Chicago Grains Closing Comments - Tuesday
30/12/14 -- Soycomplex: Beans closed lower, after trading higher earlier, in what looks like year end profit-taking and book squaring. Floods in Malaysia are said to be threatening to reduce palm oil output. Strong demand from China continues. They are expected to import around 7.6 MMT of soybeans in December, and a further 6.5 MMT in January. Seasonally, imports then start to drop off to coincide with Chinese New Year. South American weather leans favourable. Argentine soybean planting is now 90.6% complete, up 9.4 points on last week, said the Buenos Aires Grain Exchange. They held steady with their forecast for 2014/15 plantings of 20.6 million hectares, up 600,000 ha from a year ago. Canadian canola exports for the first 20 weeks of the 2014/15 season are 3.48 MMT, a 16% rise versus a year ago. Jan 15 Soybeans closed at $10.37 3/4, down 4 cents; Mar 15 Soybeans closed at $10.44, down 4 3/4 cents; Jan 15 Soybean Meal closed at $369.50, down $7.90; Jan 15 Soybean Oil closed at 32.89, up 10 points.
Corn: The corn market closed around 6 cents lower. Fund money is preparing to "rebalance" their positions early in the new year, with some suggesting that they need to sell around a net 20,000 corn contracts. China are said to be about to start auctioning off corn, beginning with an offer of around 3-5 MMT in the first week of January. They've been buying large volumes of sorghum recently instead. Yesterday's weekly export sales total of 584,300 MT was the largest single weekly sorghum sales total in 19 years, and was 77% above the previous 4 week average. China (357,300 MT) and "unknown" (presumed to be China, taking 227,000 MT) were the sole buyers. Weekly US sorghum shipments of 323,900 MT were all to China. The USDA announced 157,500 MT of US corn sold to Mexico for 2014/15 shipment. The Buenos Aires Grain Exchange reported Argentine corn for grain planting at 74.5% complete, up 9 points on last week. They forecast the planted area down 21% at 3 million hectares. Mar 15 Corn closed at $4.06 1/2, down 6 1/4 cents; May 15 Corn closed at $4.15, down 6 1/4 cents.
Wheat: The wheat market closed with double digit losses. Year end profit-taking was a likely feature. US wheat prices are seen generally being too expensive to win much export interest, a notion backed up by yesterday's weekly sales total of less than 300 TMT. US wheat did manage to win a share of Iraq's 200 TMT hard wheat purchase though, even if at $333.87 CIFFO it was the most expensive in the line-up. Canada reported wheat shipments (excluding durum) were up 2% at 6.54 MMT during the first 20 weeks of the 2014/15 season. The Buenos Aires Grain Exchange reported a 12 percentage point rise in Argentine wheat harvesting to 87.7% complete. They held steady with their production forecast at 11.5 MMT, although noted that they might reduce that a little if the current drop in yields being observed in southern La Pampa and Buenos Aires continues for a few more days. Part of the anticipated index fund rebalancing early in the new year might see them selling some wheat. China are also expected to start auctioning off around 2 MMT of government owned wheat stocks January 6-8th. Mar 15 CBOT Wheat closed at $6.02, down 13 1/2 cents; Mar 15 KCBT Wheat closed at $6.36, down 11 1/2 cents; Mar 15 MGEX Wheat closed at $6.27 1/4, down 10 cents.
EU Grains Mostly Lower, Weak Euro Supports Paris Wheat
30/12/14 -- EU grains drifted mostly lower heading into year end. Trade was predictably thin, and fresh news was lacking.
At the close Jan 15 London wheat was down GBP1.10/tonne at GBP133.85/tonne, Jan 15 Paris wheat was up EUR0.25/tonne to EUR200.25/tonne, Jan 15 Paris corn was EUR1.00/tonne lower at EUR157.75/tonne, whilst Feb 15 Paris rapeseed was EUR0.50/tonne easier at EUR354.75/tonne.
The euro fell close to it's lowest level against the pound in 18 months on renewed talk of a Greek debt default, with a general election there now less than a month away.
Greece's radical left Syriza party is leading in the opinion polls, and they say that "austerity will be history" if they win on Jan 25.
The weak euro was supportive for French wheat, as too was the notion that the newly introduced Russian wheat export duty will push more interest towards the EU, and France in particular.
Current bad weather conditions (snow and ice) in the Black Sea region is said to be causing disruptions to shipping.
Iraq bought 200 TMT of hard wheat in a tender, mixed one cargo each of Australian and US origin material and two from Canada. The prices paid were between USD325.93 and USD333.87 on a CIFFO basis.
Turkey bought 26 TMT of barley at between USD234-235/tonne C&F for January delivery.
Algeria are tendering for 50 TMT of optional origin milling wheat for Mar/Apr shipment.
Heading towards the end of what seems like another very volatile year, the HGCA interestingly say that whilst London wheat prices have varied by more than GBP60/tonne this year, that is in fact the second smallest price fluctuation range since 2007.
Chicago Grains Closing Comments - Monday
29/12/14 -- Soycomplex: Beans and meal closed with small losses on the day. Weekly export sales for beans came in at 635,800 MT for 2014/15 and a further 1,501,600 MT for 2015/16. China took 618,200 MT of the old crop and 1.5 MMT of the new crop. Weekly shipments of almost 2.4 MMT were robust once again. Old crop commitments are now 89% of the USDA target for the season versus around 80% normally. Weekly export inspections came in at 1.42 MMT, which was maybe a bit lower than the trade expected, although this is of course for a holiday week. It looks like US exports are starting to drop off, with reports coming in of early harvest activity in Brazil's western Mato Grosso. Early yield reports are "very impressive" according to Dr Cordonnier. "Farmers are attributing the high yields to the near perfect weather and a lack of disease and insect pressure," he says. There's now some talk of the 2014/15 Brazilian soybean harvest pushing the 100 MMT mark. The USDA are currently at 94 MMT. Jan 15 Soybeans closed at $10.41 3/4, down 5 3/4 cents; Mar 15 Soybeans closed at $10.48 3/4, down 5 1/4 cents; Jan 15 Soybean Meal closed at $377.40, down $2.30; Jan 15 Soybean Oil closed at 32.79, up 33 points.
Corn: The corn market closed around a couple of cents lower. That came despite weekly export sales of an impressive 1.7 MMT, around double what the trade had been anticipating. That helped total net commitments to reach around 59% of the USDA target for the season, which is in line with average. Actual shipments came in at just under 800 TMT. Weekly export inspections were 609,613 MT, which isn't too bad for a holiday week. Ukraine's seaports shipped out an impressive 667.4 TMT of corn in the past week, which is 80% of the weekly grain export total, said APK Inform. Corn exports for the season (to Dec 24) are 6.6 MMT, say the Ukraine Ag Ministry. Russia say that they've exported 1.1 MMT of corn so far this season. Turkey tendered for 100 TMT of corn for Feb/Mar shipment, with Russia and/or Ukraine possibly the most likely favourites to win the business. The Philippines said that they'd harvested a record 7.75 MMT of corn this year, up from 7.37 MMT a year ago. That total almost covers the country's domestic consumption, which is estimated at around 8 MMT this year. Mar 15 Corn closed at $4.12 3/4, down 2 cents; May 15 Corn closed at $4.21 1/4, down 1 3/4 cents.
Wheat: The wheat market closed firmer, but off session highs. Trade reaction to the export duty news out of Russia is mixed. Benson Quinn said that it "is a bearish feature as the execution of trades in the Jan slot will not be interrupted." It remains to be seen whether January shipments do indeed run smoothly, as there has already been some suggestion that Russia will continue to use "additional administrative measures" to prevent excessive grain exports. The Russian Ag Ministry say that these are 30% up on year ago levels as of Dec 24. Weekly US export inspections of only 293,100 MT were pretty poor, indicating that US wheat is less likely to be the leading beneficiary of any disruption to supplies out of the Black Sea. There were further modest sales of 35,500 MT for 2015/16 shipment. Actual shipments of 385,100 MT were down 7 percent from the previous week and 10 percent below the prior 4-week average. Still, total old crop commitments are 72% of the USDA target for the season versus 70% normally. Talk of possible damage to winter wheat crops in southern Russia in particular continue to circulate. Mar 15 CBOT Wheat closed at $6.15 1/2, up 4 3/4 cents; Mar 15 KCBT Wheat closed at $6.47 1/2, up 3 1/4 cents; Mar 15 MGEX Wheat closed at $6.37 1/4, up 5 3/4 cents.
EU Grains Playing Catch Up End Mostly Lower
29/12/14 -- EU grains closed a two-sided session mostly lower. Wheat was still playing catch-up with a US market that closed with significant losses on Christmas Eve.
The day ended with Jan 15 London wheat down GBP0.40/tonne to GBP134.95/tonne, Jan 15 Paris wheat was EUR1.00/tonne lower at EUR200.00/tonne, Jan 15 Paris corn was EUR2.75/tonne easier at EUR158.75/tonne, whilst Feb 15 Paris rapeseed ended up EUR1.75/tonne at EUR355.25/tonne.
The trade is still digesting the news of a Russian wheat export duty of a minimum EUR35/tonne starting Feb 1, 2015. It will probably take until next week for things to settle down, with trade thin and many participants still absent until after the New Year break.
For all the talk of Russian exports being deliberately restricted by red tape in recent weeks, APK Inform said that Russian seaports shipped out 556.1 TMT of grains last week, up from only 282.5 TMT the week before. Wheat accounted for 319.9 TMT (58%) of last week's total, with barley at 177.1 TMT (32%) and corn 56.1 TMT (10%).
The Russian Ag Ministry said that exports had now reached 20.4 MMT, a 30% increase on year ago levels. That total includes 16 MMT of wheat, 3.1 MMT of barley and 1.1 MMT of corn.
Offers out of Russia for Feb onwards are now said to be non-existent, with traders appearing to want to concentrate their efforts on shipping what they've already got sold in January.
Ukraine seaports meanwhile exported 829.6 MMT of grains last week, APK Inform said. Unlike Russia, they are now majoring in corn, which accounted for 80% of that total.
Their Ag Ministry said that exports so far this season (to Dec 24) are slightly behind Russia's at 18.2 MMT, of which 7.9 MMT is wheat, 6.6 MMT corn and 3.6 MMT barley.
So Russia's participation as a wheat seller looks to be more or less over between now and the end of June. Ukraine are concentrating their efforts on corn. That should be good news for EU wheat.
Kazakhstan said that their 2014 grain harvest came in at 17 MMT, a 6.6% decline on last year.
India said that growers there had planted 27.96 million hectares of wheat, which is behind last year's pace when 28.69 million ha had been sown.
Turkey tendered for 100 TMT of optional origin corn for Feb/Mar shipment.
Chicago Grains: Christmas Review
Jan 15 Soybeans closed Monday at $10.38 1/4, up 7 3/4 cents; Tuesday $10.38 1/2, up 1/4 cent; Wednesday $10.28 3/4, down 9 3/4 cents; Friday $10.47 1/2, up 18 3/4 cents. Net change for the week is up 17 cents.
Jan 15 Soymeal closed at $368.40, up $4.90; $371.30, up $2.90; $371.40, up 10 cents; $379.70, up $6.30. Net change for the week, up $16.20.
Jan 15 Soybean Oil closed at 32.04, up 7 points; 32.22, up 18 points; 31.93, down 29 points; 32.46, up 53 points. Net change up 49 points.
Mar 15 Corn closed at $4.11 3/4, up 1 1/4 cents; $4.14, up 2 1/4 cents; $4.07 3/4, down 6 1/4 cents; $4.14 3/4, up 7 cents. Net change up 4 1/4 cents.
Mar 15 Wheat closed at $6.25 3/4, down 6 1/2 cents; $6.35 1/2, up 9 3/4 cents; $6.11 1/2, down 24 cents; $6.10 3/4, down 3/4 of a cent. Net change down 21 1/2 cents.
For the record, Mar 15 Kansas wheat finished with a net loss of 21 3/4 cents for the week, and Mar 15 Minneapolis wheat was down 16 3/4 cents.
Weekly export sales from the USDA, usually released on a Thursday, are delayed until Monday due to the holiday. The regular Friday weekly commitment of traders report is also due for release Monday. Fresh news was relatively scarce, and trade was thin, as you might imagine. Beans, and oil all posted decent gains for the week, corn managed modest advances and wheat was lower, courtesy of a Christmas Eve rout. This may have been linked to profit-taking, and was possibly overdone due to the lack of participants. Fund money was given credit for being a net seller of around 2,500 Chicago wheat on the day, a modest volume that wouldn't normally see a 24 cents collapse. Kansas and Minneapolis wheat saw losses of around 20 cents that day too.
Despite the continued collapse in crude oil values, down more than 4% again last week, weekly US ethanol production came in at a record high 992k barrels/day last week - the fourth record week in the past five. Grain prices are becoming divorced from crude oil, and this appears to be directly linked to the "incentive for the world to use more grain based ethanol to meet inclusion mandates" say the HGCA.
There's talk of $40/barrel being the level at which Saudi Arabia might reach for the panic button and start choking off excess supply in the market. NYMEX crude closed below $55/barrel on Friday, so we are now only $15/barrel away from being there, and it's only taken a month to lose that much on the way down to where the market currently stands, so we might get to $40/barrel sooner than the Saudi's think.
Russia apparently confirmed on Christmas Day that the level set for the much talked about export duty on wheat would be a minimum of EUR35/tonne, which is about USD43/tonne, starting Feb 1. Yet the US wheat markets closed around unchanged on Friday. Was this "buy the rumour, sell the fact" or simply that what few traders were at their desks were unaware of this apparently significant development? Monday's trade might give us the answer to that one.
Russian news agency TASS says that Russia has agreed to provide Egypt with 120 TMT worth of wheat before the new rules kick in. To me that would appear to suggest, reading between the lines, that it will not be a free-for-all export deluge between now and the end of next month. It looks like the current unofficial "red tape" export restrictions will persist depending on who the buyer is (and maybe even despite who they are).
TASS say that Russia is the third largest wheat supplier to Egypt, accounting for 26% of their imports across the last 6 months. The largest is France (36%) followed by Romania (27%). The EU then certainly look well placed to be the main beneficiary of this new wheat Iron Export Curtain coming down, assuming that they can come up with the quality (France) and/or volume (Romania) required.
The Buenos Aires Grain Exchange said that Argentina's 2014/15 wheat harvest is now past 75% complete. They estimate production unchanged from previously at 11.5 MMT, which is up nicely on a year ago. Neighbouring Brazil will be in the market for most, if not all, of their surplus though, meaning that not much of it is likely to travel as far afield as North Africa or beyond. Happy New Year France!
EU Grains: A Quick Review Of The Week
26/12/14 -- EU grains finished the holiday shortened week generally higher than they began it, helped by news of an impending Russian export duty on wheat.
Jan 15 London wheat was up GBP1.70/tonne on Monday, a further pound higher on Tuesday and gained another 35 pence on Wednesday, for a GBP3.05/tonne advancement on the week. Paris wheat rose EUR2.50/tonne, EUR1.75/tonne and EUR0.75/tonne respectively, for a three day gain of five euro's. Corn was up EUR2.50/tonne on Monday, down a euro on Tuesday and up a further EUR3.50/tonne on Wednesday, for a net gain of also five euro's. Rapeseed was up EUR1.25/tonne, EUR1.50/tonne and another EUR1.50/tonne respectively, for a weekly gain of EUR4.25/tonne.
The Russians announced that they were going to introduce export duties on wheats on Monday, with the details due to be unveiled on Tuesday, although this never happened.
By the time I was waking from my festive slumbers on Boxing Day morning however, the inbox was full of emails saying that the duty will be for 15% of the custom cost, plus EUR7.50/tonne, and with a minimum value of EUR35/tonne. I assume that by "custom cost" they mean the net value of the cargo.
So there we have it, a duty of at least EUR35/tonne on every Russian wheat shipment, commencing Feb 1, 2015.
It's in the hands of the Russian government how much they are prepared to let through between now and when that particular window gets slammed shut.
The Russian deputy PM has already thrown in the rider that "additional administrative measures" will be used to prevent excessive grain exports, presumably with specific reference to the period between now and the end of January.
How Russian exporters, especially the smaller ones, are going to fund this minimum EUR35/tonne levy is unclear. The introduction of an export tax isn't grounds for claiming force majuere, and EUR35/tonne is much larger than the average margin that these guys will be working for.
Meanwhile, Russian intervention purchases Tuesday and Wednesday have hardly been met with a flood of offers, with the government picking up less than 20 TMT across the two days, despite increasing the price that they are prepared to pay.
In other news, 40% of winter grains in the Volgograd region of Russia are said to be a cause for concern, following a lack of moisture in the autumn, and a subsequent lack of a protective snow covering.
Across the border in Ukraine (there IS still a border there isn't there?), 4% of winter grains haven't yet emerged, and 19% of what has are now said to be in weak/thinned condition. That's up 3 points on earlier in the week and compared to only 4% this time a year ago.
In an Iraqi hard wheat tender, Romanian origin was said to be the cheapest offer at around £313/tonne, followed by Ukraine wheat at $323, Australian at $326, Canadian at $332 and US at $334 - Russian wheat wasn't offered at all.
Chicago Grains Closing Comments
22/12/14 -- Soycomplex: Beans closed around 7 to 8 cents higher. Weekly export inspections of 2.234 MMT were very strong once again, continuing with the recent theme. Brazilian weather generally looks favourable, Dr Cordonnier was said to have raised his forecast for the 2014/15 soybean crop from 92 MMT to a record 93 MMT on Friday. Harvesting of that can't come soon enough with US exports continuing at this pace. For Argentina he was unchanged at 55 MMT. Planting of that crop is a little over three quarters done. Chinese customs data shows that they imported a little over 6 MMT of soybeans in November, taking the calendar year to date total to 62.87 MMT, a 12% rise on a year ago. Imports this month are expected to peak at around 7.5 MMT, taking 2014 imports to something like 70 MMT. Jan 15 Soybeans closed at $10.38 1/4, up 7 3/4 cents; Mar 15 Soybeans closed at $10.45 3/4, up 7 1/4 cents; Jan 15 Soybean Meal closed at $368.40, up $4.90; Jan 15 Soybean Oil closed at 32.04, up 7 points.
Corn: The corn market closed with small gains. Fresh fundamental news for corn was light. The USDA announced 166,600 MT of US corn sold to unknown for 2014/15 shipment. Weekly export inspections were 790,415 MT, which is a routine kind of number. They need to be above 900 TMT to reach the USDA's target for the season. Inspections for the season to date are less than 25% of that target versus almost 29% normally at this time. "Many key growing regions of South America received good rainfall over the weekend. Any flooding that resulted from the heaviest of rain fall is viewed as a very minor issue. Forecasts point to favourable conditions for most regions during the next couple of weeks," said Benson Quinn. Dr Cordonnier was unchanged on both Brazil (72 MMT) and Argentina (21 MMT) in his weekly estimates on Friday. Syngenta said that they had received confirmation from China, approving MIR 162 corn as safe for import. Chinese customs data has them importing only 259 TMT of corn in November, down almost 68% from a year ago. Calendar year to date imports are 2 MMT, down almost 19% versus Jan/Nov 2013. Mar 15 Corn closed at $4.11 3/4, up 1 1/4 cents; May 15 Corn closed at $4.20 1/4, up 1 1/4 cents.
Wheat: The wheat market closed lower, reversing overnight gains. News that Russia is to introduce export duties was friendly. News that US wheat was comfortably outpriced in Egypt's latest wheat tender was not. After weighing things up it seems that the market decided that the main beneficiary of the Russian news is likely to be Europe, not the US. France won 240 TMT worth of Egypt's 300 TMT purchase, with Russia picking up the remaining cargo. Egypt said that they now have sufficient wheat purchased to last them until the end of April, although that certainly doesn't preclude them from tendering again soon. The Russians are expected to reveal the magnitude of these new export duties tomorrow, and some think that these could be pretty hefty, to discourage foreign sales and allow the government to procure stocks for intervention at better rates than they have managed to achieve thus far. Late in the day news emerged that the Russian Exporters Association had applied to the government to postpone the imposition of the new duties until March 1, 2015. That would allow for existing sales to be largely fulfilled, they argued. It remains to be seen whether they will agree to this, but it seems unlikely to me. Mar 15 CBOT Wheat closed at $6.25 3/4, down 6 1/2 cents; Mar 15 KCBT Wheat closed at $6.57 3/4, down 8 1/4 cents; Mar 15 MGEX Wheat closed at $6.45, down 3 1/4 cents.
EU Grains Rise On Russian Export Duties, Success For France In Egypt Tender
22/12/14 -- EU grains opened lower, but turned around to trade mostly higher mid-morning following a Russian announcement that they are to rush through issuing "temporary" export duties with more or less immediate effect.
At the close Jan 15 London wheat was up GBP1.70/tonne at GBP134.00/tonne, Jan 15 Paris wheat had jumped EUR2.50/tonne to EUR198.50/tonne, Jan 15 Paris corn was up EUR2.50/tonne at EUR159.00/tonne, whilst Feb 15 Paris rapeseed was EUR1.25/tonne higher at EUR350.50/tonne - the first close above EUR350/tonne on a front month since June.
The Russian Deputy PM announced that the government were to rush through a draft proposal to introduce export duties today, and that these could be in place as early as tomorrow.
He went on to say that of the 28 MMT of grains that Russia are expected to export this season, 21 MMT, or 75%, had already been shipped.
The Russian Ag Ministry don't seem to entirely agree with him as they said that the country had exported less than 20 MMT of grains so far this season, including 15.5 MMT of wheat, almost 3 MMT of barley and nearly 1 MMT of corn (to Dec 17).
The other main news of the day was Egypt's GASC buying 300 TMT of wheat for Jan 21-31 shipment over the weekend. Of that total 240 TMT was French, with Russian wheat also getting one 60 TMT cargo, thanks to a cheaper freight rate.
Overall the prices paid were around $9/tonne more expensive than their last January purchase.
They've now bought 655 TMT of wheat this month, compared to only 355 TMT in November. This latest purchase was said to be their largest single buy of French wheat in 3 years.
All in all this looks friendly for EU wheat. OK, Russian wheat was in the line-up, but only one cargo was booked (and offered), and that was only due to a freight advantage of at least $2.50/tonne. French wheat was the cheapest origin otherwise. US wheat was priced out by the best part of $30/tonne, and that was before adding on the much more expensive shipping costs.
Today's Russian news should continue to ensure that EU wheat picks up further export business into North Africa and beyond in the weeks and months ahead. And meanwhile GASC are buying more as the price goes up, not less.
Other than that, fresh news was relatively thin, as you might expect only a few days before Christmas.
The Ukraine Hydrometeorlogical Centre said that winter grains there could be disadvantaged by the unusually mild December that they have seen, if and when a hard freeze returns.
They said that 40% of the country's winter grains are rated in "good" condition, with 44% "satisfactory" and 16% "weak/thinned". The latter category has seen a 2 point improvement from earlier in the month, but having said that it is still high compared to only 4% this time last year.
The USDA's FAS in Bulgaria said that wet weather had cut winter wheat plantings there by around 150-200k ha from what was expected. They estimated the country's 2015 wheat harvest at 4.6 MMT, down 6.5% on last year.
The German Stats Office said that the country's growers had increased winter wheat plantings by 2.8% to 3.25 million ha. Barley plantings are up 3.3% to 1.23 million ha, and OSR sowings have declined 6.1% to 1.31 million ha, they added.
