Chicago Soybeans Set Fresh Contract Lows
20/05/15 -- Soycomplex: Beans closed lower, setting fresh contract lows in many positions. Good planting progress and a "warm and wet" US weather forecast keep the pressure to the downside. The strong US dollar isn't helping either. The Argentine Ag Ministry estimated growers there to be 35.6% sold on their 2014/15 soybeans, up from 30% sold this time last year. Chinese cash soymeal prices are said to be near a 5 year low, which could keep a lid on their bean imports. The trade is expecting weekly export sales tomorrow to be 100,000–250,000 MT on old crop
and 150,000–350,000 MT on new crop beans, according to Benson Quinn. It will be interesting to see if they manage to come in at those levels, given the recent resurgence of the US dollar. Sales last week came in at 136,600 MT on old crop and only a modest 88,000 MT on the new crop. The old crop sale of 132,000 MT of soybeans for delivery to China reported on Tuesday is only likely to show up in next week's report. The new crop soybean:corn price ratio ended the day at 2.44:1 versus 2.43:1 yesterday. Jul 15 Soybeans closed at $9.41 1/4, down 5 cents; Nov 15 Soybeans closed at $9.19 3/4, down 3 3/4 cents; Jul 15 Soybean Meal closed at $304.50, down $2.60; Jul 15 Soybean Oil closed at 32.20, up 2 points.
Corn: The corn market closed around 2-3 cents lower. The same factors that are grinding soybean prices lower also apply to corn: excellent planting progress, largely ideal weather conditions, and the firm US dollar. "The first national crop ratings report is expected next week. Initial estimates are anticipating reported ratings near record high levels," said Benson Quinn. "The US Climate Prediction Centre now predicts an 80% chance of a full-fledged El Nino in the summer months. Very heavy Midwest rainfall is associated with the El Nino in summer. The last time the El Nino signal was this strong was in the summer of 2009 a year in which the US corn yield excelled, finishing 8% above trend. Another El Nino in the summer of 2004 promoted an even higher corn yield 13% above trend," said Martell Crop Projections. The Argentine Ag Ministry estimated growers there to be 44.8% sold on their 2014/15 corn, up from 36.2% sold this time last year. The weekly ethanol grind from the US Energy Dept was friendly, coming in at 958,000 barrels/day, a sharp jump from 912,000 bpd the previous week. South Korea's Kocopia tendered for 55,000 MT of optional origin corn. Trade forecasts for tomorrow's weekly export sales report are at 400,000–600,000 MT on old crop, and 50,000–200,000 MT new crop Jul 15 Corn closed at $3.60, down 2 cents; Dec 15 Corn closed at $3.77 1/4, down 3 cents.
Wheat: The wheat market closed mostly a little higher. Extreme wetness continues to hit winter wheat that's ready for harvesting on the Plains. Oklahoma City has already had its second wettest May on record, with more than 10 days of the month still left to go, picking up almost 14 inches of rain so far this month. Ditto Lincoln, Nebraska with over 10 inches. US spring wheat hasn't got off to a great start in some states either. "North Dakota received 2-4 times the normal rainfall in the past 10 days, capped off by a hard freeze May 18th and 19th. Approximately half of the state’s spring wheat had sprouted and emerged, when freezing temperatures developed," said Martell Crop Projections. The suddenly warmer forecast will be most welcomed there. Both the Ukraine and Russian Ag Ministries remain bullish on their crop production prospects this year. Ukraine today raised their 2015 grain crop forecast by 2 MMT to 60 MMT, with wheat up 1 MMT to 21 MMT. Russia are standing firm at a 100 MMT grain crop despite spring planting delays. The Argentine Ag Ministry estimated growers there to be 73.8% sold on their 2014/15 wheat, up from 51.7% sold this time last year. Trade estimates for tomorrow's weekly export sales are zero on old crop and maybe 300,000-400,000 TMT on new crop. Sep 15 CBOT Wheat closed at $5.20, up 1 1/2 cents; Sep 15 KCBT Wheat closed at $5.55, up 4 1/2 cents; Sep 15 MGEX Wheat closed at $5.78 3/4, up 3 1/4 cents.
EU Grains Mixed As Trade Eyes Russian Developments
20/05/15 -- EU grains closed mixed with May 15 London wheat down GBP0.35/tonne at GBP109.70/tonne, Sep 15 Paris wheat was EUR2.25/tonne firmer at EUR180.50/tonne, Jun 15 Paris corn was down EUR0.75/tonne at EUR154.00/tonne and Aug 15 Paris rapeseed rose EUR2.00/tonne to EUR359.75/tonne.
Fresh news of any great note was thin on the ground. Many traders are keeping an eye on developments in Russia, where spring plantings are behind schedule and hot and dry weather is in the 7-14 day forecast.
Agritel said that by Jun 1 temperatures could hit "around 30°C in Ukraine and middle of Russia and over 30° in Southern Russia." These would be record levels for so early in the year, they say. Rainfall is also in line to be below normal in the southern, central and Volga regions of Russia along with eastern parts of Ukraine, according to the latest forecasts.
Undeterred, the new Russian Agriculture Minister Alexander Tkachev is standing by his estimate for a 2015 grain crop of 100 MMT. That's only down a little on the 105.3 MMT produced last season, although he did add the caveat "provided funding isn’t cut" to his forecast.
Russian business daily newspaper Vermosti says that the Russian Agriculture Bank has asked the state for an additional 35 billion roubles (around $700 million) to provide loans to help fund spring planting. The newspaper story suggests than only 5 billion roubles of this extra funding is likely to be forthcoming from the government.
Spring grains in Russia have officially been planted on 18.8 million ha so far, down from 21.1 million this time a year ago. That's a little over 60% of the Ag Ministry forecast, and includes 6.0 million ha of wheat (45.7% of forecast), 6.1 million ha of barley (74.9%) and 2.3 million ha of corn (83.7%).
The Russian government intervention fund picked up a little under 14,000 MT of grain in today's purchase round, taking the total bought so far to around 910 TMT. Most of that was so-called grade 3 wheat at RUB9,925/tonne, which is the equivalent of around $199/tonne. New crop 12.5% Russian milling wheat is said to be offered around the $180-185/tonne region FOB the Black Sea.
The Russian Ministry said that the country's May 1 grain reserves stood at 19.1 MMT, a 21% increase on a year previously.
In Ukraine, their Ag Ministry are as similarly bullish on 2015 crop production prospects as their Russian "friends" this year, raising their estimate for total grain production by 2 MMT to 60 MMT, which again isn't down too much on last year's output of 63.8 MMT. Wheat will account for 21 MMT of that total, they say, up 1 MMT from their previous forecast. Winter crop development is around 3-5 days ahead of normal development, they say.
They say that the country has now exported 30.8 MMT of grains this season, including 15.9 MMT of corn, 10.3 MMT of wheat and 4.4 MMT of barley. The Ministry of Economic Development forecast full season Ukraine grain exports at 36.76 MMT, including 20 MMT of corn, 11.6 MMT of wheat and 4.4 MMT of barley.
Ukraine farmers have planted 6.5 million ha of spring grains, out of a government forecast of 7.0 million, they added. That total includes 4.1 million ha of corn, they said.
Bulgaria said that they'd exported 6.36 MMT of grains this season (to May 1), including 2.88 MMT of wheat, 1.74 MMT of corn and 0.55 MMT of barley.
Algeria tendered for 50,000 MT of optional origin wheat for August shipment.
US Grains Fall, With New Crop Soybeans Setting Contract Lows
19/05/15 -- Soycomplex: Beans closed lower, with new crop Nov 15 posting a lifetime contract low. US plantings are going well, the Midwest has had plenty of moisture, and a warmer forecast for next week should be just what newly planted beans need. With corn planting already winding sown, bean sowings might also move it up a notch this week, it is thought. The usual Monday weekly export inspections numbers were delayed due to "technical difficulties" yesterday. The USDA released them today instead, and for beans they came in at 341,097 MT - a respectable total given the time of year and the large volume of old crop already exported. To add a bit more support to the old crop picture the USDA also today reported 132,000 MT of US beans sold to China for 2014/15 delivery. China's CNGOIC said that soybean production there will fall for the fifth season in a row this year, down 7% to 11.2 MMT. Ongoing strikes in Argentina should be a little supportive, but the sharply firmer US dollar isn't. Jul 15 Soybeans closed at $9.46 1/4, down 8 1/4 cents; Nov 15 Soybeans closed at $9.23 1/2, down 11 1/2 cents; Jul 15 Soybean Meal closed at $307.10, down $0.90; Jul 15 Soybean Oil closed at 32.18, down 60 points.
Corn: The corn market closed around 5-6 cents easier. Lower wheat prices didn't offer any support, and neither did the higher US dollar. Weekly export inspections of 1.1 MMT were pretty decent though. Fund money was given credit for being a net seller of around 6-7,000 lots on the day. "They are plenty short the market, but I don’t see a catalyst to move them off their short position at this point. It would take a weather scare, which certainly isn’t imminent right now," said Benson Quinn. Lower crude oil prices were another negative today, so too is the US bird flu epidemic. Low US DDGs prices could also be impacting on feed demand for US corn, it is said. Russia said that it's 2015 corn crop was 82% planted on 2.3 million ha, which is 0.1 million higher than this time last year. Germany's 2015 corn area was estimated marginally higher than a year ago at 482k ha, according to their Stats Office. DRV estimated Germany's corn crop at 4,83 MMT, a 6.1% decline on a year ago however. FranceAgriMer pegged French corn plantings at 1.64 million ha, a 6.4% fall versus last year. Jul 15 Corn closed at $3.62, down 6 cents; Sep 15 Corn closed at $3.69 1/4, down 6 cents. The new crop soybean:corn price ratio closed at 2.43:1 tonight, which is around the middle of the recent range.
Wheat: The wheat market closed sharply lower in "Turnaround Tuesday" style. A sharply higher US dollar was probably the catalyst, as heavy rains continue to be in the forecast for the US Plains. Maybe the fact that the USDA raised good to excellent wheat crop ratings last night was also another bearish influence today. Weekly export inspections of 309,562 MT were in line with what we've been used to recently, if not very inspiring. The marketing year is almost over for US wheat, and a couple of strong weeks are needed to stand a chance of hitting USDA targets for the season. Russian spring wheat is 42% planted on 5.6 million ha, which is 1.1 million less than this time last year. Kazakhstan's spring grains are 8.8% planted on 1.28 million ha. The German Stats Office estimated the winter wheat area there up 3% at 3.25 million ha. Germany's DRV increased their forecast for the 2015 German soft wheat crop by more than 1 MMT to nearly 27.8 MMT, although that's still 3% down on a year ago. FranceAgriMer raised their forecast for French winter wheat plantings to 5.16 million ha, up 3.3% on last year. Oman bought 60,000 MT of Russian 12.5% milling wheat in a tender at levels said to be at least $30/tonne below US offered levels. Jul 15 CBOT Wheat closed at $5.10 1/4, down 11 1/2 cents; Jul 15 KCBT Wheat closed at $5.40, down 15 cents; Jul 15 MGEX Wheat closed at $5.64 1/4, down 10 1/4 cents.
EU Wheat Gives Up Some Gains
19/05/15 -- EU wheat gave up some of yesterday's gains, as US futures turned lower despite ongoing concerns over rains pounding US winter wheat on the Southern Plains.
At the finish, May 15 London wheat was down GBP1.30/tonne at GBP110.05/tonne, Sep 15 Paris wheat ended EUR1.75/tonne lower at EUR178.25/tonne, Jun 15 Paris corn fell EUR0.50/tonne to EUR154.75/tonne whilst Aug 15 Paris rapeseed rose EUR2.00/tonne to close at EUR357.75/tonne.
The pound was under pressure on news that UK CPI inflation had slipped below zero for the first time on record. The euro however fared even worse on ideas that the ECB might be forced to increase QE in the near future.
FranceAgriMer raised their forecast for French soft wheat plantings to 5.17 million ha, up 3.3% from 5.01 million ha a year ago. That's now more or less in line with the French Ag Ministry's figure of 5.18 million ha, which is the largest since 1936.
FranceAgriMer estimated the French winter barley area at 1.28 million ha, up 4.3%, some of that increase came at the expense of spring barley plantings which were pegged 11% lower at 467k ha this year. That's an all barley area of 1.75 million ha versus an Ag Ministry figure of 1.71 million ha.
French corn plantings were estimated down 6.4% at 1.64 million ha by FranceAgriMer, a little lower than the Ministry's figure of 1.71 million. The former also put rapeseed sowings 1.9% lower this year at 1.48 million ha.
The German Stats Office meanwhile forecast winter wheat plantings there up 3% at 3.25 million ha, with the German winter barley area also up 3% at 1.27 million ha. Winter rapeseed plantings there are down 6.4% at 1.3 million ha, they added.
Germany's DRV meanwhile forecast the country's winter wheat crop at 27.78 MMT, up more than 1 MMT from a month ago due to "continued cool and rainy weather". German barley production was estimated down 5.4% at 10.94 MMT, with winter rapeseed output falling 16% to 5.23 MMT, and the 2015 German corn crop is seen 6.1% lower at 4.83 MMT.
Agritel forecast the Ukraine barley crop at 6.9 MMT, down almost 27% on 9.4 MMT a year ago, although above the USDA's recent 6.2 MMT prediction. They see OSR output there at 1.8 MMT, a more than 14% drop on a year ago and a little below the USDA's estimate of 2.0 MMT.
UkrAgroConsult estimated Ukraine's 2015 wheat crop at 22 MMT, up 1 MMT from previously on recent beneficial rains. That's now only 0.5 MMT below last year's production. Wheat exports in 2015/16 were pegged at 12 MMT, up from their previous forecast of 10.8 MMT. Exports this season currently stand at 10.2 MMT, and might reach close to 11 MMT by the end of the campaign.
Spring planting progress in Russia remains behind schedule, with 18.2 million ha sown so far, according to the Ag Ministry there. That's 58.6% of the government forecast and 2.3 million ha less than this time last year.
Russian spring wheat is 42.3% sown on 5.6 million ha (versus 6.7 million ha a year ago), spring barley is 73.6% sown on 6.0 million ha (7.0 million a year ago) and corn planting is 82.1% done on 2.3 million ha (versus 2.2 million a year ago), they say.
Agritel forecast the Russian 2015 barley crop at 16.4 MMT, a 12.8% decline on 18.8 MMT a year ago, and slightly below the USDA's 16.5 MMT estimate.
Chicago Grains Rise - Led By Wheat
18/05/15 -- Soycomplex: Beans closed with small gains. Oil World estimated global 2014/15 soybean ending stocks at an ample 87.7 MMT, which would take total soybean availability in 2015/16 to a plentiful 399 MMT, they said. The USDA estimated that 45% of the US 2015 soybean crop was now in the ground, in line with trade forecasts. That was up 14 points on a week ago and this time last year, and also 9 points ahead of the 5-year average. Emergence was placed at 13% versus 8% a year ago and 12% for the 5-year average. Argentine labour disputes remain a positive, although it's unclear how much, if any, business is being redirected to the US. The expanding bird flu epidemic in the US is a negative. So too is a firmer US dollar. Jul 15 Soybeans closed at $9.54 1/2, up 1 1/4 cents; Nov 15 Soybeans closed at $9.35, up 1/2 cent; Jul 15 Soybean Meal closed at $308.00, up $4.70; Jul 15 Soybean Oil closed at 32.78, down 29 points.
Corn: The corn market closed around 2-3 cents firmer. The USDA pegged corn plantings at 85% complete, up 10 points on a week ago and the 5-year average. Emergence is at 56% versus 29% a week ago, 32% a year ago and 40% for the 5-year average. All that was pretty much in line with expectations. US weather remains generally non threatening, although there's some talk of frost for one or two areas damage is likely to be very limited. Wheat was supportive for corn today too. South Korea bought 63 TMT of optional origin corn for Oct/Dec shipment over the weekend. The Ukraine Stat Stats Service estimate May 1 corn stocks there at 6.8 MMT. APK Inform said that Ukraine's corn exports via seaports fell to only 85.9 TMT last week. Russia said that it's season to date corn exports were down from 3.72 MMT a year ago to 2.54 MMT. AgroInfoMarket cut their forecast for Spanish corn production this year to 10.81 MMT and raised their estimate for corn imports by 200 TMT to 5.95 MMT, of which 2.1 MMT will come from Ukraine and 1.4 MMT from France, they predict. Jul 15 Corn closed at $3.68, up 2 1/2 cents; Dec 15 Corn closed at $3.85 3/4, up 3 cents.
Wheat: The wheat market closed with double digit gains as heavy rains pounding the Southern Plains sparked some short-covering. Fund money was still short over 100k lots in Chicago wheat as of Tuesday night, Friday's Commitment of Traders report revealed. India's wheat imports may jump to as much as 2 MT in 2015/16 from only 45,000 MT a year previously as millers there seek better quality material to blend in with their own rain damaged crop, according to a report on Bloomberg. There's talk of a hot and dry pattern developing for Russian wheat, which is adding to market jitters, although it's not really here yet. The USDA raised US winter wheat crop conditions by 1% in the good to excellent category to 45%, much better than only 29% a year ago. They said that 68% of the crop is headed versus 55% a year ago and 56% for the 5-year average. Spring wheat planting has now advanced to 94% done versus only 65% on average. Spring wheat emergence is at 67% versus only 38% on average. South Korea bought 90 TMT of Australian hard wheat for October shipment over the weekend. Sep 15 CBOT Wheat closed at $5.29 1/4, up 11 3/4 cents; Sep 15 KCBT Wheat closed at $5.64 1/2, up 13 1/4 cents; Sep 15 MGEX Wheat closed at $5.86, up 13 1/4 cents.
EU Wheat Jumps On Nervous Short-Covering
18/05/15 -- EU grains began the week trading higher across the board, with wheat posting the biggest gains on what was probably a combination of nervous short-covering and bargain hunting.
The day ended with May 15 London wheat up GBP3.25/tonne at GBP111.35/tonne, Sep 15 Paris wheat jumped EUR5.50/tonne higher to EUR180.00/tonne, Jun 15 Paris corn gained EUR0.75/tonne to EUR155.25/tonne whilst Aug 15 Paris rapeseed was up EUR2.00/tonne to close at EUR355.75/tonne.
Fears that heavy and untimely rains on the US Southern Plains - linked to the developing El Nino - could be causing some crop damage, was one reason for the rally. That got the heavily short fund money spooked. "At least 4 inches but 6-8 inches of rain, locally, developed in Texas, Oklahoma and southern Kansas the past 2 weeks This amounts to s 5-6 times the normal rainfall in an area known for its dry climate.
Talk that Russia could be in for a hot and dry spell not too far down the line has also ruffled a few feathers. Spring planting there is only 55% complete on 17.1 million ha, which is 1.9 million ha less than a year ago.
Showing signs of nerves that all was not going as well as hoped for, the new Russian Ag Minister has said that regional authorities should make every effort to increase the pace of spring planting - in particular Siberia and the North West Federal District.
Rainfall is likely to be sparse for wheat in the former Soviet Union in next 10 days, according to the Commodity Weather Group. Moisture stress could start to build in Southern Russia by the end of the month, although Ukraine may get some rain next week, they add.
Meanwhile "there are growing indications of a significant warm-up that is going to take place over the Volga and Southern districts of western and central Russia over the next 2-5 weeks," said WxRisk.com.
The Russian Ag Ministry said that the nation's wheat exports were down 60% from a year ago at 1.61 MMT since the Feb 1 wheat export duty came into force. Even so, season to date exports of wheat are still up 16% at 20.08 MMT. The market is expecting that this figure could be 21.0-21.5 MMT by the end of the season.
Spanish analysts AgroInfoMarket trimmed their forecast for the country's soft wheat crop from 6.19 MMT to 5.75 MMT, although that's still up 2.9% on output of 5.59 MMT a year ago. They also reduced their forecast for Spanish barley production by almost a million tonnes, down from 8.34 MMT to 7.39 MMT, although again that's better than the 6.74 MMT produced in 2014.
Adverse weather conditions in recent weeks was the reason given for the production cuts, and they said that further damage could be caused if the current heatwave persists. Temperatures topped 40C in many parts of Spain last week, breaking records for the month.
State broadcaster TVE said some estimates calculated agricultural losses could exceed 50 million euros due to the scorching heat.
For now though, AgroInfoMarket left their estimate for Spanish soft wheat imports unchanged from last month at 3.31 MMT, but they raised their view on corn imports by 200 TMT to 5.95 MMT and doubled their estimate for barley imports to 500 TMT.
The USDA's FAS in Saudi Arabia estimated the country's 2015/16 barley imports to fall slightly, down 200 TMT to 6.8 MMT, with the nation importing more wheat and corn. Wheat imports are seen rising 300 TMT to 3.8 MMT and corn imports expected to increase 1 MMT to 4.45 MMT.
The stronger US dollar was a supportive factor for both London and Paris wheat today. Barclays forecast the US currency beating sterling down to 1.39 in Q3 of 2015, and 1.36 by Q1 of next year. The euro meanwhile will dip to parity in Q3 and below it to 0.98 versus the dollar by the end of the year, they predict. Both events would be friendly for exports, and potentially grain prices here in Europe, if they are correct.
The Monday Morning Papers
18/05/15 -- The overnight grains are just about universally green to start the week. Let's see how long that lasts....
The only red on the board relates to lower values for the pound and euro against the US dollar - are Barclays right (see story below)??
This morning I read that the new Russian Ag Minister is saying that regional authorities should make every effort to increase the pace of spring planting - in particular Siberia (only 17% sown) and the North West Federal District (36% planted). Getting twitchy?
The Russian Ag Ministry said that the country had exported 4.75 MMT of grains since the Feb 1 wheat export duty came into force, a 23% decline compared with the same period a year ago. Wheat exports are down 60% at 1.61 MMT. That pace should pice up again now that the duty has been abolished. Mike Lee reported seeing long queues of trucks carrying grain leading to the ports on a whistle-stop tour of Russia last week
Russia's season to date exports are still up 18.4% at more than 28 MMT, including 16% more wheat (20.08 MMT).
APK Inform say that Ukraine seaports only shipped 132.7 TMT of grains last week, down sharply from 496.5 MMT the previous week.
Barley exports via seaports last week were nil, backing up the theory that these are just about done. Corn exports were 85,900 MT and wheat shipments were 46,800 MT, they say.
The Ukraine State Stas Service say that the country's May 1 grain stocks were 12.9 MMT, including 6.8 MMT of corn, 4.6 MMT of wheat and 1.0 MMT of barley.
Canada says that it has exported 12.7 MMT of wheat (excluding durum) so far, in a season which now has only 12 weeks left to go. That's a 5% increase on a year ago.
Canada has also exported 17% more durum wheat than a year ago (4.0 MMT) and 3% more canola (6.7 MMT).
Two separate South Korean companies are reported to have bought 45,000 MT each of Australian hard wheat over the weekend for October shipment.
Another South Korean buyer has purchased 63,000 MT of optional origin corn for Oct/Dec shipment.
The Brazilian government have increased the minimum support price that they will pay for wheat by 4.6%, but growers say that this is still below the cost of production which is said to be up 14%.
Barclays Forecast US Dollar Resurgence By Q3 Of 2015
Despite the pound hitting its highest against the US currency since November last week, they forecast a sharp drop to only 1.39 in the next quarter (down 11% from where we are currently), falling to 1.38 in Q4 and 1.36 in Q1 of 2016.
The euro is likely to perform even worse. Barclays say "we believe that the EUR has much further to go in its trend depreciation, albeit at a slower pace and with higher two-way risks attached. Moreover, we still think the EUR faces risks from a prolonged period of Greek political uncertainty."
The euro has recently risen close to 1.15 against the dollar - it's best level since early February - but that won't last long, with a fall to parity on the cards in Q3 of 2015 (a 13% decline), and the single currency seen dipping below that level in Q4 (0.98) and again in Q1 of next year (0.95).
The pound will still continue its trend of modest appreciation versus the euro, rising above the 1.40 level that has proven to be a difficult nut to crack, in Q4 and hitting 1.43 in Q1 of 2016 for a near 4% increase on where we are today, they estimate.
The forecasts given for the pound seem pretty bearish in particular to me, but IF they are proven correct then they could add some support to London wheat.
The outlook for the euro I can buy into more easily, which would certainly continue to boost EU wheat exports in 2015/16, and again help underpin Paris wheat.
All this won't help US wheat exports though, if it comes true, and it could certainly be construed as outright bearish for US corn and soybeans given current planting progress figures and the forecast for a non-threatening El Nino-linked summer.
