Chicago Close - Wednesday
31/10/12 -- Soycomplex: Beans closed around 10-13 cents higher, with meal up around USD5-7 and oil generally 7-10 points higher. Funds were said to have been net buyers of around 6,000 soybean contracts on the day. The USDA reported the US soybean harvest at 87% complete. There are concerns that some crops may have been damaged/lost to the remains of Hurricane Sandy. The Rosario Grains Exchange estimated Argentina’s 2012/13 soybean area at 19.5 million hectares, up 3.7% from a year ago. FCStone are out tomorrow with their latest US crop production estimates. Last month they gave us a bean yield of 36.7 bu/acre and a crop of 2.739 billion bushels.
Corn: Corn closed around 10-15 cents firmer. The USDA reported the US corn harvest at 91% complete. The rain and snow associated with Hurricane Sandy will make getting the last 9% in a challenge. Fund buying was estimated at 10,000 contracts on the day. The Rosario Grains Exchange estimated Argentina’s 2012/13 corn area at 4.0 million hectares, unchanged from their previous estimate, but 0.4 million down on a year ago. Many alalysts are already questioning Argentina's farmers ability to get 4 million hectares planted under the current very wet conditions. FCStone are out with their latest US numbers tomorrow, last month's corn figures were a yield of 121.4 bu/acre and a crop 10.607 billion bushels. Thursday's normal weekly export sales report is delayed until Friday.
Wheat: Chicago wheat ended 5-8 cents higher, with Kansas up 2-5 cents and Minneapolis 5-7 cents firmer. The Rosario Grains Exchange estimated Argentina’s 2012/13 wheat output at 10.0 MMT versus 13.0 MMT a year ago and the USDA's current 11.5 MMT forecast. Tunisia bought 125 TMT of optional origin wheat for Dec/Jan shipment. Egypt bought 300 TMT of Russian, French and Romanian wheat for last half December shipment. The market will at least be cheered by the news that US wheat was actually the cheapest on offer on a FOB basis and only missed out due to more expensive freight. China sold around half of the 769,044 MT of wheat offered at a government auction. The USDA said that 88% of the US winter wheat crop is now planted and 63% of that is emerged. The first crop ratings of the season went 40% good/excellent and 45% fair.
EU Wheat Close - Wednesday
Wheat extended its recent winning run despite the Ukraine Deputy Ag Minister appearing to contradict the recent announcement of an impending wheat export ban.
"No wheat export ban for November 15 has been drafted," he was quoted as saying.
The Black Sea nation has exported 8.2 MMT of grains so far this season, including 4 MMT of wheat, and is now said to have raised the informal limit on wheat exports from 5 MMT to 5.5 MMT.
The last of the Ukraine corn harvest is grinding on, hampered by persistent rains in the west of the country, although these will be beneficial for winter crop establishment ahead of dormancy. The Ministry say that 90% of emerged crops are in good to satisfactory condition.
Egypt booked five cargoes of wheat in a tender, two each from France and Russia and one from Romania. There was no room for US wheat, although interestingly it was the cheapest on offer and only missed out on more expensive freight costs.
The Rosario Cereals Exchange have declared an "orange alert" in Argentina’s Pampas region as incessant rains cause flooding, delaying corn and soybean plantings and damaging winter wheat potential and quality.
In Europe "Showers increased across southern and eastern areas recently, which helped to ease dryness considerably. A very dry fall stressed rapeseed and wheat establishment in Former Yugoslavia, Romania, and Bulgaria, but the recent upturn in showers there finally improved establishment of those crops," said MDA CropCast.
"However, the return of active showers to western France and southern Spain will increase wetness concerns and disease threats there once again," they added.
Chicago Closing Comments - Tuesday
30/10/12 -- Soycomplex: Beans closed around 5-6 cents higher, with meal up USD2.20-3.50 and oil down 5-8 points. Funds were said to have been net buyers of around 4,000 soybean contracts on a day disrupted by Hurricane Sandy. The USDA crop progress report, originally scheduled for Monday night won't now emerge until tomorrow. China has imported 44.3 MMT of soybeans in the first three quarters of 2012, and will end the calendar year importing a record 57.5 MMT, according to the Ag Ministry there, a 9.3% increase on 2011. This year's Chinese soybean crop may fall as low as 10 MMT, according to some reports, versus the current USDA estimate of 12.6 MMT. That may see soybean imports in 2013 rise to an unprecedented 65 MMT. October's imports were higher than originally forecast at 4.22 MMT, say the Commerce Ministry due to low international prices. Safras place Brazil's soybean crop at 28% planted, up from 12% last week and 24% normally.
Corn: CBOT corn closed around 4-5 cents higher as fund bought an estimated 5,000 corn contracts on the day. Informa estimated Brazilian corn plantings this year at 16 million hectares, a 5% increase on last season. They also forecast Ukraine's corn crop at 18.8 MMT, 2.2 MMT less than the USDA currently project. Egypt bought 180 TMT of what is thought to be mostly Argentine corn, with South American corn still at a hefty discount to US material. Reports suggest that a Mississippi ethanol plant is to idle due to low margins, the latest in a series of closures. Continued wet weather in Argentina might see their intended corn acreage cut sharply, according to many private estimates. The Ag Ministry in Argentina place the corn crop at only 40% planted versus 55% normally. The trade expects the US corn harvest to be around 93% complete when the USDA release their delayed crop progress report tomorrow. That should keep the effects of Hurricane Sandy to a minimum.
Wheat: CBOT wheat close a cent or so lower in old crop months and around 6 cents firmer on new crop. Tunisia are tendering for 100,000 MT of optional origin wheat, and Egypt are also back in the market looking for wheat for Dec/Jan shipment. US origin is thought unlikely to feature in either. Germany sold 200 TMT of wheat to Iran. Rain is seen cutting Brazil's wheat crop which is currently in the middle of being harvested. Tomorrow's delayed USDA report will also feature the first US winter wheat crop ratings of the season. India are tendering to sell 55 TMT of wheat for Nov/Dec shipment. FCStone are out on Thursday with their November crop production forecasts and Informa are out on Friday ahead of next week's USDA numbers. The latter have already cut their Australian wheat production estimate from 23.5 MMT to 21.2 MMT, citing drought.
EU Wheat Closing Comments - Tuesday
Wheat crops around the world keep shrinking. Informa have cut their estimate for Australia's output this year to 21.2 MMT from 23.5 MMT previously, which is 1.8 MMT less that the USDA and a decline of 28% on last year.
Reuters are reporting that heavy rain in Southern Brazil's Rio Grande do Sul state could cause up to a third of the wheat crop there to be lost.
The IGC say that Ukraine's 2012 wheat crop will only total 13.5 MMT this year, a drop of 39% on 2011. Informa meanwhile pegged the corn crop there at 18.8 MMT, versus 22.8 MMT in 2011 and the USDA's current estimate of 21 MMT.
Russia's grain harvest is drawing to a close at 98% complete, producing 72.2 MMT so far, versus a final 2011 total of 95.4 MMT. Wheat accounts for 39.6 MMT of that against 56.2 MMT in 2011. The barley harvest has produced 14.5 MMT against 16.9 MMT lasy year, whilst the corn crop currently stands at 5.6 MMT off 70% of the planted area.
SovEcon say that Russia will export only 1.2-1.5 MMT of wheat in November, versus 2.5 MMT in October.
Germany sold 200 TMT of wheat to Iran. French wheat exports are picking up as the Black Sea runs dry. Egypt bought 180 TMT of mostly Argentine corn in a tender.
Prospects for 2013 do look brighter, but they are unfortunately still a long way away. Ukraine will plant 6.6 million hectares of winter wheat, against 6.3 million last year. Russia meanwhile will increase it's area from 16.0 million hectares to 16.8 million, according to its Ag Ministry.
Ukraine's Ministry says that 82% of the nation's winter grains have emerged, and that 54% of those are in good condition, and only 10% in weak/thinned condition versus 16% a year ago.
Chicago Closing Comments - Friday
26/10/12 -- Soycomplex: Nov 12 Soybeans closed at USD15.61 1/4, down 2 3/4 cents; Jan 13 Soybeans closed at USD15.63 3/4, down 2 1/4 cents; Dec 12 Soybean Meal closed at USD483.40, up USD2.00; Dec 12 Soybean Oil closed at 50.96, down 49 points. Fund selling in beans was estimated at around 2,000 contracts in end of week book squaring. Nov 12 beans were 29 1/2 cents higher on the week, with Dec 12 meal up just shy of USD20 and oil shedding 62 points. Yesterday's USDA numbers showed that the US has almost 73% of projected 2012/13 soybean sales either already shipped or on contract versus around 50% normally. Planting is just getting underway in Argentina at 2% complete versus 6% normally, according to the Buenos Aires Grain Exchange. They estimate a record 48.7 million acres of beans getting sown in Argentina this year, an increase of almost 5%. Argentina's Ag Ministry estimate their 2012/13 bean crop at a record 55-60 MMT versus the previous record of 52.7 MMT set in 2009/10. We know that South America will plant record soybean acres this year. From here on in it's weather that holds the key. In Brazil "Showers across Parana and Santa Catarina this weekend and next week should further improve moisture there. Some slight improvements are also expected in drier areas of northwestern Mato Grosso do Sul later next week, although more showers will still likely be needed there to end dryness and crop stress," say MDA CropCast. The US harvest is expected to be as much as 90% complete in Monday night's USDA report.
Corn: Dec 12 Corn closed at USD7.37 3/4, down 4 1/4 cents; Mar 13 Corn closed at USD7.39 3/4, down 4 1/4 cents. Fund selling was placed at a modest 1,000 contracts on the day. For the week Dec 12 corn was 23 3/4 cents lower and Mar 13 lost almost 20 cents. The Buenos Aires Grain Exchange say that 37% of the Argentine corn crop has been planted compared to 55% normally at this time, as rains cause delays. The Ukraine corn harvest is 76% complete at 14.47 MMT, and looks like ending up closer to 19 MMT than the 21 MMT that the USDA suggest. Exports may also fall short of USDA expectations. "Dry weather across the central and western Midwest this weekend and early next week will allow late harvesting of corn and soybeans to progress well," say MDA CropCast. The US corn harvest could reach 95% complete in Monday night's USDA report versus 87% a week ago, the trade estimates. US corn remains too expensive on the international stage compared to South American and Ukraine origin, but supplies of those should become tight by the New Year. In the meantime, US exports and demand from the domestic ethanol sector continue to lag USDA projections significantly.
Wheat: Dec 12 CBOT Wheat closed at USD8.63 3/4, down 9 cents; Dec 12 KCBT Wheat closed at USD9.09 1/4, down 5 cents; Dec 12 MGEX Wheat closed at USD9.40, down 5 1/4 cents. Funds were said to have been net sellers of around 2,000 wheat contracts on the day. For the week Chicago wheat was 8 3/4 cents lower, with Kansas wheat up 1 1/4 cents and Minneapolis down 2 1/2 cents. Concerns over the health of US winter wheat remains. "The forecast is very dry in the US heartland in the 7 day outlook. This is very unfavourable for hard red winter wheat. Conditions in the Southern Plains breadbasket have turned suddenly dry, following fairly good rainfall in September. Last week gusty winds stirred up loose dirt causing a dust veil across Nebraska, Kansas and Oklahoma, visible on satellite imagery. Root establishment in winter wheat is weak because of insufficient topsoil moisture. Only 51% of hard red winter wheat had emerged compared to 82% planted by October 21. Worsening drought this month is the reason for slow seed germination," say Martell Crop Projections. "Colder temperatures across the Plains over the next few days will result in some widespread burnback to the wheat, as temperatures are expected to dip into the 20s F in many areas," say MDA CropCast.
London Wheat Closes At 18-Month High, Within Sight Of Record
26/10/12 -- EU wheat ended mixed, but mostly firmer, to end the week with Nov 12 London wheat up GBP0.25/tonne to GBP209.50/tonne and with Nov 12 Paris wheat rising EUR1.50/tonne to EUR264.25/tonne.
For the week that places Nov 12 London wheat GBP5.25/tonne higher, whilst Nov 12 Paris wheat gained a more modest EUR1.50/tonne.
This also sets an 18-month highest closing level for a front month on the weekly chart for London wheat, which is now within GBP8.00/tonne of the all-time record closing high of GBP217.50/tonne set on 20 Apr 2011.
The market is also getting anxious about prospects for 2013, with plantings across western Europe delayed by soggy field conditions and forecasters now calling for Arctic weather to hit some areas this weekend. Nov 13 London wheat gained GBP7.50/tonne this week to close at GBP186.25/tonne, just below the lifetime contract high of GBP187.00/tonne set on Thursday.
Brussels issued 242 TMT of soft wheat export licences this past week, bringing the marketing year-to-date total to 4.9 MMT, up 9% on 4.5 MMT this time a year ago. Barley export licences are 31% up on year ago levels at 2.1 MMT.
International demand is clearly out there, and these sales come against a backdrop of aggressive Black Sea exports in Q1 of 2012/13, a factor likely to be largely missing for the remainder of the season - at least in the case of wheat.
Ukraine said that it's grain harvest is now 92% complete at 40.76 MMT, with average yields down 14% at 2.98 MT/ha. The corn harvest is ongoing, at 76% done, producing 14.47 MMT to date, which implies a final crop of around 19 MMT - not the 21 MMT that the USDA are expecting and a reduction of almost 17% on last year.
The Ukraine Ministry estimate corn exports at 12 MMT this season, half a million tonnes less than the USDA and 25% down on last year. They also confirmed this week that wheat exports will cease on 15 Nov.
Russia's Ag Ministry said that 99% of their wheat harvest is complete, producing 39.6 MMT - down 32.5 % from a year ago.
Argentina's wheat harvest is only 4% complete to date, hampered by rain which may cut yields and quality this year. The corn crop is only 37% planted against 55% normally for similar reasons, say the Buenos Aires Grain Exchange.
They estimate the Argentine wheat crop at 10.12 MMT, down 23% from 13.2 MMT a year ago and well below the USDA's forecast of 11.5 MMT.
Australia's wheat harvest is also underway, with early yields said to be pretty disappointing. Most private forecasts for wheat output Down Under this year are in the region of 19-21 MMT, versus 29.5 MMT last year and 23 MMT from the optimistic USDA.
Spain's National Statistic Institute say that Q3 unemployment there rose above 25% for the first time since 1976, with 52% of 16-24 year olds out of work.
Clearly this makes it increasingly difficult for the Spanish government to pay it's debts, increasing the likelihood of a bailout request. The market would view lending Spain more money with which to hang itself as a good thing.
Chicago Closing Comments - Thursday
25/10/12 -- Soycomplex: Nov 12 Soybeans closed at USD15.64, down 6 1/2 cents; Jan 13 Soybeans closed at USD15.66, down 6 1/4 cents; Dec 12 Soybean Meal closed at USD481.40, down USD0.50; Dec 12 Soybean Oil closed at 51.45, down 39 points. Fund selling in beans was estimated at 3,000 contracts on the day. Weekly export sales of 522,200 MT fell a little below trade estimates of 600-900 TMT. Shipments however were very strong at 1,641,600 MT of which China took a whopping 1,135,900 MT. That's the fourth week in a row that actual shipments have been above 1 MMT, and constitutes the highest weekly total since Feb 2011. This weeks sales bring total 2012/13 commitments to 25 MMT, or 72.5%, versus the USDA's projected 34.5 MMT for the entire season. The USDA also announced the sale of 120 TMT of soybeans to "unknown" for 2012/13 shipment, probably partial confirmation of some of the recently rumoured Chinese business. The Chinese government sold only around 10% of the state-owned soybean reserves it offered at auction today due to a hike in the asking price.
Corn: Dec 12 Corn closed at USD7.42, down 12 1/2 cents; Mar 13 Corn closed at USD7.44, down 12 cents. Fund selling was estimated at 10,000 contracts on the day. Weekly export sales of only 142,300 MT were a little below the relatively modest trade expectations of 150-375 TMT. That figure included decreases for China of 120,300 MT. Weekly sales of around 430 TMT are needed to achieve the USDA's projected export target of 31 MMT this season. Total commitments for the 2012/13 are only 34.7% of this USDA target at 10.7 MMT. This time last year that total was 20.5 MMT. Actual shipments were only 290 TMT, also in complete contrast to those for soybeans. The IGC cut their world corn production estimate by 3 MMT to 830 MMT, 5% down on 876 MMT last year. Ending stocks were trimmed 1 MMT to 117 MMT which is 13% down on last season. Excessive rains in Argentina may see some intended corn acres shift into soybeans. MDA CropCast cut their Argentine corn production estimate by 360 TMT from last week
to 26.65 MMT for this reason.
Wheat: Dec 12 CBOT Wheat closed at USD8.72 3/4, down 11 1/4 cents; Dec 12 KCBT Wheat closed at USD9.14 1/4, down 7 cents; Dec 12 MGEX Wheat closed at USD9.45 1/4, down 9 3/4 cents. The IGC cut it's world wheat crop estimate by 2 MMT from last month to 655 MMT, a 5% drop on last season's 690 MMT. Ending stocks were trimmed 3 MMT to 172 MMT - a 14% stocks to usage ratio. Weekly US export sales came in at 572,000 MT, a bit better than the 250-450 TMT expected. Actual shipments were 379,600 MT. Total year-to-date commitments are 14.34 MMT, which is less than half the USDA's projected 31.5 MMT. The wheat marketing year is Jul/Jun though, as opposed to Oct/Sep for corn and soybeans. Iraq has pushed back its tender to buy a nominal 50 TMT of optional origin wheat. They are expected to buy considerably more than that, although none of it is likely to be of US origin. "Export forecasts (for 2012/13) have been cut for the US and Australia in favour of bigger shipments by Russia and India," the IGC said. The trade expects US wheat exports to improve in the second half of the season.
Old And New Crop London Wheat Settle At Contract Highs
Both Nov 12 and Nov 13 London wheat both closed at lifetime contract closing highs.
Interest in Nov 13 London wheat is picking up markedly. It was trading at a GBP29.20/tonne discount to Nov 12 at the beginning of the month, that is now down to GBP22.60/tonne.
France is starting to take centre stage as the premier supplier into North Africa and the Middle East, but as we are only a third into the 2012/13 marketing year their surplus stocks could run down quickly in the middle third of the season.
That potentially leaves the US to step in and pick up the slack in the final third of 2012/13. Global inventories will be pretty tight by then.
Morocco, who are the third largest wheat buyer in North Africa, may have to import 27% more wheat in 2012/13 than last year after their soft wheat crop fell by more than a third this year after minimal amounts of rainfall from December until early March had an adverse effect on output, says the USDA attaché there.
Following China's sudden and surprising arrival in the world wheat import market, Martell Crop Projections highlight a comments from a recent Syngenta market report: "China is like an elephant in the corner. Even though it is sitting silently, it takes up the majority of the room and you cannot ignore what might happen if it does something unexpected."
The IGC report a reduction in world wheat supplies of 2 MMT from last month to 655 MMT and a reduction of 3 MMT in world 2012/13 carryout versus their September projection. Year-on-year that's a decline of 5.6% in production and over 12% in ending stocks.
They also predict a 3 MMT decrease from last month in the world corn crop this year to 830 MMT, some 5% below last year's output of 876 MMT.
IN addition "the outlook for rapeseed/canola has tightened sharply owing to reduced crop prospects in Canada. Global ending stocks are expected to fall by almost one-quarter, including a steep decline in the two major exporters," they say.
