Chicago Closing Comments - Wednesday Night
04/12/13 -- Soycomplex: The market closed higher, but is still trying to reconcile strong nearby demand for US beans and meal against projected record South American production getting ever closer. There's some talk that rains in Brazil's leading soybean state of Mato Grosso might be too much of a good thing. Abiove estimated the Brazilian soybean crop at 86.6 MMT versus a previous estimate of 86.0 MMT. That's a record, although towards the low end of current trade forecasts. They see Brazil's 2013/14 soybean exports at 44 MMT, similar to the USDA. Dr Cordonnier left his Brazilian soybean production estimate unchanged at a record 90 MMT, but raised his forecast for Argentina by 1 MMT to an also record 56 MMT. Brazilian growers are said to have only been relatively light forward sellers of their 213/14 soybean crop. On a national level Safras e Mercado say that 33% of the 2013/14 Brazilian soybean crop is sold versus 48% a year ago. Stats Canada forecast the Canadian canola crop at a record 18 MMT, up sharply from 13.9 MMT last year and the 16 MMT estimated in October. That was right at the top end of trade estimates of 16.6-18.0 MMT. Oil World estimated China’s 2013/14 soybean imports at 69.7 MMT versus a previous estimate of 69.0 MMT and 59.9 MMT in 2012/13. Some are thinking that tomorrow's weekly export sales for soybeans may come in around the 1 MMT mark, others point to the fact that this would be in a holiday shortened week, so they may in fact come in a bit lower than that. Jan 14 Soybeans closed at $13.29 1/2, up 9 3/4 cents; Mar 14 Soybeans closed at $13.12 1/4, up 7 3/4 cents; Dec 13 Soybean Meal closed at $447.90, up $1.80; Dec 13 Soybean Oil closed at 40.14, up 24 points.
Corn: The corn market closed around 4-5 cents higher, shrugging off reports that China was continuing to reject some US corn consignments due to them containing traces of the non-approved MIR 162 variety. Almost 94% of China's Jan/Oct corn imports came from the US, according to Reuters. The USDA announced 165,750 MT of US corn sold to Mexico, split 132,600 MT for 2013/14 delivery and 33,150 MT for 2014/15 delivery. Stats Canada pegged the 2013/14 corn crop there at 14.194 MMT versus an average estimate of 13.3 MMT. That's up sharply from their previous estimate of 12.942 MMT and compares favourably with the 2012/13 crop of 13.06 MMT. Dr Cordonnier estimated the 2013/14 Brazilian corn crop at 68.5 MMT, unchanged from previous estimate. He estimated the 2013/14 Argentine corn crop at 24.0 MMT down 1 MMT from his previous estimate of 25.0 MMT. The US Energy Dept reported weekly US ethanol production at 913,000 barrels/day, down from 927,000 bpd last week, but above the level of around 900,000 bpd required to hit the USDA target for the season. Funds were said to have been decent net buyers on the day, covering in an estimate 9,000 contracts of their hefty short position in CBOT corn. There's a feeling that this trend will continue as we head towards year end. Estimates for tomorrow's weekly export sales report are around 850-950,000 MT which may be ambitious. Dec 13 Corn closed at $4.25 1/2, up 3 1/2 cents; Mar 14 Corn closed at $4.36 1/2, up 5 1/4 cents.
Wheat: The wheat market crashed lower, following the news from Stats Canada that this year's wheat crop there was a bin-busting 37.5 MMT. Not only is that a record by some distance, it is also far higher than the average trade guess of 33.8 MMT, and well above even the highest estimate in the ring (35.3 MMT). Canadian barley production was also pegged above the top end of trade estimates at 10.24 MMT. The Canadian wheat crop last year was only 27.1 MMT and barley production was 8 MMT. The news was bearish, especially following a similar surprisingly bullish wheat production report from Australia's ABARES only yesterday. Weakness in the Canadian dollar will also help their exports to the detriment of US wheat. China is seen buying 3-4 MMT of Australian wheat in 2013/14, limiting sales from the US. The trade will now be monitoring an Arctic air blast set to send temperatures plunging across almost the entire US during the next week, although some are now saying that things may not be quite as cold as was forecast yesterday. MDA Weather Services say that about 5% of the US HRW wheat crop is at risk from winterkill. Russia's winter grains plantings (mostly wheat) stand at 14.7 million hectares versus 15.8 million in 2012 and 15.9 million in 2011. Informa yesterday forecast the 2014 Russian wheat crop at 48.5 MMT. Trade estimates for tomorrow's weekly export sales report for wheat are around 450-550 TMT. Dec 13 CBOT Wheat closed at $6.47 1/4, down 6 1/2 cents; Dec 13 KCBT Wheat closed at $7.09 1/4, down 2 1/2 cents; Dec 13 MGEX Wheat closed at $6.72 1/2, down 12 1/4 cents.
EU Wheat Claws Higher Despite Record Canadian Production
04/12/13 -- EU grains closed mostly higher with Jan 14 London wheat ending up GBP0.95/tonne at GBP165.20/tonne and Jan 14 Paris milling wheat settling EUR1.50/tonne firmer to close at EUR213.00/tonne. Feb 14 Paris rapeseed rose EUR0.75/tonne to EUR378.25/tonne, whilst Jan 14 Paris corn closed EUR0.50/tonne higher at EUR182.00/tonne.
Whilst Paris milling wheat may be clawing it's way gradually higher, front month London wheat hasn't closed outside the GBP163-166/tonne range since Oct 18.
To close higher at all was impressive, considering that Stats Canada came out with an all wheat production estimate there of 37.5 MMT this year. That is a record volume by some considerable distance, way above the 33 MMT forecast in October and also much higher than the range of trade estimates of 33.3-35.3 MMT.
They also reported a 2013/14 Canadian barley crop of 10.24 MMT versus trade expectations of around 9.4-9.5 MMT and the 8 MMT estimated in October.
The news comes hot on the heels of a surprisingly large forecast for Australian wheat production yesterday from ABARES. US wheat futures fell a little, but not a great deal in the wake of the Canadian news. A wheat market that doesn't move down, or not by much, in the face of such overtly bearish news is interesting.
There's trade talk of possible damage to US winter wheat is keeping US price losses to a minimum. "The coldest winter temperatures in several years are predicted in the United States expected to last for at least a week. Arctic air sinking into the US heartland will drop temperatures into the single digits F in Kansas and -10 on Colorado feed lots," said Martell Crop Projections. Some traders see maybe 5% of the winter wheat crop as being vulnerable to winterkill this week.
Robust EU exports also underpin the market. FranceAgriMer said that Q1 soft wheat exports (Jul/Sep) were 4.2 MMT, up from 3.2 MMT in 2012/13. Barley exports also rose from 1.4 MMT to 1.8 MMT. French commercial wheat stocks as of Nov 1 were 12.1 MMT, some 1 MMT down on a year previously despite a rise in output this year. Commercial barley stocks were also down, by 1.4 MMT to 4.0 MMT, they said.
A large/close to record fund short position in US wheat and corn futures heading into the year end is seen as supportive to the market in the near term, They are expected to close out some of these positions for profit-taking and book squaring purposes over the next few weeks, leading to increased buying regardless of the fundamentals.
Russia bought 19,169 MT of intervention grains today in their twice weekly purchase. The total volume bought to date this season is only 443 TMT out of their originally declared intention to buy 2-3 MMT by the end of the calendar year. They will do well to buy that volume before the end of the season at this rate.
The Russian harvest may now exceed the Ministry forecast of 90 MMT in clean weight, their head said today. They've currently harvested a grain crop of 95.3 MMT off 95% of the planned area. Wheat accounts for 54.1 MMT of that total.
Ukraine's harvest is 99% complete at a record 62.8 MMT, versus only 46.2 MMT a year ago.
Tunisia bought 100 TMT of wheat and 75 TMT of barley for Jan/Feb shipment, both of optional origin. Algeria purchased 100 TMT of wheat for Jan shipment. French wheat is thought likely to supply both countries.
EU Rapemeal Prices
04/12/13 -- Rapemeal prices on the continent are little changed today, with the exception of the nears which are displaying their usual sign of seasonal tightness in availability that we often get at this time of year.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Dec13 |
Unq
|
n/a
|
| Jan14 |
245.00
|
+3.00
|
| Feb/Apr14 |
236.00
|
unch
|
| May/Jul14 |
220.00
|
-1.00
|
| Aug/Oct14 |
210.00
|
+1.00
|
| Nov14/Jan15 |
212.00
|
unch
|
| Feb/Apr15 |
213.00
|
-1.00
|
The Morning Vibe And It Might Nearly Be Time To Root Them Old Boots Out
04/12/13 -- The overnight Globex market trades with corn a couple of cents weaker, wheat up 1-2 cents and beans 3-6 cents firmer. Chinese rejections of US corn is the big story, although at only a couple of cents lower the market currently seems relatively relaxed about the issue at the moment. More relaxed than I'd be if I was a shipper with a boat load of US corn on the way to China.
A report on Reuters suggests that there's almost 2 MMT of US corn en-route to China right now. They've apparently rejected a total of around 180 TMT of US corn since they first found traces of the non-approved MIR 162 variety in shipments from the US last month.
At the very least this is going to cause delays in unloading US corn consignments as they are held up pending customs clearance. The issue would appear to provide Ukraine, Brazil and Argentina with a window of opportunity - not that the latter appears to have much corn left to sell ahead of new crop.
It might also provide an opportunity for someone like South Korea if they can take in a couple of corn boats at short notice.
It's not the sort of news that the US corn market needs, not on the back of a record 14 billion bushel harvest. The bulls/US corn growers will be hoping that the fact that ethanol production margins in the US are very robust will underpin prices. The US Energy Dept will probably report another big week for ethanol production, and therefore corn usage, later this afternoon.
I suspect that the reason that we aren't seeing corn slumping to fresh lows on this latest Chinese news is that we are now heading into year end, and fund money is sitting on a very large short position in CBOT corn. Hence some significant fund buying is likely to take place during the month of December, maybe even it's already started, as they bank some profits and square off a few positions.
In other news, soybean growers in Parana state have just about got all their soybeans for the 2013/14 harvest planted, and 98% of the crop is said to be in good condition with 11% of the crop already flowering, according to Dr Michael Cordonnier.
Despite that, growers only have 20% of their anticipated 2013/14 soybean crop forward sold versus 35% a year ago.
New crop prices being not as good as they were last year, and at a substantial discount to old crop values, would appear to be the reason for that. Even so, current new crop prices are in excess of the equivalent of $13/bu, which is still pretty reasonable.
The situation is mirrored in Mato Grosso where farmers are 44% sold versus 64% this time last year. On a national level Safras e Mercado say that 33% of the 2013/14 Brazilian soybean crop is sold versus 48% a year ago - and that is only up one percentage point in a month.
To me this suggests that the potentially huge Brazilian crop on the way could be met with a large wave of spot selling once the harvest is underway. Brazilian growers infamously don't have a lot of "stick it in the store and wait for a better day" options open to them.
That could put the market under pressure in early the new year. "Remind me again, when do we often see a dip in the soya market, Nogger?" I hear you ask. Erm, that would be February based on historical data going back 30 years.
Here's a little chart I created last week for somebody, showing the highs and lows in Chicago soymeal across the last four years: CBOT Meal 2010-13
Of course it can't be as easy as that every year, that would just be like going into the bookies and knowing that your horse was already in the winners enclosure before you put your bet on. Where's the fun in that? I want a bit of a run for my money. "And as they enter the final straight its Don't Tell The Missus from That Git Piggot followed by I Bleedin Knew It and half a length back to Come On You Beauty...."
So you will note immediately of course that Feb 2011 was entirely the wrong time to be buying soymeal, but that was the year that a severe drought cut production in Brazil and Argentina very sharply. In the other 3 years putting your name on some meal sometime in the Jan/Mar period would have been a very smart move. And I'd settle for backing three winners in four.
On the basis that as things stand it looks like another bumper year for South American soybean production early in 2014, and that Brazilian growers could be fire-sale sellers at harvest time, I'd be currently thinking about rummaging under the stairs for them old boots and a shovel across the Christmas shut-down, in readiness for an opportunity early in 2014.
Another factor to consider is that by Apirl/May, and possibly even March, we will almost certainly be starting to see logistical problems manifest themselves in Brazil. This has to be especially likely with a potentially record 88-90 MMT crop, given all the problems that they had earlier this year and that availability from the US will be much tighter by then.
Also don't forget that a major fire at the Brazilian port of Santos on Oct. 18 wiped out one of the world's largest sugar terminals. The sugar that would of been exported from here is now being handled by various facilities, potentially piling further pressure on the ones that also handle the shipment of grains. Brazil's 2013/14 sugar cane crop is forecast at record levels too.
Disclaimer: What happened in the past has no relation whatsoever to what is going to happen in the future. That's what me old mate Confucius told me. When I asked him if I was doing the right thing by marrying MrsN#2.
Chicago Closing Comments - Tuesday
03/12/13 -- Soycomplex: Beans closed slightly lower on old crop, and at around the middle of the day's trading range, whilst prices for the 2014/15 harvest were steadier. Rumours that a Chinese buyer was looking to cancel at least six cargoes of US beans scheduled for Jan delivery were unsettling. The weak US dollar however was supportive. There are signs that South American soybean supplies are decreasing. Brazil’s Trade Minster said Brazil exported 647,900 MT of beans in Nov, down sharply from 1.5 MMT in October. Informa Economics forecast the 2013/14 Brazilian soybean crop at a record 88 MMT, up 1.3 MMT from previously. That's in line with the USDA, but below some other trade forecasts - Dr Cordonnier suggests 90 MMT for example. Informa put the Argentine soybean crop at a record 59.5 MMT - the highest estimate in the market that I am aware of. Stats Canada are due to release their December numbers tomorrow, with the trade expecting Canadian canola production to be forecast at a record 16.9 MMT versus 16.0 MMT previously. ABARES estimated the Australian canola crop at 3.4 MMT, down 15% versus last year's crop of 4.0 MMT. Jan 14 Soybeans closed at $13.19 3/4, down 1 1/2 cents; Mar 14 Soybeans closed at $13.04 1/2, down 1 1/2 cents; Dec 13 Soybean Meal closed at $446.10, down $0.90; Dec 13 Soybean Oil closed at 39.90, down 44 points.
Corn: The corn market closed around 5-6 cents higher despite concerns over Chinese rejections due to some recent US corn shipments there containing non-approved GMO varieties. This could lead to cancellations and/or reduced Chinese interest in purchasing US corn. Nevertheless very robust ethanol margins are likely to see domestic demand in the US remain strong. The huge discount that currently exists versus wheat is also seen as being supportive, whilst producer selling remains subdued at these levels. There are signs that Argentina's old crop corn supplies are running low, they only exported 339 TMT of corn in October, down 68% versus September and down a similar percentage versus October 2012. There's a fairly widespread belief that the government vastly overstated Argentina's 2012/13 corn crop. There's talk that persistent wet weather will see a greater proportion of this year's French corn crop get cut for silage, possibly reducing the corn for grain crop to around 14.5 MMT versus 15 MMT last year. Informa cut their forecast for the EU-28 corn crop by 1.1 MMT to 66.4 MMT. Brazil's crop was cut by 0.5 MMT to 70.6 MMT, with Argentina's unchanged at 25 MMT. Ukraine's harvest estimate was raised 1 MMT to 28.5 MMT. The trade will be looking for the Energy Dept to confirm strong demand from the ethanol sector tomorrow. Last week's report had US ethanol output at 927,000 barrels/day in the previous week. Dec 13 Corn closed at $4.22, up 5 1/2 cents; Mar 14 Corn closed at $4.31 1/4, up 6 3/4 cents.
Wheat: Wheat closed around 4-7 cents higher across the three exchanges. Egypt's GASC bought one cargo of Romanian wheat in its tender. US wheat wasn't offered, although that is likely to be down to the shipping period requested being not very friendly for shipment from US - Dec 20-31. US wheat is expected to be in the ballpark for shipment in the new year though, especially if the dollar keeps falling as many think it will. ABARES surprised the market a little by increasing their forecast for the Australian 2013/14 wheat crop from 24.5 MMT to 26.2 MMT. That compares with 22.5 MMT last year and the current 2013/14 USDA estimate of 25.5 MMT. A strong rebound in output in WA, up from 7.3 MMT last year to 9.6 MMT this time round, was behind much of the increase although prospects in SA and VIC have also improved since their last report, they said. Stats Canada will also release updated Canadian wheat production estimates tomorrow, with the all wheat crop expected to come in at around a record 33.8 MMT, up 24% on last year's 27.2 MMT. Russia's wheat harvest is 98% complete at 54.1 MMT, according to the Ag Ministry. They've also harvested 16.3 MMT of barley off 95.5% of the planned area. Winter grains planting in Russia seems to have more or less ground to a halt at 14.7 million hectares versus the intended 16.4 million. Ukraine's winter grains planting is said to be over at a little over 7.7 million hectares, around 500k less than originally forecast. Dec 13 CBOT Wheat closed at $6.53 3/4, up 4 cents; Dec 13 KCBT Wheat closed at $7.12, up 7 cents; Dec 13 MGEX Wheat closed at $6.86 3/4, up 5 1/2 cents.
EU Grains Mostly Higher On Strong Export Demand, Despite Australian Crop Upgrade
03/12/13 -- EU grains closed mostly a little firmer, on ideas that the strong pace of EU wheat exports that has been witnessed so far in 2013/14 will continue - if not accelerate.
Jan 14 London wheat ended unchanged at GBP164.25/tonne, Jan 14 Paris wheat finished EUR1.50/tonne firmer at EUR211.50/tonne, Jan 14 Paris corn closed EUR2.75/tonne higher at EUR181.50/tonne, whilst Feb 14 Paris rapeseed was flat at EUR377.50/tonne.
Algeria is seeking 50,000 MT of optional origin milling wheat for Jan shipment, whilst Tunisia is tendering for 109,000 MT of optional origin milling wheat and 75,000 MT of optional origin barley for Jan/Feb shipment. French wheat is likely to be the favoured origin. Egypt are also back in the market for wheat, with Romania, France and Germany all in with a shout.
The EU Commission yesterday pegged the 2013 soft wheat crop here at 134.2 MMT, the highest since 2008. The corn crop was estimated at 65.1 MMT (down from 65.9 MMT previously, but up 10.5% on last year) and the barley crop at 59.0 MMT.
Corn production in western parts of Europe is seen lower. Analysts think that the French corn crop may now only amount to 14.5 MMT versus 15.0 MMT last year, with the German crop seen down from 5.5 MMT in 2012 to more like 4.7 MMT in 2013. Italy's corn crop is forecast also to decline by around 15% to 6.7 MMT. All of these reductions are due to wet weather, either at harvest time (as in the case of France), or in the spring. A larger proportion of the French crop is also seen being downgraded as suitable only for silage/whole crop usage.
In contrast, corn crops in Eastern Europe are at abundant levels. The Hungarian crop is seen 45% higher at 6.8 MMT, with Romania's output up 79% at 9.75 MMT and Bulgaria's forecast up 47% at 2.5 MMT. Ukraine is also expected to have a record crop of around 29 MMT, up almost 29^%, this year. All of these nations are aggressively exporting corn at cheap prices.
ADAS said that almost 95% of the intended UK wheat acreage was planted by the end of November, along with 96% of oats and all of the winter barley and OSR.
For winter wheat "good weather and soil conditions, and memories of autumn 2012, prompted an increase in early drilling this year, with the earliest crops drilled in early September. The settled weather allowed rapid progress until mid-October when rainfall caused some disruption with later sowings," they added.
The Ukraine Farmers Association estimated the country's November grain exports at a record high of 4.2 MMT versus 3.4 MMT in October. That total included a record 3.4 MMT of corn, as they really step up their efforts to export the latter. Russia remains also an aggressive exporter of corn.
The Ukraine Ministry forecast spring 2014 grain plantings up 300k ha versus this year at 8.7 million hectares. Much of that is expected to go into corn and soybeans.
The Russian government bought 25,245 MT of grains for intervention today, that brings the total purchased so far in 2013/14 to 424 TMT.
Their grain harvest is now 95% done at 95.3 MT, including 54.1 MMT of wheat, 16.3 MMT of barley and 10.3 MMT of corn. The Ag Ministry said that they expect 2013/14 grain exports to reach 20 MMT, of which around 14 MMT will be wheat.
Australia's ABARES forecast the wheat crop there at 26.2 MMT, up 16.4% on last year, and up from their previous estimate of 24.5 MMT. They put the barley crop at 8.6 MMT, up a similar percentage on last year, with canola production seen down 15% at 3.4 MMT.
Chicago Corn Slumps To Fresh Lows Before Late Recovery
02/12/13 -- Soycomplex: Beans slumped on a combination of strong US producer selling, beneficial South American weather, fund selling and spillover weakness from corn. The Argentine Ministry said that soybean planting there is past halfway at 54% done. They have the 2013/14 soybean area at 20.646 million hectares, although some estimates are above 21 million as growers eye much more attractive soybean prices versus corn. Dryness in October and early November may also be responsible for a greater switch into beans and away from corn than the market had hitherto expected. The USDA attaché in Argentina estimated the 2013/14 soybean crop at a record high 57.5 MMT, fully 4 MMT more than the USDA's own official figure of 53.5 MMT. Current weather conditions in Argentina, Brazil and Paraguay are said to be more or less ideal. Safras e Mercado said as of Nov 29 Brazilian soybean planting on a national level was 88% complete versus 78% a week ago 86% a year ago. Very early beans in Brazil's Mato Grosso could be getting harvested in little more than a month. Record production is also expected here. Weekly export inspections of 52.623 million were below the recent impressive pace, and less than the 60-70 million expected. Corn slumped to new lows, adding to the negative tone. Funds were estimated to have been net sellers of around 7,000 soybean contracts on the day. Jan 14 Soybeans closed at $13.21 1/4, down 15 1/4 cents; Mar 14 Soybeans closed at $13.06, down 11 3/4 cents; Dec 13 Soybean Meal closed at $447.00, down $9.60; Dec 13 Soybean Oil closed at 40.34, up 12 points.
Corn: The corn market slumped to fresh lows on rumours that China had cancelled a further two cargoes of US corn due to them containing non-approved GMO varieties. By the close of play though, the market had recovered to close around unchanged levels. The Argentine Ag Ministry said that corn planting there is 48% complete versus 62% a year ago. They have the 2013/14 corn area estimated at 5.714 million hectares. Argentina’s Buenos Aires Grain Exchange estimates planting progress at 43.5% done. Ukraine's corn harvest is 94% complete and is a record 28.369 MMT already. Russia's corn harvest is 80.5% done at a record 10.3 MMT. Both are aggressive sellers, with Russian corn reportedly heading into Germany amongst others. The Russian port of Novorossiysk is said to have shipped a record volume of corn last month. Ukraine corn is going all over Europe and into Asian buyers. Spain's corn imports were down 87% in September year-on-year. Spanish Q1 2013/14 corn imports are 12% lower than last season at less than 729 TMT. A French scientist's controversial 2012 report that GMO corn caused tumours in rats has been withdrawn as the small sample size means that "the results presented - while not incorrect - are inconclusive," according to a report on Reuters. Weekly US corn export inspections of 35.661 million bushels were better than last week's 30.259 million and take inspections for the season so far to 320.662 million bushels versus 209.319 million a year ago. Funds were early net sellers, but judged to have been around even on the day as profit-taking kicked in. Dec 13 Corn closed at $4.16 1/2, up 1 1/4 cents; Mar 14 Corn closed at $4.24 1/2, unchanged.
Wheat: Wheat crashed around 5-8 cents lower across the three exchanges. Weekly export inspections of 15.5 million bushels may have been up a little on last week, but are hardly staggering considering that US wheat is supposed to now be amongst the cheapest in the world on an FOB basis. India are a thorn in the side, tendering to sell 370,000 MT of wheat for export in the Jan-Feb time frame. Plantings for the 2014 Indian wheat crop are ahead of normal, and a possible record crop in excess of 95 MMT may be on the cards next year. Harvesting of that will begin late March. Bangladesh is tendering for 50,000 MT of wheat to start the week. Late reports suggest that Egypt is also back in the market for wheat for Dec 20-31 shipment. The results of that will be closely watched by the market tomorrow, with French wheat securing the business last week. They will probably be the favourites again. Algeria tendered for 50,000 MT of optional origin milling wheat for January shipment. French wheat is usually their favoured origin. Both Stats Canada and Australia's ABARES are due out with revised crop estimates this week. The EU Commission today raised their forecast for the 2013 soft wheat crop here to 134.2 MMT, the highest since 2008. There's talk that the freezing temperatures that are in the forecast for the US Plains this week may cause damage to some wheat unprotected by snow cover. US wheat is heading into winter dormancy in much better condition than a year ago. The USDA's weekly crop condition reports are now over until the spring. Dec 13 CBOT Wheat closed at $6.49 3/4, down 5 1/4 cents; Dec 13 KCBT Wheat closed at $7.05, down 8 1/4 cents; Dec 13 MGEX Wheat closed at $6.81 1/2, down 5 1/4 cents.
EU Grains Mixed As US Corn Losses Trims Early Gains
02/12/13 -- EU grains closed narrowly mixed, after Paris wheat had earlier raced to fresh 6-month highs. Gains were pared back later in the day though when the Chicago market turned lower on corn, which was then rapidly followed by wheat and soybeans.
The session ended with Jan 14 London wheat down GBP0.25/tonne at GBP164.25/tonne, Jan 14 Paris wheat was EUR0.25/tonne firmer at EUR210.00/tonne, Jan 14 Paris corn was up EUR1.00/tonne at EUR178.75/tonne and Feb 14 Paris rapeseed fellEUR0.50/tonne to EUR377.50/tonne.
Everything was green across the board in early trade, but reports that China had rejected another two cargoes of US corn due to them containing non-approved GMO varieties quickly turned CBOT corn red as it fell to fresh 3 1/2 year lows, and other US markets followed, with that weakness also spilling over in European grains.
The pound hit it's best level against the euro since January, and managed to rise above 1.64 versus the US dollar for the first time since August 2011 - potentially making imports of wheat and corn even cheaper. That also took some of the shine off UK wheat.
It's the same old story for EU wheat. Cheap early season sellers like Romania, Russia and Ukraine now have little left to sell, leaving the door open for premium sellers like France and Germany to mop up demand from buyers North Africa and the Middle East. US wheat is cheaper, but has a hefty freight disadvantage into these homes. India still has plenty of wheat to sell, but not everybody likes their quality.
India's winter wheat planting for next year's short-cycle crop (harvesting begins late March and just about done by the end of April) is in fact now well advanced. The top producing state of Uttar Pradesh has already sown 6.38 million hectares, a 5-year high for this time and 17% more than last year. Nationally, almost 18 million hectares of winter wheat has been sown versus 15.8 million a year ago. An Indian Ministry official forecast production in 2014 at a potential record 95 MMT.
The government are actively seeking to sell wheat prior to the influx of another bumper new crop harvest, with state-owned stocks far outweighing recommended buffer levels. The government support price for 2014 was recently raised again from the level offered last season, to help ensure that growers plant well again. The plan seems to be working. The only problem is that the government now have to sell this wheat at a loss once storage and various other costs are factored in.
Russia exported 2.26 MMT of grain in the Nov 1-27 period, including 1.54 MMT of wheat, 539 TMT of corn and 143 TMT of barley. Year to date exports are up 16% on last year at 13.64 MMT.
Russia's harvest now stands at 95.3 MMT off 95% of the planned area. That includes 54.1 MMT of wheat and 16.3 MMT of barley. Their corn harvest is 80.5% complete, producing a crop of 10.3 MMT to date.
The major Russian port of Novorossiysk on the Black Sea exported 751 TMT of grains in November, 6% less than in October, but 24% up on November 2012. That volume included 462 TMT of wheat (down 32% versus October), 45 TMT of barley (down 53%) and a record 244 TMT of corn. They are currently said to be loading a 47 TMT consignment of corn for Germany - an unusual home for Russian corn - as they look to spread their export wings afield. Clearly they are following Ukraine's lead in producing and exporting much larger volumes of corn than they ever have before.
The Ukraine grain harvest is 98% done at a record 62 MMT, up 36% on a year ago. Corn harvesting is 94% complete, producing a crop of 28.4 MMT so far (also a record). The Ukraine Ministry said that 98% of winter grains have now emerged and 92% of crops are in good/satisfactory condition. There's no sign yet of the current civil unrest in the country causing any disruption to grain supplies, but the situation warrants monitoring.
Protests are beginning to heat back up in Egypt too, which may signal further wheat import tenders.
Spain imported 348 TMT of wheat in September, only half the level shipped in during the same month in 2012. Corn imports were down even more, 87%, to 188 TMT. They had a bumper grain crop this year.
It's looking like Argentine wheat production could have taken another hit this year though, if the Ministry are to be believed. That could limit their export effectiveness again in 2013/14.
There's a blast of Artic air forecast to "sink southward out of Western Canada into the Great Plains and Upper Midwest, causing sub-zero F temperatures Wednesday-Friday nights," according to Martell Crop Projections. Some are talking of this causing potential damage to some recently planted, and unprotected by snow, US winter wheat.
