Early Call On Chicago
15/02/12 -- The overnight grains were mostly steadier with beans ending around 5-7 cents higher, with wheat up 2-3 cents and corn flat to a cent firmer. Crude is around a dollar or so higher.
I've just heard an unconfirmed report on the radio that today's meeting of EU financial leaders to ratify Greece's austerity "deal" has been cancelled, saying that further assurances are required first. I can't find confirmation of that on the BBC or Reuters though.
This has all the hallmarks of the largest and most ludicrously false application for a loan in history. With an election due in April it would seem that the Troika are looking for assurances that a new government won't simply turn round and say "I think you'll find that it was the last lot that signed that agreement, not us."
Not only is a Greek exit from the eurozone now being openly discussed, a bit like Carlos Tevez, the BBC are now reporting that some eurozone team-mates no longer want them in the bloc.
Soybeans look the strongest of the three, indeed wheat and corn have only closed lower that night's closing levels once this month.
China has bought 116,000 MT of US soybeans for 2011/12 delivery today, say the USDA.
Oil World have cut their Brazilian soybean estimate from 70.0 MMT to 69.5 MMT and also their forecast for Parguay from 6.0 MMT to 4.6 MMT. They've increased their Argentine estimate from 46.5 MMT to 47 MMT. All three figures are below the USDA's 72 MMT, 6.4 MMT and 48 MMT respectively.
Ukraine says they have no plans to limit grain exports. There were however suggestions last week that the government had "asked" shippers to lighten up on wheat exports due to doubts over the health of the current over-wintering crop.
Regardless of the state of the 2012 wheat crop in Ukraine there is no shortage of the grain elsewhere around the globe with Western Australia state saying that they have had a 15 MMT record grain harvest this year, backing up ABARES forecast of a record 29.5 MMT wheat crop in 2011/12 released yesterday. With forecasts of exports at 22.3 MMT that would make them second only to the US in terms of being the world's largest wheat seller.
Corn is what Ukraine has plenty of, and that situation looks like being replicated in 2012/13 by virtue of a large increase in planted area this spring due to the failure of winter wheat and rapeseed.
Early calls for this afternoon's CBOT session: beans up 6-8 cents, corn flat to 2 cents firmer, wheat up 1-3 cents.
EU Rapemeal Prices
15/02/12 -- Been away for a few days, hence the lack of blogging, so I've no idea if these prices are up, down or sideways.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb12 | unq | n/a |
| Mar12 | 187.00 | n/a |
| Apr12 | 183.00 | n/a |
| May/Jul12 | 175.00 | n/a |
| Aug/Oct12 | 163.00 | n/a |
| Nov12/Jan13 | 168.00 | n/a |
| Feb/Apr13 | 170.00 | n/a |
Chicago Close - Tuesday
14/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.55, up 3 cents; Nov 12 Soybeans closed at USD12.57 1/2, down 1 1/2 cents; Mar 12 Soybean Meal closed at USD330.10, down USD0.40; Mar 12 Soybean Oil closed at 53.02, down 3 points. Soybeans continue to look the strongest of the three main grains/oilseeds to my mind. Support today came from the USDA announcing the sale of 215,000 MT of soybeans for 2011/12 delivery and 68,000 MT for 2012/13 delivery to unknown. Funds were said to have bought 4,000 soybean contracts on the day.
Corn: Mar 12 Corn closed at USD6.33 1/2, down 6 cents; Dec 12 Corn closed at USD5.64 1/4, down 2 3/4 cents. Weighing on the market was yesterday's USDA baseline forecast of 2012/13 ending stocks almost doubling to 1.623 billion bushels together with production at a record 14.235 billion bushels. Funds sold an estimated 6,000 contracts on the day on the back of that. The USDA see food. seed and industrial usage of corn rising to more than 6 billion bushels in 2012/13 with demand from the ethanol sector also increasing. I wonder if either is achievable.
Wheat: Mar 12 CBOT Wheat closed at USD6.35, down 6 1/4 cents; Mar 12 KCBT Wheat closed at USD6.75 1/2, down 7 3/4 cents; Mar 12 MGEX Wheat closed at USD8.12, down 3 1/2 cents. Funds were said to have sold 2,000 CBOT contracts on the day, as Australia increased the size of it's recently harvested wheat crop, and it's export potential, to all-time highs. The notion that US wheat has finally got itself competitive on the world export stage is however supportive. Russia looks like it's done the majority of it's selling the the first half of the season and Ukraine's exports have never really got going.
EU Wheat Closing Comments - Tuesday
14/02/12 -- EU grains finished higher with Mar 12 London wheat ending up GBP0.50/tonne to GBP164.00/tonne and Mar 12 Paris wheat climbing EUR4.25/tonne to EUR211.00/tonne. New crop London wheat was GBP2.75/tonne higher, yet Nov 12 Paris wheat was only EUR0.25/tonne firmer.
Clearly EU wheat didn't know what to do today. Rising Chicago wheat should be supportive, you'd have thought, but indications that European wheat is too expensive relative to American wheat isn't helpful.
News that Australia's equivalent of the HGCA, ABARES, had increased the size of the 2011/12 wheat crop there to a record 29.5 MMT was hardly friendly. Wheat exports are also pegged at a record 22.3 MMT, 1.8 MMT higher than the USDA predicted last week, and also an all-time high.
Winterkill doubts still linger though following the recent cold snap across Europe.
"The so far the mild winter prevented winter cereals partially from hardening and they were vulnerable to frost kill damage in western Europe but also in western Poland, Czech Republic and around the Black Sea.
"Frost kill due to the current cold spell is very likely to occur in eastern France, the Benelux countries, Germany, Poland and Czech Republic as well as in Ukraine," say EU research centre MARS.
Elsewhere doubts remain over Greece's commitment to the recently announced "done deal" on austerity, especially in the light of April elections immediately following the next tranche of bailout money due next month.
Chicago Ends Higher
13/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.52, up 23 cents; Nov 12 Soybeans closed at USD12.59, up 19 1/2 cents; Mar 12 Soybean Meal closed at USD330.50, up USD10.50; Mar 12 Soybean Oil closed at 53.05, up 52 points. The USDA issued a preliminary forecast of US plantings for the 2012 harvest pegging beans at 74 million acres, lower than other private estimates which have been roughly unchanged from 2011 at around 75 million. Funds came in for an estimated 8,000 soybean contracts on the day encouraged by news that Greece was a step closer to pushing through it's austerity measures.
Corn: Mar 12 Corn closed at USD6.39 1/2, up 7 3/4 cents; Dec 12 Corn closed at USD5.67, up 7 1/4 cents. The USDA suggested that US corn plantings would reach 94 million acres this spring, a bit lower than Informa's 94.75 million but still a significant increase on 2011's 91.9 million. If that baseline projection is correct then we'd see 2012/13 ending stocks double to 1.623 billion bushels. The USDA weekly export inspections report was a pretty poor 29.016 million bushels. Nevertheless funds came in for an estimated 10,000 contracts on the day.
Wheat: Mar 12 CBOT Wheat closed at USD6.41 1/4, up 11 1/4 cents; Mar 12 KCBT Wheat closed atUSD$6.83 1/4, up 10 1/4 cents; Mar 12 MGEX Wheat closed at USD8.15 1/2, up 1 1/4 cents. Funds bought an estimated 4,000 CBOT contracts on the day. A first success of the 2011/12 season for US wheat in Egypt's weekend tender encouraged belief that US wheat is now competitively priced with European and Black Sea origin. The USDA predicteded that the US wheat area for the 2012 harvest would come in at 56.7 million acres, a little below some other suggestions. Even so that's a significant increase on last year and would place stocks to use at almost 41% in 2012/13.
EU Wheat Looking Too Expensive
13/02/12 -- EU grains finish sharply lower with Mar 12 London wheat down GBP1.50/tonne to GBP163.50/tonne and Mar 12 Paris wheat slumping EUR3.75/tonne to EUR206.75/tonne.
Paris wheat took the hardest hit on news that it was USD20-25.00/tonne inferior to US wheat in an Egyptian weekend tender. The recent slump in the freight market is clearly helping wheat travel further for less, with Argentine wheat also featuring into North Africa of late.
Last week's widespread reports of 200,000 MT of US wheat sold to Spain will also be fresh in traders minds. European wheat is still looking too expensive to export and domestic demand is sluggish to say the least.
Nearby Mar 12 London wheat fared better than other months which closed with losses of GBP2.05-2.85/tonne.
The euro was a bit firmer on news that Greece had cleared one more hurdle as it strives to jump through hoops to qualify for the next tranche of Troika bailout money.
The Morning Rant
13/02/12 -- Greece finally got it's austerity vote through parliament I see, as protesters and police clashed outside. Eurozone ministers now need to ratify the proposed measures on Wednesday. Saying that you are going to do x,y and z to get your hands on EUR130 billion is not the same as actually doing x,y and z once you've got your greasy little mitts on the money of course, but I don't suppose that anyone has thought of that. That's just too ludicrous to contemplate isn't it?
US wheat won a rare victory in Egypt's latest tender over the weekend, coming in around USD20-25/tonne cheaper than French material. That's the first win for US wheat in the current marketing year, even if it was for only one cargo. It also seems to suggest that Paris wheat prices have got a little ahead of themselves.
My chums in the US are telling me that the effects of the removal of the ethanol blenders tax credit are finally starting to bite. That should mean reduced demand for corn from that sector, but also lower DDGS production. You could argue that to be either bullish or bearish for wheat there.
What you can't really argue against though is world wheat stocks at an all-time high, US winter wheat acres sharply higher and potentially massive US corn plantings to come.
Chicago Wheat Sharply Lower
10/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.29, up 1 1/2 cents; Nov 12 Soybeans closed at USD12.39 1/2, up 1 cent; Mar 12 Soybean Meal closed at USD320.00, down USD1.00; Mar 12 Soybean Oil closed at 52.53, down 1 points. Beans rebounded from double digit losses at one point to close the week overall 3 1/2 cents lower on the March, with meal down a more significant USD8.60 and oil closing up 88 points. The USDA announced the sale of 120,000 MT of soybeans to China. They cut soybean imports by the latter 1 MMT to 55.5 MMT yesterday, but that figure is still up more than 3 MMT on 2010/11. Year to date Chinese imports are however more than 3 MMT lower than at this time a year ago, suggesting that the USDA's 2011/12 target may have to be lowered further yet.
Corn: Mar 12 Corn closed at USD6.31 3/4, down 5 1/4 cents; Dec 12 Corn closed at USD5.59 3/4, down 8 1/4 cents. On the week corn was 12 3/4 cents lower on the March. Weakness in wheat spilled over into corn which saw the March contract close below key support at USD6.33/bu. Renewed fears of a Greek default saw the dollar sharply higher in a "risk off" move, with weaker crude oil also a negative influence. Funds were said to have sold 8,000 contracts on the day despite the USDA reporting the sale of 240,000 MT to Egypt. Ethanol margins are getting squeezed tightly with reports coming through of slowdowns and shutdowns amongst producers in the US now that the 45 cent tax break has gone.
Wheat: Mar 12 CBOT Wheat closed at USD6.30, down 16 cents; Mar 12 KCBT Wheat closed at USD6.73, down 19 cents; Mar 12 MGEX Wheat closed at USD8.14 1/4, down 17 1/2 cents. For the week as a whole Chicago wheat was down 30 3/4 cents, with Kansas dropping 39 cents and Minneapolis losing 24 1/4 cents. In amongst yesterday's USDA data was a forecast increase in US winter wheat acres of 30% to just under 42 million acres. That's why Kansas wheat took the biggest hit for the past couple of sessions. World wheat ending stocks at the highest level in history can't be anything but bearish for wheat either. Under the circumstances wheat at over six dollars/bushel looks a big price, especially if the Greek farce turns into a tragedy before long.
