Chicago Close - Tuesday
29/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.51 3/4, up 4 cents; May 13 Soybeans closed at USD14.39 3/4, up 6 1/4 cents; Mar 13 Soybean Meal closed at USD423.70, up USD3.40; Mar 13 Soybean Oil closed at 51.71, down 18 points. The market remains fixated on South American weather as they will have to provide the world with soybeans once the US run out. Oil World said that they expect the US to have shipped 83% of their projected exports by the end of February. Demand from China remains very strong, both for old crop and new crop. They are forecast to import 36% more soybeans in Q2 of 2013 than they do in Q1. Oil World said that they expect US soybean stocks to fall to a 9-year low by the end of the current season. In Brazil, the forecast for Mato Grosso is "super wet" according to Martell Crop Projections, which will continue to hamper early harvest efforts. Southern Brazil meanwhile has received little or no rainfall in the past 10-12 days, they say. Over the border daytime temperatures in Argentina yesterday rose to 92-98 F, which 8- 10 degrees above normal. Hot temperatures are expected to persist for several more days without much rainfall to compensate, they add. Agriculture Consultant Pablo Adreani said he may cut Argentina’s soybean crop estimate to 48.5 MMT from a previous estimate of 51.3 MMT (and the USDA's 54 MMT) if Argentina doesn’t get rain soon.
Corn: Mar 13 Corn closed at USD7.29 1/2, up 1/4 cent; May 13 Corn closed at USD7.30, up 3/4 cent. The same Argentine consultant mentioned above said he may cut his corn crop estimate to 25.5 MMT from a previous estimate of 27.1 MMT (and 28.0 MMT from the USDA) if adequate rains don't arrive soon. The "super wet" forecast for northern Brazil won't help second crop corn get planted. Delays in plantings could be detrimental for corn a few months from now when the dry season begins if the crop hasn't had time to thrive now in these abundant rains. Japan, the world's largest corn buyer, said that it aims to boost it's animal feed grain reserves by 44% in the fiscal year beginning in April. Much of their needs traditionally come from the US, although they have been casting the net a bit wider in the last twelve months. JC Intelligence said Chinese buyers are reluctant to buy large quantities of Argentine corn because of concerns that it won't pass China's photo sanitary requirements. The weekly ethanol production report comes out tomorrow. The bulls will be looking for an increase on last week's 792,000 bpd, which is well below the level required to hit current USDA projections. A Texas plant became the latest producer to announce a temporary shutdown today, following a spate of similar recent closures.
Wheat: Mar 13 CBOT Wheat closed at USD7.77, down 2 1/4 cents; Mar 13 KCBT Wheat closed at USD8.30 3/4, down 2 cents; Mar 13 MGEX Wheat closed at USD8.61, down 5 1/2 cents. A continued deterioration of US winter wheat crops on the Plains was confirmed last night by USDA state offices in Kansas and Oklahoma. A wetter 14-day forecast for these areas offers some glimmer of hope. Egypt's GASC said that they have enough wheat supplies to last until June. Algeria was said to have bought 500-600 TMT of optional origin durum wheat for March/May shipment. MDA CropCast said that wheat conditions favourable across much of the Middle East. In North Africa "rains this past week continued to improve moisture across northern Morocco, northern Algeria, and northern Tunisia, but dryness continues to stress wheat in southwestern Morocco and central Tunisia," they added. Unlike the UK, not everywhere around the world is in for a disastrous wheat crop in 2013. Agriculture and Agri-Food Canada estimated Canada’s 2013/14 wheat crop at 28.5 MMT, up 4.8% from last year. Ukraine's winter grain production (mostly wheat) could rise by 20 to 30 percent in 2013, a senior Ukrainian weather forecaster said. Allendale estimated the 2013/14 world wheat crop at 694 MMT, up around 40 MMT from this season.
EU Wheat Rises, Crop Conditions Support
29/01/13 -- EU wheat closed higher with Mar 13 London wheat up GBP0.60/tonne to GBP214.05/tonne, May 13 up GBP1.55/tonne at GBP216.00/tonne and new crop Nov 13 firming GBP0.60/tonne to GBP190.05/tonne. Front month Mar 13 Paris milling wheat gained EUR0.25/tonne to close at EUR247.50/tonne.
The weakness of the pound continues to underpin wheat in London relative to that in Paris, along with the ongoing very poor UK crop conditions and the outlook for another domestic production disaster in 2013.
Wheat also drew support via news from across the pond that US winter wheat conditions had worsened considerably in the top two producing states of Kansas and Oklahoma compared with last month and the last weekly USDA report released at the end of November.
In Kansas 39% of the crop is now rated as poor/very poor, versus 31% a month ago and 25% at the end of November. In Oklahoma poor/very poor conditions are now a whopping 69%, from 61% at the end of December and 44% in late November. The proportion of Nebraska wheat rated poor/very poor is now 50%.
"If there is any god news on winter wheat potential it would be a favourable crop in the Pacific Northwest, where soft white wheat is grown. Washington, the leading grower, reporting a very promising crop from generous winter precipitation and no significant freeze damage," reported Martell Crop Projections.
The Russian Ministry are lowering their forecast for 2012/13 grain exports from 15.5 MMT to 14.0 MMT, according to the Prime News Agency. That's exactly half the volume exported in 2011/12.
The latest official figures pegged exports so far this season at just over 13.0 MMT as of 16 Jan, meaning that very little grain will leave the country between now and the end of the season. Ending stocks meanwhile are now estimated at 9 MMT, less than half the volume left over at the end of last season.
Rumours of potential imports abound, even if the government don't waive the 5% duty on foreign wheat shipments.
India continue to take advantage of the current relatively high wheat price and dwindling international availability, releasing another 125,000 MT of milling wheat for export overnight, this parcel being for Feb 20 - Mar 31 shipment via the east coast port of Krishnapatnam.
Ag Canada say that they expect all wheat production there this year to come in at 28.5 MMT, 4.8% up on last year due to a combination of increased plantings and better yields. The Canadian Wheat Board yesterday forecast that wheat plantings this season would be 5-10% higher than last year’s 23.8 million acres.
Ag Canada estimated the country's 2013 barley crop at 9 MMT, up 12.5% on last year, with canola output seen at 15.5 MMT, a 16.5% increase on 2012.
EU Rapemeal Values
29/01/13 -- Rapemeal prices on the continent are generally a little lower today despite a firmer tone to soymeal values.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:
| Feb13 | 273.00 |
-2.00 |
| Mar/Apr13 | 267.00 |
-3.00 |
| May/Jul13 | 242.00 |
-2.00 |
| Aug/Oct13 | 202.00 |
unch |
| Nov13/Jan14 | 204.00 |
-1.00 |
| Feb/Apr14 | 204.00 |
-1.00 |
| May/Jul14 | 202.00 |
-3.00 |
US Wheat Conditions Deteriorate Further
In the top US winter wheat producing state of Kansas only 20% of the crop is now rated good/excellent (with only 1% in the top category), down from 24% at the end of December and 29% in the last USDA weekly report at the end of November.
The crop is now rated 39% as poor/very poor, versus 31% a month ago and 25% at the end of November.
Very considerable declines, made all the more shocking by the news that the ratings at the end of November were the worst on record for the US winter wheat crop heading into dormancy.
"Temperature averages for the month of January over most of the State were two to five degrees above normal. Rainfall was received in most areas of the State, with all 53 stations recording at least trace amounts of moisture for the month, but none received an inch or more," the report says.
Things are even worse in neighbouring Oklahoma, the second top wheat producing state in the US. Here the US Drought Monitor continues to report that the entire state is in a severe to exceptional drought. None of the crop at all is rated excellent and only 5% good, versus 11% at the end of December and 14% in late November. Poor/very poor conditions meanwhile are now a whopping 69%, from 61% at the end of December and 44% in late November.
Chicago Moves Higher To Start The Week
28/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.47 3/4, up 6 3/4 cents; May 13 Soybeans closed at USD14.33 1/2, up 7 1/2 cents; Mar 13 Soybean Meal closed at USD420.30, up USD3.90; Mar 13 Soybean Oil closed at 51.89, down 21 points. Funds were said to have been modest net buyers of around 2,000 soybean contracts on the day. The anticipated mass exodus of buying interest to South America doesn't seem to have begun yet, with China buying 220 TMT of soybeans for 2013/14 delivery, the USDA announced today under the daily reporting system. It is interesting that they have been recent featured buyers of new crop beans as news starts to circulate of vessels lining up in Brazil waiting to load beans. Truck freight rates are said to have risen in the last week and those increases are expected to accelerate as harvest progress. The early soybean harvest in Mato Grosso is said to be 7.1% complete with yields variable, but generally in line with expectations. Last week's robust US export sales mean that weekly old crop sales now only need to be 111,000 MT to hit the USDA target for 2012/13. Weekly export inspections today were 40.667 million bushels - 1.1 MMT. Weather forecasts for South America offer little change, abundant rains for northern Brazil which will hamper the early harvest, and dryness in Argentina.
Corn: Mar 13 Corn closed at USD7.29 1/4, up 8 1/2 cents; May 13 Corn closed at USD7.29 1/4, up 7 3/4 cents. Fund buying was estimated at a net 3,000 corn contracts on the day. The excessive rains in northern Brazil that are hindering the early harvest of soybeans could also therefore have a negative impact on second crop corn plantings in those areas. Export inspections of 21.127 million bushels (around 537 TMT) beat expectations of 5-15 million for a change, adding a bit of support. This total actually beat the level required to hit the USDA's target for exports of 26 MMT in 2012/13, something that hasn't been happening too much lately. Vietnam is tendering for 50 TMT of optional origin corn, with Malaysia looking for 60 TMT of the same. US exports have been dragging all season so far, recent data from the Energy Dept and last week's announcement of another ethanol plant closure may mean that demand for corn from that sector will fall short of the USDA projections of 4.5 billion bushels too. It will also therefore be a concern that livestock numbers in the US are falling based on Friday's cattle on feed report.
Wheat: Mar 13 CBOT Wheat closed at USD7.79 1/4, up 2 3/4 cents; Mar 13 KCBT Wheat closed at USD8.32 3/4, up 3 1/4 cents; Mar 13 MGEX Wheat closed at USD8.66 1/2, up 1 1/2 cents. Weekly export inspections of 22.283 million bushels (around 606 MMT) beat trade expectations and may provide another small hint that the anticipated pick up in demand for US wheat finally has arrived. Jordan and Bangladesh are tendering for wheat, the results of the recent Syrian tender are also expected any time now, although it may be unlikely that US wheat will feature into any of these. Nevertheless, whoever wins it leaves less wheat in circulation. European exports are well ahead of last year, Ukraine and Russia are effectively sold out and Australian prices are rising. US winter wheat on the Plains got only very light rains over the weekend, and the outlook is for continued dryness. The Canadian Wheat Board said that the 2013 wheat area there may be 5-10% higher than last year’s area of 23.8 million acres.
EU Wheat Mixed, Weak Pound Supports London Market
London wheat once again garnered some support from the pound slipping to it's lowest level since August 2012 against the US dollar and below 1.17 against the euro for the first time since Dec 2011.
The weekend widespread snow and subsequent rapid melt and flooding will have done little to improve the already pretty dismal crop prospects for the UK harvest in 2013. Still, the destiny of UK prices will be heavily influenced by production across Europe and beyond, as much as what is going on here. New crop Ukraine corn is said the be available at a substantial discount to the Nov 13 London wheat future.
Defra are due to issue revised estimates for UK supply & demand on Wednesday, with wheat imports likely set to rise above the current 2 MMT forecast.
Jordan are tendering for 100 TMT of optional origin wheat for March/April shipment. Syria's tender for wheat is now closed, with the results due in the next few days. Morocco is tendering to buy 176 TMT of soft wheat on the domestic market. Egypt remains absent, although that may have more to do with the ongoing civil unrest in the country than playing the market.
The last couple of week's worth of export sales from the US indicate that things are picking up for them. Both have been ahead of the required level to hit the USDA's targeted level of 29.5 MMT of foreign sales in 2012/13.
They will need to maintain that momentum, but might just do it as supplies elsewhere around the world tighten. The market is also focused on US winter wheat conditions which are very far from ideal on the Great Plains.
"Weekend precipitation was near expectations. Light rain showers occurred in eastern CO, northern KS, southern NE, far eastern OK and eastern TX. Amounts were 0.10 to 0.50 inches with less than 10% coverage. Isolated rain and snow showers will be confined to western NE, eastern CO, eastern OK and eastern TX from today through Tuesday. Amounts through Friday will be 0.10 to 0.75 locally up to 2.0 inches with less than 10% coverage," said MDA CropCast
State-by-state crop condition updates will be released later today, although many are expecting little to no improvement.
Canadian farmers hope to plant 5-10% more wheat for the 2013 harvest, according to the CWB. Potential margins for wheat are said to be significantly better than those of other grains like oats and rye.
Ukraine said that it exported 1.6 MMT of grains during the Jan 1-25 period, bringing the 2012/13 marketing year-to-date total to 15.8 MMT, an increase of 46% on last year. Wheat exports have now hit the 6 MMT mark and will be reduced to a trickle, if anything, for the remainder of the season.
Chicago Closing Comments - Friday
25/01/13 -- Soycomplex: Mar 13 Soybeans closed at USD14.41, up 5 3/4 cents; May 13 Soybeans closed at USD14.26, up 2 1/4 cents; Mar 13 Soybean Meal closed at USD416.40, up USD1.70; Mar 13 Soybean Oil closed at 52.10, down 1 point. For the week nearby beans rose 10 3/4 cents, meal USD2.00 and oil 42 points. The USDA reported weekly export sales of almost 1 MMT versus expectations of 700 TMT-1.2 MMT, although it was interesting to see new crop (595 TMT) outstrip old crop. Ever present China took 210 TMT of old crop and 355 TMT of new crop. The remainder of the new crop sales were marked as "unknown". Sales/shipments for 2012/13 are now 90% of the USDA forecasts. In addition to these there were also sales of 126 TMT of optional origin old crop beans to China along with 246 TMT of new crop. The world's largest soybean buyer would appear to be putting a little "insurance" down with these purchases from the US, knowing full well that supply disruptions are pretty inevitable in South America this year. Safras e Mercado estimated this year's Brazilian soybean crop at 84.7 MMT, versus CONAB’s estimate of 82.7 MMT and the USDA's 82.5 MMT forecast. The Buenos Aires Cereals Exchange said 97.4% of Argentine soybeans are now planted versus 96.4% a year ago. The Rosario Grain Exchange said that so far forward selling has been light, with only only 5 MMT of the 2013 crop currently sold versus 10 MMT this time a year ago.
Corn: Mar 13 Corn closed at USD7.20 3/4, down 3 1/2 cents; May 13 Corn closed at USD7.21 1/2, down 2 3/4 cents. Mar 13 corn was 6 3/4 cents lower on the week. Unlike soybeans, US corn sales continue to lag, with the USDA only reporting weekly export sales of just 138,500 MT of old crop and 51,300 MT of new crop. Total commitments are now 55% of the USDA target, versus 63% normally. Domestic demand from the ethanol sector if also waning, judged on the last couple of week's worth of data from the Dept of Energy. POET, one of the biggest US ethanol producers, today announced that it was mothballing a facility in Missouri due to poor margins and difficulties in sourcing corn locally. This is just the latest in a spate of recent ethanol plant closures. The Buenos Aires Cereals Exchange said 94% of the Argentine corn crop is now planted versus 97% a year ago. The Rosario Grain Exchange estimated Argentina’s corn crop at 26.5 MMT versus the USDA's 28.0 MMT forecast. There's continued talk of dryness being a potential problem for shallow rooted corn in Argentina. The latest weather forecast calls for below normal rains in the upcoming week, according to Martell Crop Projections. Indonesia bought 25 TMT of Indian corn for Jan shipment. Vietnam is looking for 50 TMT of optional origin corn for Feb shipment. Malaysia seeks 60 TMT of South American corn for March shipment.
Wheat: Mar 13 CBOT Wheat closed at USD7.76 1/2, up 8 cents; Mar 13 KCBT Wheat closed at USD8.29 1/2, up 8 cents; Mar 13 MGEX Wheat closed at USD8.65, up 9 1/2 cents. That puts Chicago wheat 14 3/4 cents lower on the week, with Kansas wheat down 14 1/4 cents and Minneapolis falling 11 cents. Weekly export sales from the USDA beat expectations of 300-550 TMT at 572,500 MT of old crop (beating the required 430,800 MT needed to hit USDA targets), along with 75,000 MT of new crop which included a 55,000 MT sale to China. Exports of 559 TMT were almost double last week and the 4-week average. Nevertheless net commitments so far this season are only 72% of the USDA target versus 85% normally at this time. The Rosario Grain Exchange pegged this year's Argentine wheat crop at only 9.3 MMT, versus 15.5 MMT a year ago and the USDA's current estimate of 11.0 MMT. Next week should see us get an update from USDA state departments on winter wheat crop conditions. On the weather front "the continued drier trend across the central and southern Plains will maintain low moisture supplies there," said MDA CropCast. "Our latest 16-30 day temperature outlook has trended cooler across the northern Plains and Midwest, and warmer in the Southeast. The cooler trend across the northern and eastern Midwest would increase risks of winterkill there for the wheat, while winterkill risks should be low in the central and southern Plains," they added.
EU Wheat Trading Sideways
25/01/13 -- EU grains were mixed with Mar 13 London wheat unchanged at GBP213.00/tonne, May 13 also unchanged at GBP214.00/tonne and new crop Nov 13 up GBP0.30/tonne to GBP187.30/tonne. Mar 13 Paris milling wheat was EUR0.50/tonne firmer to close at EUR247.25/tonne.
For the week as a whole that places May 13 London wheat GBP1.00/tonne lower, Nov 13 London wheat GBP1.25/tonne weaker and Mar 13 Paris wheat EUR0.75/tonne easier as the trade adopts a sideways pattern.
Brussels reported that they'd issued 354 TMT of soft wheat export licenses this past week, taking the cumulative marketing year-to-date total to 10.8 MMT. That's now almost 37% up on this time last year.
Currently the USDA only have the EU-27 down to export 8.6% more wheat this season than in 2011/12, yet the pace of shipments versus this time a year ago has been steadily increasing since the beginning of November (see chart).
That would suggest that 2012/13 ending stocks in Europe may ultimately be far tighter than the 10 MMT that the USDA currently have factored in - and that number is the lowest this century.
So who is going to pick up the slack? Not Russia that's for sure, they've just reported Jan 1 grain stocks of 25.3 MMT, down almost 30% on this time a year ago. Rumours persist that they may need to import wheat to see them through to the 2013 harvest, a notion flatly denied by the Deputy PM it has to be said.
Ukraine have also hung up the "sold out" sign now that wheat exports have hit the 6 MMT mark.
The Rosario Grain Exchange today estimated Argentina’s recently harvested wheat crop at just 9.3 MMT, versus a previous estimate of 9.5 MMT and the USDA's current over optimistic looking 11.0 MMT. That's a drop of 40% on last year's 15.5 MMT if the local exchange's forecast is correct, which would obviously impinge on their ability to export the 7.5 MMT in 2012/13 that the USDA are persisting with.
US wheat exports meanwhile do finally seem to have picked up, with the USDA today revealing weekly export sales of 572,500 MT of old crop plus a further 75,000 MT of new crop (most of which was for China). Physical shipments of 559 TMT meanwhile were almost double last week and the 4-week average.
India are newly arrived on the wheat export scene after a succession of record harvests and another potentially on the way, although their reputation in terms of quality is less than sparkling.
Australia still has wheat to sell, although their harvest was down by more than a quarter this season and their prices aren't the most competitive around. Canada also has wheat to market, although it's generally a premium product at a premium price.
Syria are expected to announce the results of their recent wheat tender early next week.
