CBOT Closing Comments
08/10/10 - Soybeans
November soybeans closed at USD11.35, up 70 cents; October soybean meal closed at USD317, up USD25.00; October soybean oil closed at 46.22, up 243 points. A very bullish USDA report, particularly for corn, set the tone, with soybeans opening limit up and staying that way. The USDA pegged the 2010 US soybean crop at 3.408 billion bu on yield of 44.4 bpa. That's down from 3.483 billion and 44.7 bpa last month, but still the largest US crop in history! The bull surprise in the pack for soybeans was them slashing their ending stocks estimate to 265 million from 350 million last month.
Corn
December corn closed at USD5.28 1/4, up the 30 cent limit; March corn closed at USD5.37 1/2, also up 30 cents. The USDA slashed it's 2010 US corn yield estimate to 155.8 bushels/acre, 6.7 bpa lower than last month and 4.2 bpa below the average trade guess. That cut production to 12.664 billion bushels from 13.160 billion last months and 147 million bushels below the lowest trade estimate. Ending stocks came in at 902 million bushels, 95 million less than the lowest trade estimate. The EPA decision on whether to move towards E15 (15% inclusion of ethanol in gasoline) is expected to be announced in a week.
Wheat
December CBOT wheat closed at USD7.19 1/4, up 60 cents; December KCBT wheat closed at USD7.58 1/2, up 59 cents; December MGEX wheat closed at USD7.64 1/2, up 58 cents. Spillover strength from corn propelled wheat to close at or near daily trading limits. The average trade guess for ending stocks was 873 million bushels. USDA came in at 853 million, 49 million lower than last month. They also cut world wheat production by 1.6 MMT, including a 300,000 MT reduction for Canada tp 22.2 MMT, whilst world consumption was raised by more than 2 MMT.
EU Wheat Closing Comments
08/10/10 -- A bullish crop report from the USDA set the EU grains markets on fire Friday afternoon. Nov London wheat closed GBP9.70 higher at GBP167.00/tonne and Nov Paris wheat rose EUR15.75 to EUR223.75/tonne.
Other EU grains also closed sharply higher with Nov Paris corn up EUR13.25/tonne and Nov Paris rapeseed EUR10.75/tonne higher.
The USDA stunned the trade for the second week running. Last week they pegged Sept 1st corn stocks 300 million bushels higher than the trade was expecting. This week they pegged 2010 corn yields at 155.8 bushels/acre, 6.7bpa lower than last month's estimate and 4.2bpa lower than the trade was expecting.
That slashed US corn production this year by more than 12.5 MMT from last months estimate to 321.6 MMT and cuts US ending stocks to just 22.9 MMT. That represents 57.8 days of supply, the second tightest of the past 35 years.
US wheat ending stocks were also estimated lower this month at 23.2 MMT.
Lost in amongst all the data they actually raised EU-27 wheat production for 2010/11 by half a million tonnes to 135.63 MMT. World wheat output this season was reduced slightly to 641.4 MMT, 6% down on last year. World ending stocks were forecast at 174.7 MMT, down 3 MMT from last month and 22 MMT below last year.
Even so, those ending stocks are still 50 MMT higher than in the so-called "food crisis" year of 2007/08. That's 40% more wheat than when we visited the dizzy heights of GBP200/tonne, yet there will be plenty now who will be expecting us to go there again after this report, ably assisted by fund money of course.
It is interesting that a mere 22 MMT (just 3% of world production) marks the difference between last year's "burdensome" stocks and this year's new "food crisis" is it not? It is also interesting to note that this season's ending stocks approaching 175 MMT are still forecast to be almost 10 MMT higher than they were in 2008/09 when wheat prices completely collapsed.
The difference between now and then of course is that the funds have got their appetites back.
The USDA Unsurprisingly Surprise Us
08/10/10 -- No surprises to see another USDA report littered with surprises. This time they've come up with a corn production number of 12.664 billion bushels, down sharply from from 13.160 billion last months and 147 million bushels below the lowest trade estimate.
Yields were pegged at 155.8bpa, well under the lowest trade estimate of 158.2bpa and 4.2bpa below the average expectation. Corn ending stocks dropped to 902 million bu, down from 1.708 million last year and also lower than the lowest trade estimate within a range of 997 million to 1.392 billion. That represents 57.8 days of supply, the second tightest of the past 35 years.
They also gave us a soybean crop of 3.408 billion bu on yield of 44.4bpa. That's down from 3.483 billion and 44.7bpa last month, but pretty close to trade expectations. The big surprise for beans though was ending stocks down to 265 million from 350 million last month, again lower than the lowest trade estimate.
Wheat stocks were pegged at 853 million bushels, down from 902 million last month and a bit lower than the average trade guess of 873 million.
Early reaction is calling for corn up the 30 cents limit this afternoon with beans called 20-30c higher and wheat up 10-15 cents.
Here we go again then, Nov London wheat currently GBP7/tonne higher with Paris wheat up around EUR10/tonne.
Australia Latest
08/10/10 -- Drought in Western Australia is seen cutting the state's percentage of the national wheat crop from a "normal" share of around 35-40% to less than 20% this season.
Rabobank say that this year's Australian wheat crop will total 22-23 MMT, that's 2-3 MMT lower than some other recent estimates, although still an increase on last season.
If it wasn't for the drought in WA - where they peg output at "around 4 MMT" - then we'd have been looking at a potentially record national crop of 26-27 MMT this year.
Wheat production is NSW is seen at a record 8.7 MMT, say Rabobank. That's an increase of over 70% on last season.
CBOT Close
07/10/10 -- Soybeans
November soybeans ended 3 cents higher at USD10.65; December soymeal ended USD0.40 higher at USD296.20; December soyoil settled 0.34 cents higher at 44.12. Export sales of 947,400 MT were down from the previous week, but in line with estimates for sales of 750-950,000 MT. The market is particularly cautious ahead of tomorrow's USDA report given last week's surprises. Soybean production and ending stocks are expected to see small reductions.
Corn
December corn settled up 9 3/4 cents at USD4.98 1/4; Export sales were disappointing at a combined 632,500 MT against estimations for sales of 750-850,000 MT. In tomorrow's USDA report ending stocks for corn are seen at 1.172 billion (USDA 1.116 billion last month). Some reports suggest that the USDA may raise planted acres to compensate for lower yields, leaving production relatively unchanged. Mexico and South Korea purchased 822,960 MT and 110,000 MT respectively of US corn today.
Wheat
CBOT December wheat closed up 1 cent at USD6.59 1/4; KCBT Dec wheat rose 2 cents to USD6.99 1/2; MGEX Dec wheat rose 1 1/4 cents to USD7.06 1/2. All exchanges finished well off early highs ahead of tomorrow's USDA report. Export sales were above the average trade estimates (450-650,000 MT) at 808,400 MT. Ending stocks for wheat tomorrow are seen at 873 million (USDA last month: 902 million). Reports coming out of Western Australia are also a worry, where the wheat crop is seen at less than half last year.
EU Wheat Close
07/10/10 -- Nov London wheat closed GBP2.25 higher at GBP157.30/tonne, with Nov Paris wheat up EUR4.00 at EUR208.00/tonne.
The pound broke through 1.60 against the dollar for the first time since late January, but stayed there only briefly before slipping back below 1.59 by the close.
The euro remains strong, setting a five month high of over 88 pence against the pound after the Halifax said British house prices plunged a record 3.6 percent in September.
Strength in Chicago grains added support ahead of another raft of key data from the USDA tomorrow.
Ukraine finally bit the bullet and said it would impose export quotas until at least the end of the year.
Brussels issued export licences for 480,000 MT of soft wheat this past week, bringing the cumulative total so far this marketing year to 6.8 MMT compared with 5.1 MMT this time last year. Barley exports are running at 1.5 MMT versus 289,000 MT twelve months ago.
UK exports are also continuing at a strong pace, with some already questioning how much wheat is going to be left for sale come the spring.
Early Call On CBOT
07/10/10 -- The overnights closed mostly steady with wheat around 6-7c firmer, corn up 3-5c and beans 8-10c higher.
Crude oil is around half a dollar higher and the USD is weak.
The market is positioning itself ahead of tomorrow's crucial USDA data and nervous of another surprise. There seems to be some talk that although dropping corn yields is a given, they may actually find some extra acres to leave production above 13 billion bushels. Soybean output is also expected to fall.
Ending stocks for corn are seen at 1.172 billion (USDA 1.116 billion last month), with beans coming in at 337 million (350 million) and wheat at 873 million (902 million).
Today's weekly export sales were neutral for corn and beans and friendly for wheat.
Dryness in Brazil is still a concern, although soybean plantings are expected to be record.
Reports coming out of Western Australia are also a worry, where the wheat crop is seen at less than half last year.
Early calls for this afternoon's CBOT session: corn up 3-5c; wheat up 5-7c; beans up 8-10c.
USDA Export Sales
07/10/10 -- The USDA today reported the following export sales for the period September 24-30, 2010:
Wheat
Net sales 808,400 MT for the 2010/11 marketing year were primarily for Egypt (147,500 MT), Nigeria (113,600 MT), Thailand (95,500 MT), the Philippines (86,500 MT), Saudi Arabia (52,300 MT), and Brazil (41,000 MT). That beat forecasts for sales of 450-650,000 MT. Exports of 878,200 MT were up 12 percent from the previous week and 9 percent from the prior 4-week average. The primary destinations were Egypt (153,600 MT), Nigeria (111,700 MT), South Korea (89,000 MT), Japan (64,000 MT), Saudi Arabia (52,300 MT), and South Africa (45,400 MT).
Corn
Net sales of 607,100 MT for 2010/11 and 25,400 MT for delivery in 2011/12 fell short of estimations for sales of 750-850,000 MT. The main buyers were Syria (171,900 MT), Japan (166,400 MT), Venezuela (85,000 MT), Indonesia (67,400 MT), South Korea (57,700 MT), and Mexico (33,200 MT). Exports of 978,600 MT were up 4 percent from the previous week. The primary destinations were Japan (364,500 MT), Mexico (128,300 MT), Syria (103,700 MT), Indonesia (63,500 MT), South Korea (57,800 MT), and Israel (57,200 MT).
Soybeans
Net sales of 947,400 MT were down 46 percent from the previous week, but in line with estimates for sales of 750-950,000 MT. The main buyer as usual was China (624,300 MT) followed by Mexico (75,800 MT). Exports of 654,400 MT were up 26 percent from the previous week. The destinations were primarily to China (335,900 MT), Mexico (151,800 MT), Taiwan (57,000 MT), Syria (30,100 MT), and Morocco (27,300 MT).
