Chicago Dips Following USDA Data - Led By Wheat
10/12/13 -- Soycomplex: The much-awaited USDA report was neutral to a little friendly for beans, subsequent modest losses may have been down a bit of pre-year end profit-taking. Maybe this report simply wasn't bullish enough, even if the USDA did trim US soybean ending stocks from 170 million bushels to 150 million? Whilst world production was raised from 283.5 MMT to 285 MMT, and ending stocks upped from 70.2 MMT to 70.6 MMT, these increases were less than the market expected. Argentine soybean production was raised from 53.5 MMT to 54.5 MMT, and Brazil's crop was left unchanged at 88 MMT. Chinese imports were also unchanged at 69 MMT. Separately, Brazil's Conab pegged the 2013/14 soybean crop there at just over 90 MMT. Abiove estimated Brazil’s 2013 soybean crush at 35.4 MMT (only 60% of the current crushing capacity), down from 36.4 MMT in 2012. They are clearly looking to major on soybean exports rather than crush, with Conab estimating these at 45.9 MMT in 2013/14. China's Nov soybean imports were 6.03 MMT, up 44% versus October. Cumulative Jan/Nov imports now stand at 56 MMT versus 52.5 MMT in 2012. The Chinese are said to have crushed 60.2 MMT of soybeans so far this year, up 9% from a year ago. Jan 14 Soybeans closed at $13.38 1/4, down 5 1/2 cents; Mar 14 Soybeans closed at $13.22, down 4 3/4 cents; Dec 13 Soybean Meal closed at $464.10, up $2.50; Dec 13 Soybean Oil closed at 39.91, down 14 points.
Corn: The corn market closed around 1-2 cents lower on an overall neutral to slightly friendly USDA crop report. They raised world production from 962.8 MMT to 964.3 MMT and cut global ending stocks from 164.3 MMT to 162.5 MMT (versus the expected 163.3 MMT). There was a 1 MMT increase for the Ukraine crop to a record 30 MMT, and production in both Brazil and Argentina was left unchanged at 70 MMT and 26 MMT respectively. Local analysts Conab and Safras e Mercado both see the Brazilian corn crop far higher. Conab today estimated production at 78.8 MMT, and Safras said 77.2 MMT earlier in the week. The USDA cut US corn ending stocks from 1.887 billion bushels to 1.792 billion, versus the average trade guess of 1.871 billion due to increases in US ethanol use and exports. China’s production estimate was unchanged at 211 MMT as were imports at 7 MMT. There's talk of China maybe starting to test DDGS for traces of the non-approved MIR 162 variety that is currently holding up corn imports from the US. The US Energy Dept will report on weekly ethanol production tomorrow, last week's report gave us a weekly grind of 913,000 barrels/day. Russia's corn crop is 89% harvested at 11.3 MMT, with yields at record levels. Morocco imported 580 TMT in Q1 of 2013/14, with most of it coming from South America, according to local customs data. A second shipment of Ukraine corn is said to have landed in China as part of an inter-governmental deal for Ukraine to ship 2 MMT to the Chinese in 2013/14. Dec 13 Corn closed at $4.27 1/2, down 1 cent; Mar 14 Corn closed at $4.36, down 2 cents.
Wheat: This report has come in bearish for wheat in two out of the last three years, and today the USDA made that three out of four. The market was expecting maybe a 20 million bushel cut to US wheat ending stocks in 2013/14, and instead it got a 10 million increase to 575 million bushels. They also raised their global wheat production estimate from 706.4 MMT to 711.4 MMT, usurping last week's 711 MMT forecast from the FAO. World ending stocks were increased from 178.5 MMT to 182.8 MMT versus the 179.1 MMT expected. Argentine production was expected to fall 1 MMT to 10 MMT, but instead was left unchanged. Canadian output was raised from 33.2 MMT to 37.5 MMT, bringing the USDA into line with last week's Stats Canada number. Australian output was also increased 1 MMT to 26.5 MMT. Clear evidence that Japan is switching away from US spring wheat to Canadian origin is unsettling for US export prospects. Japan imported almost 900 TMT of Canadian Western Red Spring wheat in Apr/Nov, a 40% increase on last year. Imports of US Dark Northern Spring wheat meanwhile have slumped by a third to less than 600 TMT in the same period. Today the Japanese bought 111,173 MT of Canadian Western Red Spring wheat in a tender and no US origin material. Conab forecast the Brazilian wheat crop at 5.32 MMT, up 11% from their previous estimate and versus the USDA's 4.75 MMT. Strong buying interest from Brazil is what has been supporting the US market of late. Dec 13 CBOT Wheat closed at $6.29 1/2, down 9 1/2 cents; Dec 13 KCBT Wheat closed at $6.94 1/2, down 9 cents; Dec 13 MGEX Wheat closed at $6.58 3/4, down 9 1/4 cents.
EU Grains Slip Heading Into USDA Report
10/12/13 -- EU grains closed mostly lower, with the exception of malting barley, heading into the December world supply and demand numbers from the USDA, which only came out just as our markets were wrapping up.
The session ended with Jan 14 London wheat down GBP1.60/tonne at GBP162.80/tonne, Jan 14 Paris wheat was EUR3.25/tonne easier at EUR205.75/tonne, Jan 14 Paris corn was down EUR2.50/tonne at EUR177.00/tonne and Feb 14 Paris rapeseed slumped EUR6.50/tonne to EUR365.25/tonne.
This was the first time that a front month on London wheat had closed outside of the recent narrow trading range of GBP163-166/tonne since mid-October.
The trade was expecting that a possible 1 MMT decrease in wheat production in Argentina would be more than offset by rises for Australia and Canada this afternoon's USDA report.
Stats Canada stunned the market last week by projecting the all wheat crop there at a record 37.5 MMT, which is far higher than the USDA's November estimate of 33.2 MMT and 38% up on a year ago.
That was followed by a FAO forecast for a global all wheat crop of 711 MMT in 2013/14, which is 5 MMT more than the USDA said last month despite it containing a relatively low ball estimate for Canada of "only" 34.9 MMT.
Japan bought 111,173 MT of western red spring Canadian wheat in a tender today. They are reported to have been buying Canadian Spring Wheat in preference to the more expensive US Dark Northern Spring variety of late.
They are said to have bought almost 900 TMT of the former during the Apr/Nov period, an increase of 40% on last year. In contrast purchases of US Dark Northern Spring wheat are down by a third in the same period to less than 600 TMT.
Ukraine said that it's 2013/14 marketing year to date grain exports (Jul 1-Dec 9) were up 20% on last year at 15.353 MMT. Corn is now the leading grain being exported (7 MMT), followed by 6.3 MMT of wheat and almost 2 MMT of barley. The Ag Ministry recently increased their forecast for full season grain exports to 32.5 MMT, up more than 40%, or nearly 10 MMT, on 2012/13.
Russia and Ukraine have both seen an exponential jump in corn production in recent years, a trend that looks set to continue into 2104 and beyond, as growers adopt more Westernised agronomy methods and plant higher yielding hybrid varieties much more extensively.
The Russian Ministry said that they expect this year's corn planted area of 2.1 million hectares to grow to 5 million ha by 2020, when they hope to be harvesting a crop of 25 MMT. Annual production was only 3 MMT as recently as 2010.
Ukraine's corn crop is expected to be close to 30 MMT this year, treble the volume produced only a few years ago. Exports meanwhile are seen up 360% in the past 3 years.
Russia bought 22,680 MT of grains for its intervention fund today, taking the total purchased so far this year to just under 466 TMT. The Russian corn harvest is 89% complete, producing a record crop of 11.3 MMT. Yields are averaging an all time high of 5.29 MT/ha.
In their review of the 2012/13 crop year the EU Commission's MARS unit said: "On balance, the EU-28 yields for cereals are favourable and well above both last year’s levels and the five-year average. For soft wheat as well as durum wheat, yields at EU-28 level are close to the five- year average, mediocre yields in France and the UK for soft wheat are offset by good yields in Hungary, Bulgaria and Germany."
"Rapeseed yields are close to the five-year average, as low yields in France and the UK are compensated by those of Germany, Poland and the Czech Republic," they added.
Chicago Grains Mostly Higher Heading Into USDA Report
09/12/13 -- Soycomplex: Beans and meal posted sharp gains, led by nearby months, heading into tomorrow's USDA report. That is expected to show 203/14 US soybean ending stocks falling from last month's 170 million bushels to around 155 million (from within a range of 118-170 million) on continued strong demand. To highlight the latter the USDA today confirmed the sale of 230,000 MT of US soybeans sold to China for 2013/14 delivery, along with a further 60,000 MT for 2014/15 delivery. In addition, weekly export inspections of 60.430 million bushels were robust once more and beat the expected 48-55 million. Oil World estimated China’s 2013/14 soybean imports at new record 70.0 MMT, and 1 MMT more than the USDA's current projection. Will they nudge that up a bit tomorrow? AgRural said that Brazil's soybean crop is 94% planted, up 5 points from last week and 4 points ahead of this time last year. Safras e Mercado estimated the Brazilian 2013/14 soybean crop at a record 89.453 MMT versus the previous all time high 2012/13 crop of 82.125 MMT. Conab come out tomorrow with their Brazilian 2013/14 crop estimates. Last month they estimated plantings at 29.5 million hectares, with production at 87.9-90.2 MMT. Wet and humid conditions in the north of Mato Grosso are said to be raising Asian rust concerns. The average trade guess for Brazilian soybean production tomorrow is 88.736 MMT, with Argentine output forecast at an average 55.329 MMT. Jan 14 beans closed at 13.43 3/4, up 18 1/4 cents; Dec 13 meal closed at $461.60, up $14.30; Dec 13 soybean oil closed at 40.05, down 23 points.
Corn: The corn market closed around 3-4 cents firmer, with funds reportedly continuing to close out short positions ahead of year-end and tomorrow's USDA report. They were estimated to have been net buyers of around 5,000 contracts on the day. Tomorrow's USDA report is expected to show 2013/14 US corn ending stocks at around 1.86-1.87 billion bushels versus 1.887 billion previously. The Argentine corn crop is seen falling from 26 MMT last month to around 25.5 MMT this time round, with Brazil's crop maybe slightly higher than the 70 MMT forecast last month at around 70.3-70.4 MMT. Conab are also out tomorrow, last month they forecast Brazil's corn crop at 78.5-79.2 MMT. Safras e Mercado estimated the Brazilian corn crop at 77.238 MMT versus the 2012/13 crop of 82.070 MMT. They said that 99% of the summer corn crop has been planted versus 97% a year ago. As you can see these local estimates are far higher than where other trade forecasts are lining up. Weekly US export inspections for corn came in at 40.246 million bushels, higher than the expected 28-32 million. The Russian corn harvest is ongoing, producing 11.3 MMT to date. Talk that China has rejected, or is holding, around 10-15 US corn cargoes at various ports due to them containing unapproved GMO strains is bearish, but as long as funds need/desire to cover in their shorts heading into year end then the market will remain supported. Dec 13 corn closed 4 1/2 cents higher at $4.28 1/2; Mar 14 corn was up 3 3/4 cents at $4.38.
Wheat: The wheat market closed mixed across the three exchanges. Weekly export inspections were fair at 19.76 million bushels, and beat the low ball 11-15 million that the trade was expecting. Extremely cold temperatures across almost the entire US is raising the prospect of some winterkill in wheat, although losses are not expected to be higher than 5% and possibly as low as 1% depending on who's opinion you run with. Tomorrow's USDA report is seen trimming US 2013/14 ending stocks from the 565 million bushels estimated last month to around 540-550 million. Argentine wheat production is seen falling from the 11 MMT estimated last month to 10 MMT this time round, but increased output in Canada and Australia should more than compensate for that. World wheat ending stocks in 2013/14 are seen rising to around 179 MMT from 178.5 MMT last month. Safras e Mercado estimated the Brazilian wheat crop at at 5.525 MMT versus 4.698 MMT in 2012/13. There's talk that Egypt could be back in the market for wheat this week after last week's winning bid subsequently got cancelled. The French Farm Ministry estimated soft wheat plantings there to be 89% complete and said that the final area would amount to 4.9 million hectares, a 1.2% drop on last year. Winter barley plantings are seen almost 1% higher at 1.15 million hectares, they added. Dec 13 CBOT wheat closed at $6.39, up 1 3/4 cents; Dec 13 KCBT wheat closed at $7.03 1/2, down 1 3/4 cents; Dec 13 MGEX wheat closed at $6.68, up 5 cents.
EU Grains Mostly Lower, But Still Trades Sideways, USDA Report May Provide Direction
09/12/13 -- EU grains closed mostly lower with Jan 14 London wheat ending down GBP0.30/tonne at GBP164.40/tonne and Jan 14 Paris milling wheat settling EUR1.00/tonne easier to close at EUR209.00/tonne. Feb 14 Paris rapeseed fell EUR2.75/tonne to EUR371.75/tonne, whilst Jan 14 Paris corn dropped EUR0.75/tonne to EUR179.50/tonne.
The market remains stuck in a relatively sideways move, and in need of fresh news and direction, although maybe that will change once we get tomorrow's December WASDE report from the USDA?
French soft wheat exports were only 1.46 MMT in October, down 4.1% versus September and 10% below those of October 2012, according to Bloomberg. Algeria was the top buyer, taking 449 TMT.
Strategie Grains said that the EU-28 will produce 21.3 MMT of rapeseed next year, up 2.4% versus 20.8 MMT in 2013. Plantings will drop 100k hectares to 6.6 million ha, but yields will rise from 3.1 MT/ha to 3.2 MT/ha, they estimate. Output in France will jump 18.6% to 5.1 MMT, they added.
The Australian Oilseeds Federation said that the country will produce 3.2 MMT of canola this year, down from 4.2 MMT last year and the 3.4 MMT estimated previously.
Indian wheat plantings are well advanced at almost 45 million hectares, or nearly 75% of the planned area, up 16.7% on a year ago.
The Russian grain harvest is 95.5% complete at 96.2 MMT in bunker weight. Wheat accounts for 54.1 MMT of that, along with 16.3 MMT of barley and 11.3 MMT of corn.
Russia exported 10.52 MMT of wheat in the Jan/Oct 2013 period, down 26.4% versus the same period on 2012. Wheat imports were up almost four fold at over 650 TMT.
Ukraine shipped an impressive 1.02 MMT of grains in the week through to Oct 8, a similar volume to the previous week, according to APK Inform. This is towards the maximum that their limited infrastructure and logistics will allow.
The trade is now looking towards tomorrow night's (only due out at 5pm London time) USDA WASDE report for some direction. They are not expected to change their November US production estimates for wheat, corn and soybeans, although they are due to revise their global supply and demand forecasts.
The trade is expecting increases for wheat production in Australia and Canada, along with a reduction to output in Argentina.
They are also expected to trim US 2013/14 wheat ending stocks from 565 million bushels last month to around 553 million this time round.
Very cold weather stretching all the way down to Texas from the Canadian border is raising some fears of damage to US winter wheat.
Chicago Little Changed Friday
06/12/13 -- Soycomplex: For once, neither beans, corn nor wheat finished with anything other than minor changes. Nothing much has altered this week for beans, with very strong nearby demand tempered by the prospect of a huge South American crop around the corner. Around the corner isn't now though is it? The USDA announced the sale of 189,150 MT of US soybeans for 2013/14 delivery, and just for good measure threw in an additional 195,000 MT for 2014/15 shipment. Yesterday's weekly export sales mean that the US already had 95% of the target for the entire 2013/14 season on the books already. Brazil's soybean crop is 93% planted, up 5 points on the week, with some now pegging production in excess of 90 MMT versus the current record crop 82 MMT harvested earlier this year. There are reports that they'll be harvesting the first of the early soybeans in Brazil's top producing state of Mato Grosso by New Year's Day. There are some reports circulating that some Mato Grosso growers may plant a second soybean crop straight after this harvest. Normally they'd plant second crop corn, but current price differentials suggest that some may try a new approach. This may only provide short-term gain for long-term pain. Oil World note that the lack of crop rotation in Brazil and Argentina is already raising disease risk and curbing yields. Meanwhile the current Brazilian caterpillar infestation is spreading at an "alarming rate" they note. The Buenos Aires Grain Exchange said that soybean planting in Argentina is 58% complete, up from 49% a week ago and versus 54% this time last year. Rumours that Argentina may be about to temporarily reduce their soybean export tax to stimulate farmers to release the large volume of old crop stocks that they are sitting on have been denied by the Ministry. Cynics say that the government need the revenue too much to contemplate such a move, but 15-25% of something is surely better than 35% of nothing? Jan 14 Soybeans closed at $13.25 1/2, down 2 1/2 cents; Mar 14 Soybeans closed at $13.10 1/2, down 1 1/4 cents; Dec 13 Soybean Meal closed at $447.30, up $1.20; Dec 13 Soybean Oil closed at 40.28, down 10 points. For the week that puts beans down 11 cents, meal down $9.30 and oil 6 points higher.
Corn: The corn market ended around a cent or so higher on the day. Considering that China continues to reject some US corn shipments, on the grounds of them containing traces of the un-approved MIR 162 variety, the market has performed quite well this week. That's probably down to the fact that fund money appears more inclined to bank profits and cover in existing sales heading into the year end than establish fresh short positions, which is understandable. The Chinese are said to be continuing to evaluate the situation with MIR 162. The US are saying "hey, even the Europeans let this one in, so what's the problem?" Talk that some Brazilian growers might give up on second crop corn could provide a bit of support going forward. The Buenos Aires Grains Exchange said that corn planting in Argentina is 47% complete, up only a little from 44% a week ago and versus 55% done this time last year. There still seems to be some mileage in notion that South America's corn plantings and production for the 2014 harvest may fall below current area estimates. "Although 'mid-season' corn may be planted through to the end of February, it also produces a much lower yield. Full season varieties are far more productive," said Martell Crop Projections. Brazilian analysts Conab are due out on Tuesday with their latest production estimates. Last time they gave us a 2013/14 total corn crop estimated at 78.5-79.2 MMT and 2013/14 corn exports at 18.0 MMT. Both could be revised lower next week. Also due out on Tuesday is the December WASDE report from the USDA. This is not likely to include revisions to US corn production this year, that is usually left until the January report. This will include however the latest world production and demand estimates. We will also get the latest US and global ending stocks numbers. The trade is expecting an average Argentine corn production estimate of around 25.6 MMT versus 26 MMT last month, with a Brazilian crop of around 70.4 MMT versus 70 MMT in November. US 2013/14 corn ending stocks are forecast at an average 1.871 billion bushels versus 1.887 billion previously, and world ending stocks at 163.3 MMT, down 1 MMT from last month. The French corn harvest is making heavy weather of it (literally), at 85% done versus 99% a year ago. Dec 13 Corn closed at $4.24, up 1 1/4 cents; Mar 14 Corn closed at $4.34 1/4, up 3/4 cent. For the week Dec 13 corn was up 8 3/4 cents, with Mar 14 9 3/4 cents firmer.
Wheat: Wheat futures closed steady to 3 cents lower, but with losses of anywhere from 8 to almost 24 cents for the week across the three exchanges. Whilst there seems to be a pick-up in global interest in wheat, with Tunisia, Algeria, Libya, Morocco, Iran, Japan and Taiwan all buying this week, very little of that was thought likely to come from the US. Yesterday's disappointing weekly export sales, and much higher production numbers out of Canada and Australia than the trade expected this week have knocked market confidence. The fact that Brazil failed to show up at this week's export party has Benson Quinn posing the notion that "Brazil’s new crop seems to have arrived in better shape than many had feared and large scale imports of US HRW don’t appear imminent." This sees traders having second thoughts about predicting that the USDA will increase exports and lower ending stocks by 25 million bushels in the supply and demand report next week. Conab are due out with their Brazilian December supply & demand estimates on Tuesday. Last month they forecast the 2013/14 wheat crop at 4.81 MMT with imports estimated at 6.7 MMT. Argentina would normally supply much of that requirement. The Buenos Aires Grains Exchange said that the wheat harvest there is approaching 30% done, up from 20% a week ago and versus 23% this time last year. They stood by their production estimate of 10.35 MMT, which is considerably higher than some other forecasts recently thrown into the ring. A severe winter storm, stretching from the Texas/Mexico border all the way through to the Ohio Valley is seen possibly causing some damage to US winter wheat, although weekly crop condition reports from the USDA have now been discontinued until the spring. US and European winter wheat largely seems in pretty good condition versus 12 months ago. The Russian Ag Ministry said that the country has planted 12.23 million hectares of winter wheat, and will add a further 13 million to that in the spring, taking the total wheat acreage to in excess of 25 million hectares, similar to the area harvested in 2013. Tuesday's USDA report normally only deals with US demand and world production, not US production. We should see upward revisions to output in Canada and Australia, and probably a downwards tweak for Argentina. Dec 13 CBOT Wheat closed at $6.37 1/4, down 3/4 cent; Dec 13 KCBT Wheat closed at $7.05 1/4, up 1/4 cent; Dec 13 MGEX Wheat closed at $6.63, down 3 1/4 cents. For the week CBOT wheat down 17 3/4 cents, with KCBT losing 8 cents and MGEX shedding 23 3/4 cents.
EU Grains Range Bound, Strong Exports Support
06/12/13 -- EU grains closed mostly a little lower in generally range bound trade. The strong pace of EU wheat exports continue to provide underlying support, but the global crop keeps getting bigger.
Jan 14 London wheat ended up GBP0.45/tonne at GBP164.70/tonne, although other old crop months were lower. Jan 14 Paris wheat finished EUR1.75/tonne weaker at EUR210.00/tonne, Jan 14 Paris corn closed EUR0.25/tonne lower at EUR180.25/tonne, whilst Feb 14 Paris rapeseed fell EUR3.00/tonne to EUR374.50/tonne.
For the week that puts Jan 14 London wheat the princely sum of GBP0.20/tonne higher. Paris wheat gained EUR0.25/tonne, corn added EUR2.50/tonne and rapeseed fell EUR3.50/tonne.
Generally sideways trade remains the order of the day. London wheat now hasn't closed outside the EUR163-166/tonne range for 36 trading sessions.
Brussels confirmed that they'd issued 572 TMT of soft wheat export licences this past week, bringing the 2013/14 cumulative total to 11.8 MMT, up 47.5% versus this time a year ago. Corn imports in the same period meanwhile are down nearly 16% at 3.2 MMT.
Algeria bought 300 TMT of optional origin, most likely French, milling wheat at around USD311-314/tonne C&F for Jan shipment. Tunisia bought 100 TMT of wheat and 75 TMT of barley for Jan/Feb shipment, whilst Morocco is said to have bought around 500 TMT of wheat in the past 3 weeks (probably mostly French) after import duties on wheat were temporarily suspended.
Libya has bought 35 TMT of Mexican durum wheat this week, and Iran is said to have bought at least 300 TMT of mixed origin (probably some German) wheat in the past 3 weeks after Western sanctions were lifted. They are also said to be in the market for Australian wheat and Mexican durum too.
The French corn harvest advanced from 73% to 85% done in the week through to Dec 2, according to FranceAgriMer. That's still well behind last year when 99% of the crop was in.
French winter wheat is 95% sown, versus 91% a week ago and 97% this time last year. Maturity is advanced, with 39% of the crop in the early tillering stage versus 32% a week ago and only 17% this time last year. Winter barley is 61% at the tillering stage versus 55% last week and 34% a year ago.
FranceAgriMer rated 79% of winter wheat as being in good/very good condition, a 2 point drop on a week ago, but well ahead of 63% this time in 2012. Winter barley good/very good was unchanged on last week at 81%, and versus 84% this time last year.
Strong demand from North Africa and the Middle East would appear to offer some modest upside potential for EU milling wheat across the winter months, especially with now only very limited availability of quality wheat out of the Black Sea. Competition from the US, Canada and Australia is seen limiting gains though. India are also likely to remain something of an wheat exporting wild card in Q1 of 2014, by the end of which they should have begun harvesting another bumper, and possibly record, crop of their own - the first major wheat harvest of the year in the northern hemisphere.
Chicago Mostly Lower - Led By Wheat
05/12/13 -- Soycomplex: Beans finished the day narrowly mixed. Weekly soybean export sales of 805,200 MT for delivery in 2013/14 were pretty strong given that this was in a holiday-shortened week. There were also net sales of 355,600 MT for 2014/15. Total net commitments are now 95% of the USDA forecast for a season only 3 months old. That compares to around 78% this time last year and the 5 year average of 69%. In addition, the USDA reported 110 TMT of 2014/15 soybeans sold to China under the daily reporting system. There was a small 11,200 MT cancellation to China and a 60 TMT switch from China to Thailand, but no sign of the heavy cancellations that have been rumoured of late. Chinese soybean prices on the Dalian Exchange are said to be close to the equivalent of USD20/bushel. The FAO raised their forecast for the world soybean crop from 282 MMT to 286 MMT, some 2 MMT higher than the USDA's current estimate. MDA CropCast cut their Argentine sunflower production forecast by 360 TMT from last week and added 1.41 MMT to their Canadian canola estimate. Brazilian analysts Agroconsult raised their forecast for soybean production there in 2013/14 from 86 MMT to a new record 90.7 MMT. That's a jump of an impressive 10.6% on what was already an all-time high production in 2012/13. Output in Argentina is also likely to be at record levels in 2013/14. Weather conditions in South America remain mostly favourable for crop development. There's also now talk of Argentina temporarily lowering its export tax on soybeans from the current 35% to maybe around 25%. The idea behind that is to encourage farmers to release some of the estimated 12 MMT of old crop soybeans that they are said to be holding onto as a hedge against inflation and the weak peso. The spectre of a gigantic South American crop coming along in the first half of 2014, and fund money still sitting on a sizable CBOT soybean long, a long liquidation sell-off as we head towards the end of the year may be on the cards. Jan 14 Soybeans closed at $13.28, down 1 1/2 cents; Mar 14 Soybeans closed at $13.11 3/4, down 1/2 cent; Dec 13 Soybean Meal closed at $446.10, down $1.80; Dec 13 Soybean Oil closed at 40.38, up 24 points.
Corn: The corn market finished around 2-3 cents lower after weekly export sales disappointed. They came in at 593,600 MT for the 2013/14 marketing year versus the 850-950 TMT that the trade was expecting. Weekly exports topped 1 MMT however, with over half of that (587,900 MT) heading for China. Will it get unloaded in a timely manner when it gets there, given the recent spate of rejections of non-approved GMO US corn? Total US corn commitments are now at 73% of the USDA target for the season versus 68% a year ago and the 5 year average of 50%, so all is not lost just yet even if the bearish news still keeps coming. The FAO raised their forecast for the world corn crop from 994 MMT to just over a billion tonnes for the first time in history. That's a 14.4% increase on last year's 875 MMT and 38 MMT more than the USDA's current estimate. They see 2013/14 ending stocks at 180 MMT versus 177 MMT previously, 134 MMT last year, and the USDA's 164 MMT. Brazilian firm Agroconsult raised their forecast for the 2013/14 corn crop there from 75.7 MMT to 76.1 MMT, and far higher than the USDA's current 70 MMT estimate. MDA CropCast cut their Brazilian corn production forecast by 0.5 MMT from last week to 72.7 MMT. They also trimmed 0.7 MMT of Argentine production to 24.2 MMT. There are a few question marks over China's demand for corn in 2014. China’s CNGOIC estimated their 2013 corn crop at a record 217.5 MMT, up from 208 MMT in 2012. Imports were forecast at 4.5-5.0 MMT versus 5.2 MMT last year and a previous estimate of 7 MMT. They said that Chinese Jan/Oct feed production was down 9.4% versus 12 months previously, as pig numbers fell 6% and poultry output by 17% due to bird flu. Dec 13 Corn closed at $4.22 3/4, down 2 3/4 cents; Mar 14 Corn closed at $4.33 1/2, down 3 cents.
Wheat: Wheat closed lower for a second day, ending with losses of around 4-9 cents across the three exchanges. Weekly export sales of a marketing year low of 229,200 MT set the tone. That fell well short of the 450-550 TMT that the trade was anticipating. Thailand (65,700 MT) was the top home, there was no sign of China and Brazil only featured taking a minuscule 1,300 MT. The FAO raised their estimate for the world wheat crop from 708 MMT to a record 711 MMT, up 51 MMT (or 7.7%) versus last year. This came despite them using low ball estimates for both the Canadian (33.2 MMT) and Australian (24.5 MMT) crops compared to the numbers released by Stats Canada (37.5 MMT) and ABARES (26.2 MMT) earlier in the week. They forecast the Russian wheat crop at 53.6 MMT, up 42% on last year. MDA CropCast raised their forecast for Canadian wheat production by 2.1 MMT from last week, upping Australian output by 0.7 MMT to 34.9 MMT and 25.2 MMT respectively. Egypt apparently cancelled their 60 TMT purchase of Romanian wheat made earlier in the week due to "problems with the documents presented by the seller" - according to Reuters. Iran is said to have bought at least 300 TMT of wheat in the past few weeks since Western sanctions were temporarily lifted. Algeria were said to have bought a similar volume of wheat in a tender for 100 TMT. Iraq are shopping for 50 TMT of US, Canadian, or Australian wheat. Taiwan is looking for 35 TMT of US milling wheat for Jan-Feb shipment. South Korea and Australia are said to have reached an agreement to eliminate import tariffs on certain agricultural products, including wheat. Dec 13 CBOT Wheat closed at $6.38, down 9 1/4 cents; Dec 13 KCBT Wheat closed at $7.05, down 4 1/4 cents; Dec 13 MGEX Wheat closed at $6.66 1/4, down 6 1/4 cents.
EU Wheat Falls As Bearish Data Mounts
05/12/13 -- EU grains closed lower across the board, with bad news for wheat coming thick and fast this week it's been pretty impressive to see Paris wheat post its best close since May yesterday - even with EU exports holding up very well.
The session ended with Jan 14 London wheat down GBP0.95/tonne at GBP164.25/tonne, Jan 14 Paris wheat was EUR1.25/tonne easier at EUR211.75/tonne, Jan 14 Paris corn was down EUR1.50/tonne at EUR180.50/tonne and Feb 14 Paris rapeseed fell EUR0.575/tonne to EUR377.50/tonne.
We've already had ABARES increase the size of the Australian wheat crop to levels well above those expected by the trade on Tuesday, followed by Stats Canada doing likewise yesterday. Today we had further bearish news in the form of the FAO raising their forecast for the world wheat crop in 2013 to a record 711 MMT from 708 MMT previously and up 7.7%, or 51 MMT, on a year ago.
There were increases also for global corn and soybean production. The world cereal crop was estimated at an all-time high of almost 2.5 billion tonnes (including milled rice), up 8.4% on a year ago and 6% above the previous global record output achieved in 2011. Ending stocks were forecast up 68 MMT, or 13.4%, at 572 MMT which is 9 MMT more than a month ago.
It is also worth noting that these figures were formulated using a Canadian wheat crop of "only" 33.2 MMT and an Australian one of 24.5 MMT - both figures being significantly lower than this week's latest updates from Stats Canada (37.5 MMT) and ABARES (26.2 MMT). That may indicate that the FAO's next forecast (not due now until February) could be even higher.
They pegged the EU-28 wheat crop at 143.3 MMT, similar to the USDA's current forecast, and 7.3% more than a year ago.
Further bearish news today came from the USDA reporting weekly US wheat export sales at a marketing year low of only 229,200 MT versus the 450-550 TMT that the trade was expecting.
HSBC said that the price of UK wheat could fall to GBP150/tonne next year. A year ago they correctly forecast that UK wheat prices would fall to GBP165/tonne in 2013 (in fact as we now know they fell close to GBP150/tonne), at a time when you could have sold the Nov 13 and Jan 14 futures short in the GBP190-200/tonne region.
Ukraine's grain harvest is almost over at 99% done, producing a record near 63 MMT crop to date. That includes a record 29.3 MMT of corn off 97% of plan.
