seen at 194.64 MMT, almost identical to last month.
EU Wheat Closing Comments
10/10/11 -- EU grains finished mostly firmer but off session highs with Nov London wheat up GBP0.60/tonne to GBP147.35/tonne and Nov Paris wheat climbing EUR0.50/tonne at EUR184.00/tonne.
The pound rose to 1.5675 against a weak US dollar but fell to 1.1475 versus the euro, the latter buoyed by positive comments following a weekend meeting by Germany and France.
An EU summit to discuss the European debt crisis has been delayed by a week to give EU leaders more time to finalise plans to recapitalise it's banks and Greece, says the president of the European Council.
Weekend rains for US winter wheat areas on the southern Plains were less than anticipated, according to Martell Crop Projections.
"Central Texas got was the big winner with 3-5 inches of rainfall. Oklahoma wheat areas received 1.0 - 2.5 inches of rain, but less in the northern growing areas. Kansas rainfall was extremely variable ranging from .25 inch to 6 inches with 65% coverage. Rainfall was expected to be 3-5 inches across the board in the Southern Great Plains. Dry weather is expected to resume the next 10 days, along with above-normal temperatures on the High Plains," they say.
Elsewhere "Argentina was hit with drenching rainfall in the farm belt that restored field moisture for corn planting. Eastern Cordoba, southern Santa Fe and northwest Buenos Aires received at least 3-5 inches in the heart of the Argentina corn belt. Flooding occurred further north with 6-8 inches of rain. Dry fields have been replenished, which will lead to rapid advancement of corn planting," they add.
