Chicago Close - Friday
20/01/12 -- Soybeans: Mar 12 Soybeans closed at USD11.87, down 10 cents; May 12 Soybeans closed at USD11.95 1/2, down 8 3/4 cents; Mar 12 Soybean Meal closed at USD311.90, down USD3.80; Mar 12 Soybean Oil closed at 50.43, down 63 points. On the week as a whole beans gained 28 1/2 cents, meal USD10.40 and oil 14 points. Weekly soybean export sales were above expectations of 500-900 TMT at 991,100 MT, of which more than a third was to China. They won't be back for much next week as it's their Lunar New Year celebrations. Informa Economics estimated spring soybean plantings in the US at 74.568 million acres, down a fraction from their December estimate and over 400,000 below the area in 2011. Funds were said to have been sellers of around 5,000 soybean contracts on the day, squaring things off a little ahead of a weekend that may bring decent rains to Argentina.
Corn: Mar 12 Corn closed at USD6.11 1/2, up 5 1/2 cents; May 12 Corn closed at USD6.16 3/4, up 4 3/4 cents. On the week corn was 12 cents higher. Funds were said to have bought 6,000 contracts on the day, making them a suggested net buyer of 14,000 on the week. Weekly export sales were good at 759,900 MT - in line with trade estimates of 500-850 TMT and included 132,200 MT for China. New crop Dec 12 finished 5 1/4 cents lower after Informa estimated 2012 US corn plantings at a very large 94.748 million acres, up 2.8 million on last year and easily the largest since the war. Should they be right and US yields were to fall back into line with the trend then the US would produce an unprecedented volume of corn this year - almost four and a half times the entire output of Brazil and Argentina combined.
Wheat: Mar 12 CBOT Wheat closed at USD6.10 1/2, up 4 3/4 cents; Mar 12 KCBT Wheat closed at USD6.67, up 9 cents; Mar 12 MGEX Wheat closed at USD7.98 3/4, down 1/4 cent. On the week Chicago wheat was 8 1/4 cents higher, with Kansas losing 3 cents and Minneapolis down 2 1/2 cents. Weekly export sales of 584,200 MT were towards the upper end of trade estimates. Sales aren't shipments though. Actually physical exports fell short once again and have now been below the level required to hit the volume the USDA say that the US will export this season in 13 of the past 15 weeks. Informa peg US all wheat area for the 2012 harvest at 57.9 million acres, an increase of 3.5 million, or 6.4% on last year and 600,000 acres up on their December estimate.
EU Wheat Attempting To Defy Gravity
20/01/12 -- EU grains ended with Jan 12 London wheat down GBP0.25/tonne at GBP157.00/tonne and Mar 12 Paris wheat was unchanged at EUR198.50/tonne.
EU wheat continues to do a pretty good job of attempting to defy gravity, closing GBP1.50/tonne higher on the week. Paris wheat clawed it's way EUR1.00/tonne higher compared with last Friday.
Weather models have developed a wetter look for Argentina this weekend, with 1-3 inch totals expected to add to last week's similar amounts. The cooler temperatures that this front is expected to leave behind should also be of benefit.
Despite downgrading corn output forecasts for both Brazil and Argentina yesterday the IGC say that they still expect both countries to produce record corn crops this year.
Brussels issued 175,000 MT of soft wheat export licences this week, bringing the marketing year-to-date total 7.7 MMT so far, a 36% decrease on where we were this time last year despite a larger crop this time round.
US analytical firm Informa Economics today estimated that American farmers will plant 57.9 million acres of wheat for the 2012 harvest, an increase of 3.5 million, or 6.4%, on last year. That's 600,000 acres up on their December estimate.
For corn they came out with 94.75 million acres, up 2.8 million on last year and almost 360,000 acres higher than they suggested in December. That's around 1.2 million acres above the current post war record high of 93.5 million set in 2007 when US farmers gleefully jumped on the ethanol bandwagon.
If they're right, and US yields in 2012 were to return to a trendline 160 bu/acre, that would produce a monster crop of around 14 billion bushels this autumn, allowing for an 8% abandonment rate. That's 355.6 MMT in English money, which would be a whopping 41.6 MMT more than in 2011, an increase of 13% and probably around twice the size of the entire production of Argentina this year.
Early Call On Chicago
20/01/12 -- The overnight grains closed mixed with beans 3-5 cents weaker, and with corn and wheat trading a cent or two either side. Crude is down almost a dollar and a half sending it back below USD100/barrel.
Weekly export sales from the USDA came in at a net 584,200 MT, towards the upper end of trade estimates. Shipments of 357,900 MT however once again fell short of the level required to hit the USDA's 2011/12 target. They've only beat that target twice in the past 15 weeks.
Corn sales of 759,900 MT were in line with trade estimates of 500-850 TMT and included 132,200 MT for China. Soybean sales were 991,100 MT of which more than a third was China. Yesterday's reported Chinese business won't show up until next week.
Chinese New Year celebrations will keep them out of the market next week. Some of this week's widely reported sales were likely a result of that.
Widespread rains are expected in Argentina over the weekend and early part of next week, that may encourage a bit of profit-taking and/or spec selling heading into the weekend.
It was only a matter of time, but some reports are already talking of "excessive" rain hampering harvest progress in Brazil.
The IGC peg soybean production there at 71.8 MMT, and that in Argentina at 51 MMT which is interestingly a little higher than the USDA's scoffed at 50.5 MMT released last week.
Beans have been the biggest gainer on the week so far, up 38 3/4 cents as opposed to corn which is up 6 1/2 cents and wheat, up 3 1/2 cents. With a good chance of decent weekend rains in Argentina then I guess we can expect beans to lead the way lower this afternoon.
Informa are expected to release updated 2012 acreage forecasts mid session. They have a habit of being towards the high end with their estimates.
Europe has gone a bit quiet this past few days, as this millstone of a problem has had the habit of doing over the past year or so. As we all know by now though a sudden volcanic eruption is possible at any time with this festering volcano.
Greece, desperate for the next tranche of EU/ECB/IMF cash continues to hold a gun to it's creditors heads, saying it's 50% or nothing what do you want? As reported previously though it's actually 15% plus a probably worthless 35% time bomb of a bond to have ticking away on your balance sheet for Christ knows how long or nothing. Nothing is almost starting to look the more attractive of the two!
It is only a matter of time before this baby blows IMHO, with the fan splattering brown smelly stuff all around the globe. If and when that happens then it will be like Italian captains deserting their ship as the funds scramble to get out.
But, don't let that worry you, six dollar wheat and corn and twelve dollar beans are cheap as chips, everybody knows that so fill your boots son.
Early calls for this afternoon's session: beans down 3-5 cents, wheat and corn mixed.
EU Rapemeal Prices
20/01/12 -- Rapemeal prices on the continent are a bit of a mixed bag today, slightly weaker nearby and a bit firmer going forward.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan12 | 181.00 | -2.00 |
| Feb12 | 174.00 | -1.00 |
| Mar/Apr12 | 173.00 | +1.00 |
| May/Jul12 | 166.00 | +2.00 |
| Aug/Oct12 | 153.00 | +1.00 |
| Nov12/Jan13 | 159.00 | +2.00 |
| Feb/Apr13 | 161.00 | +2.00 |
The Morning Rant: London Wheat Higher For No Reason Whatsoever!
20/01/12 -- Jan12 London wheat has gained GBP16.25/tonne since the mid-December low, pretty impressive eh? So something pretty dramatic must have happened to cause this turnaround?
Well, world wheat production has actually increased by 2.5 MMT since then according to the USDA, or by 7 MMT if you want to side with the IGC.
Consumption must have gone up then? Well it has but only by 1.2 MMT according to the USDA or 2 MMT in yesterday's report from the IGC. By less than production has increased.
Bugger me, so we've actually got more wheat on our hands now than we did when wheat was GBP141.00/tonne? Yes.
I've got it, we must be exporting more. Well no actually, the EU has issued soft wheat export licences for just 7.7 MMT so far in 2011/12, a 36% decrease on last year. Despite a good set of numbers for November, UK exports are down by almost a quarter on where we were last season AND we've got a bigger crop here this time round AND demand from the domestic feed sector is very sluggish.
The Argie drought then? I mean it's decimated corn production down there hasn't it? Slasherty slash. Million of tonnes of the stuff must have been wiped off world supplies surely to Christ? Erm, no. The USDA have world corn production higher now than than they did in December, only by half a million tonnes mind, but higher not lower.
Hah, they don't know what they're on about the USDA. What about the IGC? Those lads have their fingers on the pulse. Glad you asked me that one, they have world corn output 8 MMT higher than in December. In fact they say that "despite a smaller US crop and a worsening outlook for South America, total maize production in 2011/12 is forecast to increase by 4%, to a record 861 MMT." Adding that despite crop downgrades both Argentina and Brazil are still expected to produce record crops.
I know! It must be ending stocks that have been reduced then? No, the USDA and IGC both have corn and wheat carryout higher now than they did in December. The outlook for next season, that must be well down then? No. record ending stocks in 20121/13 too.
Right, so what you are telling me is that we've got more wheat and more corn, both in terms of production AND ending stocks, than we thought we had in mid-December but prices have gone up significantly since then? By 11.5% in fact in the case of London wheat. Yes grasshopper.
Currency then? Well, the pound is up slightly against the euro since mid-December, which makes us less competitive on the continent not more so. The dollar then, it must be the dollar? The pound was 1.5465 on December 14th when London wheat bottomed, by some strange quirk of fate it is exactly the same right now.
Hmmmmmm....
Chicago Reverses Wednesday's Losses
19/01/12 -- Soybeans: Mar 12 Soybeans closed at USD11.97, up 13 1/2 cents; May 12 Soybeans closed at USD12.04 1/4, up 12 cents; Mar 12 Soybean Meal closed at USD315.70, up USD3.70; Mar 12 Soybean Oil closed at 51.06, up 66 points. With China closed next week for the Lunar New Year celebrations there have been strong rumours all week of them actively buying soybeans. Before the open the USDA confirmed the sale of 110,000 MT of soybeans to China. The trade will now be interested to see what, if anything, shows up in tomorrow's weekly export sales report. Trade estimates for that are 500 to 900 thousand MT. Even so, weekly shipments are well behind year ago levels, suggesting that many of the outstanding sales were "optional origin" not specifically US beans. Argentina gets a very decent shot at significant rains this weekend and into next week.
Corn: Mar 12 Corn closed at USD6.06, up 12 1/2 cents; May 12 Corn closed at USD6.12, up 11 3/4 cents. Corn reversed Wednesday's losses with funds said to have bought 12,000 contracts on the day. The USDA announced the sale of 154,700 MT of US corn sold to Mexico. South Korea also bought 230,000 MT of corn overnight, with 110,000 MT of that confirmed today as US origin. The market is comfortable that corn below USD6/bu will flush out the buyers. Trade estimates for tomorrow's weekly export sales range from 500 to 850 thousand MT. Last week's corn sales were only 321,500 MT for 2011/12 and negative 23,000 MT for 2012/13. The International Grains Council raised world corn production by 8 MMT for 2011 to 861 MMT with carryover coming in at 125 MMT, 2 MMT higher than previously. Decent rains are on the cards for Brazil and Argentina this weekend and early next week.
Wheat: Mar 12 CBOT Wheat closed at USD6.05 3/4, up 13 1/2 cents; Mar 12 KCBT Wheat closed at USD6.58, up 5 cents; Mar 12 MGEX Wheat closed at USD7.99, down 1 3/4 cents. Wheat simply followed corn and beans higher. The International Grains Council upped their 2011/12 world wheat production estimate by 7 MMT to 690 MMT today, with ending stocks upped 4 MMT to 204 MMT. Elsewhere Strategie Grains forecast an EU-27 2012 soft wheat crop of 133.3 MMT, a 3% increase on last year. They also peg 2012/13 EU wheat ending stocks 20% up on this season and world wheat ending stocks for next season at a record 211 MMT. Trade estimates for tomorrow's weekly export sales report range from 350 to 600 thousand MT. As ever it will be the weekly shipment total that I will be more interested in. Shipments of just 196,200 MT last week were the lowest since the first week of the marketing year - well below the 465,000 MT level now needed to reach the USDA's export target of 25 MMT.
EU Wheat Rises, Despite Some Bearish Data
19/01/12 -- EU grains finish mixed, although wheat was mostly higher, with Jan 12 London wheat up GBP0.75/tonne to GBP157.25/tonne and Mar 12 Paris wheat rising EUR1.00/tonne to EUR198.50/tonne.
London wheat still seems to be basking in the glory of last week's friendly export data for November. Today's bond auctions by France and Spain were well received by the market despite recent S&P's downgrades, allaying fears (even if only temporarily) over European debt.
What other fresh news was around today was largely bearish though. Some of it very bearish going forward into 2012/13.
The IGC raised their estimate on 2011 world wheat production by 7 MMT to 690 MMT, pegging 2011/12 ending stocks 4 MMT higher than last month at 204 MMT. World corn production and carryout were also increased by 8 MMT and 2 MMT respectively.
Despite reducing South American prospects because of drought and heat stress both Argentina and Brazil are still expected to produce record corn crops, they said.
Looking ahead world wheat plantings for the 2012 harvest are projected to expand by 1.7%, to 225 million hectares - the largest since 1998, they added.
Elsewhere, Strategie Grains issued their second forecast on 2012/13 grain production within the EU-27. They came up with a soft wheat crop estimate of 133.3 MMT up 3% from a year ago, and durum wheat production of 8.9 MMT up 6% from last year. That gives us an all wheat crop of 142.2 MMT versus the USDA's 2011 figure of 137.7 MMT.
Barley production is seen 5% higher in 2012 to 54.5 MMT.
Citing a sharp fall in demand from the animal feed sector they peg world 2012/13 ending stocks at a record 211 MMT next year, with those in the EU-27 climbing almost 20% to 15.8 MMT.
Ag Canada estimate the wheat area there this year at 24.2 million acres, up 12% on 2011. The Canadian barley area is seen leaping 21.5% to a record 7.9 million acres and rapeseed plantings are also forecast to be a record 19.8 million acres.
Early Call On Chicago
19/01/12 -- The overnight grains are higher with beans leading the way up 10-12 cents, with corn and wheat both some 3-5 cents firmer. Crude oil is up more than a dollar.
Macquarie Group have released their latest estimates for South American crop production. Argentina: Corn 25.6 MMT, Soybeans 49.0 MMT. Brazil: Corn 60.0 MMT, Soybeans 73.6 MMT. Maybe more evidence that last week's USDA numbers weren't as outrageously over the top as the bulls would like to make out?
Beans are up on reports of Chinese buying ahead of their Lunar New Year celebrations starting Monday and lasting through all of next week.
The USDA's weekly export sales report is delayed a day to tomorrow due to the MLK holiday on Monday.
There's been a flurry of tender activity this last day or two after prices worked lower. South Korea have bought 230,000 MT of corn overnight, with 110,000 MT of that confirmed today as US origin. Japan has bought 185,000 MT of wheat in it's regular Thursday tender split between US, Canadian and Australian origin.
The USDA have also today confirmed 154,700 MT of US corn sold to Mexico and 110,000 MT of soybeans to China.
Bangladesh bought 60,000 MT Ukrainian wheat for Jan/Feb shipment this week, with UAE buying Black Sea and Kazakh wheat and Ukraine origin corn.
Jordan is tendering for 100,000 MT of optional origin wheat.
The IGC have upped their 2011/12 world wheat production estimate by 7 MMT to 690 MMT today, with ending stocks upped 4 MMT to 204 MMT. World corn production is also increased, by 8 MMT to 861 MMT with carryover coming in at 125 MMT, 2 MMT higher than previously.
Strategie Grains are forecasting an EU-27 2012 soft wheat crop of 133.3 MMT, a 3% increase on last year. They also peg 2012/13 EU wheat ending stocks 20% up on this season to 15.8 MMT and world wheat ending stocks for next season at a record 211 MMT.
Iran continues to wind up the west talking about a closure of the Strait of Hormuz if "Iran is threatened seriously and somebody wants to tighten the noose." That's keeping oil prices steady.
Greece is into a second day of talks with private credit holders ahead of the imminent arrival of EU/ECB and IMF inspectors (if the latter turn up) to see if they are doing all they said they were going to do to qualify for their next cash injection.
News that the IMF is looking to to boost its resources in an effort to tackle the euro zone debt crisis seems to have provided a little boost. Where are they going to get the money from Mars?
Rains are on the cards for Brazil and Argentina this weekend and early next week. Parts of Argentina could get as much as as much as 1.5 inches over the weekend, with more to come Monday/Tuesday.
Early calls on this afternoon's CBOT session: beans up 8-10 cents, corn up 3-5 cents, wheat up 2-4 cents.
